Entrepreneurship Process:

The process of pursuing a new venture is embodied in the entrepreneurial

process, which involves more than just problem solving in a typical
management position. An entrepreneur must fnd, evaluate, and develop an
opportunity by overcoming the forces that resist the creation of something
new.
Entrepreneurial process can be defned as the process through which a new
venture is created by an entrepreneur. This process involves fnding,
evaluating, and developing an opportunity by overcoming the strong forces
that resist the creation of something new.
teps in entrepreneurial process
The are process of four distinct phases:
!"# $dentifcation and evaluation of the opportunity,
!%# &evelopment of the business plan,
!'# &etermination of the re(uired resources, and
!)# *anagement of the resulting enterprise.
Although these phases proceed progressively, no one stage is dealt with in
isolation or is totally completed before wor+ on other phases occurs. ,or
e-ample, to successfully identify and evaluate an opportunity !phase "#, an
entrepreneur must have in mind the type of business desired !phase )#.
Phase.": $dentify and evaluate opportunity: opportunity identifcation is
the process by which an entrepreneur comes up with the opportunity for a
new venture. /pportunity identifcation and evaluation is a very di0cult tas+.
*ost good business opportunities do not suddenly appear, but rather result
from an entrepreneur1s alertness to possibilities or, in some cases, the
establishment of mechanisms that identify potential opportunities.
&i2erent Aspects of this step relates to .
3 4reativity and 5usiness $dea generation
3 6ecognition of entrepreneurial opportunity
3 Assessment of entrepreneurial opportunity !in terms of real and
perceived value, ris+ and return
3 Evaluating entrepreneurial opportunity !in terms of personal 7
entrepreneurial s+ills and competencies, prevailing and future circumstances
and competitive environment#
/pportunity Evaluation Process
*ost good business opportunities result from an entrepreneur being alert to
possibilities. ome sources are often fruitful, including consumers and
business associates. 4hannel members of the distribution system.retailers,
wholesalers or manufacturer1s reps.are also helpful. Technically.oriented
individuals often identify business opportunities when wor+ing on other
projects.
8hether the opportunity is identifed by using input from consumers,
business associates, channel members, or technical people, each opportunity
must be carefully screened and evaluated. This evaluation of the opportunity
is perhaps the most critical element of the entrepreneurial process, as it
allows the entrepreneur to assess whether the specifc product or service has
the returns needed compared to the resources re(uired.
3 This evaluation process involves loo+ing at.
3 The creation and length of the opportunity,
3 $ts real and perceived value,
3 $ts ris+s and returns,
3 $t1s ft with the personal s+ills and goals of the entrepreneur, and
3 $ts uni(ueness or di2erential advantage in its competitive
environment.
$t is important to understand the cause of the opportunity, as the resulting
opportunity may have a di2erent mar+et si9e and time dimension. The
mar+et si9e and the length of the window of opportunity are the primarily
bases for determining ris+s and rewards. The ris+s re:ect the mar+et,
competition, technology, and amount of capital involved. The amount of
capital forms the basis for the return and rewards. The return and reward of
the present opportunity needs to be viewed in light of any possible
subse(uent opportunities as well. The opportunity must ft the personal s+ills
and goals of the entrepreneur. The entrepreneur must be able to put forth the
necessary time and e2ort re(uired for the venture to succeed. /ne must
believe in the opportunity enough to ma+e the necessary sacrifces. The
methodology for evaluating ris+s and rewards, fre(uently indicates that an
opportunity o2ers neither a fnancial nor a personal reward commensurate
with the ris+s involved.
/pportunity assessment plan
/pportunity analysis, or what is fre(uently called an opportunity assessment
plan, is one method for evaluating an opportunity. $t is not a business plan.
4ompared to a business plan, it should be shorter; focus on the opportunity,
not the entire venture; and provide the basis for ma+ing the decision of
whether or not to act on the opportunity.
An opportunity assessment plan includes the following: a description of the
product or service, an assessment of the opportunity, an assessment of the
entrepreneur and the team, specifcations of all the activities and resources
needed to translate the opportunity into a viable business venture, and the
source of capital to fnance the initial venture as well as its growth. The
assessment of the opportunity re(uires answering the following (uestions:
3 8hat mar+et need does it fll<
3 8hat personal observations have you e-perienced or recorded with
regard to that mar+et need<
3 8hat social condition underlies this mar+et need<
3 8hat mar+et research data can be marshaled to describe this mar+et
need<
3 8hat patents might be available to fulfll this need<
3 8hat competition e-ists in this mar+et< =ow would you describe the
behavior of this competition<
3 8hat does the international mar+et loo+ li+e<
3 8hat does the international competition loo+ li+e<
3 8here is the money to be made in this activity<
Phase.%: &evelop 5usiness Plan: A business plan is the written
description of the future direction of the business. $t helps entrepreneur in
Putting $deas together and Preparing 5.Plan &raft.
