Community Media/IFEPAC/Entrepreneurship2

UNIT 2

A SUITABLE BUSINESS OPPORTUNITY

Introduction

A good business opportunity is one that has the potential of generating enough returns to recover costs incurred and earn some profit for the business owner. This unit intends to improve the ability of course participants to run truly profitable businesses. .

Aim

By the end of this unit, participants should be able to demonstrate the ability to select a suitable business opportunity in the business environment.

Objectives

By the end of this unit, participants should be able to:

1)Analyze their environment for a business opportunity; 2)Identify indicators of a viable business opportunity; 3)Illustrate methods of identifying business opportunities; 4)Prepare a simple business plan.

Reference Materials

1)A Guide to Starting and Managing a Small Business by Equity Building Society. 2)Learning about Small Scale Business Adult Education Teachers’ Guide Authored by Department of Adult Education, Kenya 2003. 3)Start and Manage Your Business Authored by Department of Adult Education, Kenya.

Study Activities

1)Reading Texts 2)Taking Notes 3)Question and Answer 4)Discussion

Content

Step 1: Scanning an Environment for a Business Opportunity

You may have most of the right entrepreneurial qualities and right attitude for self –employment, but unless you can identify a viable business opportunity, you may never succeed in business.

You may gather information about small businesses in your locality using one or more of the following means:

• • Interviewing people
  • Reviewing directories, newspapers, magazines, etc.
  • Personal observation
  • Soliciting suggestions or complaints
  • Exhibition and trade fares

With the information gathered through the above methods, identify one type of business and give three reasons as to why you have chosen it.

1.___________________________________________________

2.__________________________________________________

3._________________________________________________

Individual Activity

Visit a business owner in your area of interest or customers of existing businesses in the field you are considering or users of the product or service you are interested in. Use your discussion with any of the persons visited to state five reasons as to why you may start –up or not start up a business of the same kind.

Summary

The methods of identifying and evaluating a business opportunity include:

• Brainstorming i.e. generating as many ideas as possible.
• Observations
• Soliciting for information from individuals, newspaper and magazines etc.

Step 2: Identify Indicators of a viable Business Opportunity

When selecting a good business opportunity, you need to get all the facts right. You may need to consider the following facts when identifying a viable business opportunity.

• Wide market scope with enough customers who want the product and have the ability to buy.
• High return on investment through generation of good profit margin.
• Availability of raw materials and other resources that may be needed for business operations.
• Government policies and laws relating to the type of business.
• Special skills that may be needed to carry out business activities.
• Existing scope of financing the business especially at the start up stage.
• How easily you can dissolve the business in case this is necessary.
• Whether the business may require frequent or extensive changes in technology.

Activity

1)List three locations within your community where you can to set up your business. a)___________________________________________ b)___________________________________________ c)___________________________________________

2)For each location, list the needs of the community, consumers, types of goods and services required and whether you could fulfill these needs. Consider transport availability, access to roads utilities, convenience, labour supply, raw material supply, etc. You should evaluate these locations from first hand experience – get out and interview someone hiring or doing business in the area.

a)Location 1 i)________________________________________________ ii)________________________________________________ iii)________________________________________________ iv)________________________________________________

b)Location 2 i)________________________________________________ ii)________________________________________________ iii)_______________________________________________ iv)_______________________________________________

c)Location 3 i)_______________________________________________ ii)_______________________________________________ iii)_______________________________________________ iv)_______________________________________________

Summary

Business opportunity selection is a difficult undertaking and hence, the decision so made should have support from family members. You should have a lot of faith in your own judgment so as not to regret later. Base your decisions on facts and information.

Step3: Methods of Identifying Business Opportunity

List any possible business opportunities in your community.

1)__________________________________________________________________ 2)__________________________________________________________________ 3)__________________________________________________________________ 4)__________________________________________________________________ 5)__________________________________________________________________ 6)__________________________________________________________________ 7)__________________________________________________________________ 8)__________________________________________________________________

From the above listed business opportunities select the most viable business opportunities.

Give reasons as to why you have selected the business opportunity as the most viable 1)__________________________________________________________________

2)__________________________________________________________________

3)__________________________________________________________________

4)__________________________________________________________________ Check whether you can use the following methods to identify a business opportunity.

• Look at your community and pick one successful business person to be interviewed. The interview guide given below may help in determining his/her business opportunity?

a)What are the business opportunities? i)________________________________ ii)________________________________ iii)________________________________

b)Where can I identify a business opportunity? i)___________________________________ ii)___________________________________ iii)___________________________________

c)How can I identify business opportunities? i)___________________________________ ii)___________________________________ iii)___________________________________

d)Who can make me identify business opportunities? i)____________________________________ ii)____________________________________ iii)____________________________________

e) Which methods can I follow to help me identify business opportunities? i)____________________________________ ii)____________________________________ iii)____________________________________

f)What is the importance of identifying business opportunities? i)___________________________________ ii)____________________________________ iii)____________________________________

• Studying available information

a)Reading business directories b)Newspaper- advertisement section c)Magazines- Business section d)Surveying – study population growth and lifestyle - Study the environment - Study the shops that are selling different commodities.

• Observation i.e. the way of looking at things or events in the business world or environments.

• Listening for complaints or suggestions i.e. visiting business people in the community and enquiring from them what problems they are experiencing with the current products/services; what is making them happy and how do they suggest products/services be provided to make them happy.

Group Activity

Discuss in your group the different methods of gathering information about small business in your community e.g. -Interviews -Reviewing directories, newspapers, magazines -Observation -Soliciting suggestions / Complaints.

Discuss the situations in which these methods can be used more effectively.

Summary

Business opportunity is an idea that can be turned into business and it comes about after a thorough study or survey of your environment. Business opportunity can be identified through understanding a consumer market and what needs to be done to products or services to satisfy consumers. Specific methods are interviews, observations, asking for suggestions newspapers, magazines, soliciting complaints, etc.

Step 4: Preparing a Simple Business Plan=

A business plan is a written document that will organize and clarify your thoughts on how you will set up and operate your business. You may require the following issues to be clarified in your business plan.

• The experience and strengths you have to demonstrate;
• The product or service of the business
• The marketing strategies or tactics.

A business plan should have the following main parts:

1)Description of the business

- Identity of the business i.e. its name, location, and the owner, purpose for existence etc.

2)Marketing plan - Clarifying the possibility of making sales hence, identifying customers and competitors

2)Organization plan

- Clarifies how the business will be set up and managed i.e. types of ownership, relevant licenses and regulations to comply with.

4)Financial plans to clarify how much profit the business can make, how much money is needed to get started and how much money is needed to keep the business going until you make profits.

Activity

1)List three ways a business plan can help a potential entrepreneur. i)________________________________________________ ii)________________________________________________ iii)________________________________________________

2)Discuss the five parts of a business plan and prepare a business plan for a business of your choice.

Summary=

A business plan is your own vision as an entrepreneur of your investment of money, energy and time in your business. You are responsible for preparing your plan