Chapter 2---Understanding Entrepreneurship
Identifying an opportunity and accessing resources to capitalize on it.
Small business – owner-managed, not dominant in market, <100 employees
o 97.8% of all businesses in Canada are small
o Contribute >26% annually to GDP
o Provide more jobs than large businesses
o New ventures lead in new products and services
Three main steps in Entrepreneurial Process:
1) Influenced by PEST
2) Successful only when entrepreneur, opportunity and resources match.
3) Begins with entrepreneur identifying an opportunity then accessing
o Weeding out bad ideas
o Save times, money
Three-Step of "Screening" Process
(PS: Screening for viability & competitive advantage.)
(1) Idea creates or adds value for customer.
Solving a problem, meeting a need.
o the problem is significant enough, don’t create ideas that is already
Customers are willing to pay for it.
(2) Idea provides a competitive advantage that can be sustained.
Product is unique in a valuable way or is better than others.
o How is it different and better from existing products and substitutes? If
your good is commodity it means it’s the same with others.
o Are differences valuable to customers?
o Is it something that existing firms can easily do or may want to imitate
Can the idea be protected legally?
Ex: Patten, a new manufacturing process, made the competitors
difficult to copy because the huge cost of changing new product (3) The idea is marketable and financially viable.
Are there enough customers who are willing to buy it? What is the market
demand likely to be? Where would you sell it?
Who are the key competitors and what are the forces that affect
Is the market growing, shrinking, concentrated, fragmented?
o concentrated means only having a few dominant players (monopoly )
Safety point: does the idea have low exit costs?
Long time to profitability? OR Greater up-front investment needed? = riskier
VIDEO: APPLYING THE SCREEN: GREEN GYM
1) Solve the safety problem, solve the monitory problem, children, obesity, lose
2) Chinese, cheap labor
3) Social obesity
How to "Screen"?
Using PEST analysis to assess environment. Is it supportive of your idea?
Using Five Forces to determine ease of entry and profitability of
Using Five Forces, PEST, and market exploration to ensure uniqueness of
Using research of market (library databases) to evaluate how bi