A good business plan must be developed in order to e-ploit the defned
opportunity. This is a very time.consuming phase of the entrepreneurial
process. An entrepreneur usually has not prepared a business plan before
and does not have the resources available to do a good job. A good business
plan is essential to developing the opportunity and determining the resources
re(uired, obtaining those resources, and successfully managing the resulting
venture.
3 5.plan ,ormat
!a# Title Page
!b# Table of 4ontents
!c# $ntroductory Page !>ame and address of business, and
promoters, >ature of 5usiness, tatement of fnancing
needs#
!d# E-ecutive summary
!e# &escription of $ndustry. $ndustry Analysis ! ,uture outloo+ and
trends, 4ompetitors1 analysis, *ar+et segmentation, $ndustry
and mar+et forecast#
!f# &escription of 5usiness !Product!s#, ervice!s#, i9e of
business, /0ce e(uipments and personnel, 5ac+ground of
entrepreneurs#
!g# ,unctional?/perational Plans
3 Production plan !*anufacturing Process, Physical Plant !@ayout and
@ocation#, *achinery and E(uipments, Production inputs and output
specifcation !6aw material, tools and consumables, suppliers#
3 /perational Plan !&escriptions of new business operations, ,low of orders
for goods?services, Technology utili9ation#
3 *ar+eting Plan!A).PB &escription !Product, Pricing, Place and Promotion
elements#, Product ,orecasting, 4ontrols#
3 /rgani9ational Plan !,orm of ownership, /rgani9ational structure &esign,
Cob &esign 7 &escriptions !6oles 7 responsibilities of members of
organi9ation#, *anpower plan, *anagement.Team bac+ground#
3 ,inancial Plan !tatement of fnancing needs 7 4apital structuring,
ource of fnancing details, tatement of application of funds, tatement of
fnancing wor+ing capital needs, 4ash 5udget, Proforma $ncome statement
and 5alance heet, 4ash 7 funds :ow projections, 5rea+.even analysis#
!h# Assessment of 6is+ and Dncertainty
3 $dentifcation of 6is+.aspects
3 Evaluate wea+ness of business
3 8/T analysis
3 4ontingency Plan
!i# Appendi- !5ac+up material#
3 @etters
3 *ar+et research &ata
3 @eases or contracts
3 Price lists from suppliers
'. &etermination of 6esource 6e(uirement
3 &etermine e-isting resources
3 $dentify 6esource Eaps and available uppliers
3 &evelop access to and procure needed resources
). *anage the enterprise
3 &evelop *anagement tyle
3 Dnderstand +ey variables for success
3 $dentify problems and Potential problems
3 $mplement control systems
3 &evelop growth strategy
Phase ': &etermine the 6esources 6e(uired.
Assessing the resources needed starts with an appraisal of the entrepreneur1s
present resources. Any resources that are critical must be distinguished from
those that are just helpful. 4are must be ta+en not to underestimate the
amount and variety of resources needed. The entrepreneur should also
assess the downside ris+s associated with insu0cient or inappropriate
resources.
The ne-t step in the entrepreneurial process is ac(uiring the needed
resources in a timely manner while giving up as little control as possible. An
entrepreneur should strive to maintain as large an ownership position as
possible, particularly in the start.up stage. As the business develops, more
funds will probably be needed to fnance the growth of the venture, re(uiring
more ownership to be relin(uished. The entrepreneur also needs to identify
alternative sup.pliers of these resources along with their needs and desires.
5y understanding resource supplier needs, the entrepreneur can structure a
deal that enables the resources to be ac(uired at the lowest possible cost and
with the least loss of control.
Phase ): *anage the Enterprise.
After resources are ac(uired, the entrepreneur must use them to implement
the business plan. The operational problems of the growing enterprise must
also be e-amined. This involves implementing a management style and
structure, as well as determining the +ey variables for success. A control
system must be established, so that any problem areas can be (uic+ly
identifed and resolved. ome entrepreneurs have di0culty managing and
growing the venture they created.