THE ENTREPRENEURIAL PROCESS

The Entrepreneurial Process

The process through which a new venture is created by an entrepreneur is called
entrepreneurial Process.

The process has four distinct phases.

 Identification and evaluation of the opportunity
 Development of a business plan
 Determination of the required resources
 Management of resulting enterprise

1. Identify and evaluate the opportunity

The process by which an entrepreneur comes up with the opportunity for a new venture.
Important points:
A. opportunity results from an entrepreneur’s alertness to possibilities OR through the
establishment of mechanism that identify potent opportunities.
B. The other sources for opportunity identification can be: consumers and business
associates, members of the distribution system and technological people.
C. Each opportunity must be carefully screened and evaluated.
Integrated Components:
A. opportunity assessment
B. creation and length of opportunity
C. real and perceived value of opportunity
D. risk and returns of opportunity
E. opportunity VS. Personal skills and goals
F. Competitive environment

A. opportunity assessment
Important points:
*. Opportunity assessment compared to a business plan should be shorter, focus on the
opportunity not on the entire venture and provide the basis for making the decision of
whether or not to act on the opportunity.
*. An opportunity assessment includes the following:
  A description of the product or services
 An assessment of the opportunity
 An assessment of the entrepreneur and the team
 Specification of all the activities and resources needed to translate the opportunity into
a viable business venture
 Source of capital to finance the initial venture as well as its growth
*. The assessment must answer following questions:

 What market need it fulfils

 Personal observation experienced or recorded with regard to that market need
 Social condition regarding that market need
 What market research data can be marshalled to describe that market need
 Any patents required or available for fulfil this need
 Type of competition and its behaviour
 Overview of international market
 Competition in international market
 Where is the money to be made in the activity

B. creation and length of opportunity

The market size and the length of window of opportunity are the primary basis for further
determination of the risks and rewards.
Window of opportunity:
The time period available for creating a new venture.
C. Real and perceived value of opportunity
There is always a gap in real and perceived value of opportunity.
D. Risk and returns of opportunity

 The risks reflect the market, competition, technology and amount of capital involved.
 The amount of capital needed provides the basis for returns and rewards.
 Opportunity offers reward not in proportion to risk involved.
E. opportunity VS. Personal skills and goals
F. Competitive environment

2. Development of a Business Plan

The description of the future direction of a business.

 Title page
 Table of contents
 Executive summary
  Major section:
 Description of business
 Description of industry
 Technology plan
 Marketing plan
 Financial plan
 Production plan
 Organization plan
 Operational plan
 Summary
 Appendixes

3. Resources required
 Determine resource need
 Determine existing resource
 Identify resource gap and available resources
 Develop access to needed resource
Important points:
 Any resources that are of critical need to be differentiated from those that are just
helpful.
 The downside risks associated with insufficient or inappropriate resources should also
be assessed.
 An entrepreneur should strive to maintain as large an ownership position particularly
in the start-up stage .as the business develops more funds will probably be needed to
finance the growth of the venture, requiring more ownership to be relinquished.
 By understanding resource suppliers need the entrepreneur can structure a deal that
enables the resource to be acquired at the lowest possible cost and the least loss of
control.

4. Manage the enterprise

 Develop management style
 Understand key variables for success
 Identify problems and potential problems
 Implement control systems
 Develop Growth Strategies