CHAPTER 2:

OPPORTUNITY
SEEKING, SCREENING,
AND SEIZING
2.1 OPPORTUNITY SEEKING
Entrepreneurs are innovative opportunity seekers.
They have endless curiosity to discover new or
different ideas and see whether these ideas will work
in the marketplace.

Entrepreneurial Mind Frame, Heart Flame and Gut

Game

The entrepreneurial mind frame allows the

entrepreneur to see things in a very positive and
optimistic light in the midst of crisis or difficult
situations.
If there is one commonality between an inventor and
an entrepreneur, it is their surging passion or the
entrepreneurial heart flame. Passion is that great
desire to attain a vision or fulfill a mission. Heart
flame is also about emotional intelligence or EQ,
which is often manifested in the entrepreneur’s
efforts to nurture relationships with customers,
employees and suppliers.

The final ingredient is the entrepreneurial gut game

which refers to the ability of the entrepreneur to
sense without the use of five senses also known as
INTUITION.
THE MANY SOURCES OF OPPORTUNITIES
 Macro Environmental Sources of Opportunities
The macro environment refers to the ‘’big or macro
forces’’ that affect the area, the industry and the
market, which the enterprise belongs to. It is divided
into five categories composed of the Social, Political,
Economic, Ecological and Technological dimensions
or SPEET.
1. Socio – cultural Environment
It includes the demographics and cultural
dimensions that govern the relevant entrepreneurial
endeavor.
2. Political Environment
Defines the governance system of the country or
the local area of business. It includes all the laws,
rules and regulations that govern the business
practice as well as the permits, approvals and
licenses necessary to operate the business.
3. Economic Environment
Supply and demand forces mainly drive the
macro economic environment. They are the same
factors that drive the interest and foreign exchange
rates that fluctuate with the movement of the
market forces.
4. Ecological Environment
Includes all natural resources and the ecosystem,
habitat of men, animals, plants and minerals. This
growing awareness would become a factor for
countries, industries and businesses.
5. Technological Environment
New scientific and technological discoveries,
which often lead to the launch and
commercialization of new products with superior
attributes or to rendering the old ones obsolete, are
the entrepreneur’s nightmares.
 Industry Sources of Opportunities
The next biggest sources of opportunities are the
industry and market. One of the most difficult aspects
about industry analysis is defining what constitutes an
industry in the first place.
Participants in an industry include:
1. Rivals or competitors in a particular type of
business
2. Suppliers of input
3. Consumer market segments being served by rivals
4. Substitute products or services
5. All other support and enabling industries
 Market Sources of Opportunities
The entrepreneur must also be able to measure
the actual demand and supply as well as the
potential demand and supply of the industry that
the enterprise belongs to. Equally important is the
monitoring of the prevalence of product substitutes
and their market impact on the existing players in
the industry. Market traits, characteristics and
behavior are identified in order to match these
customer traits with the product offerings of the
enterprise.
 Micromarket
Micromarket refers to the specific target market segment
of a particular enterprise. These are the target customers
that represent the immediate customers of an enterprise.
It likewise pertains to a clearly defined location or
specific customer group that an enterprise wishes to
serve.
 Consumer Preferences, Piques and Perceptions

Consumer Preferences refers to the tastes of particular

groups of people.
Consumer dislikes refer to the things that irritate
customers.
Either way, the entrepreneur can explore opportunities
brought about by consumer preferences or dislikes.
 Other Sources of Opportunities
1. Customer preferences change over time.
2. People’s tastes in clothes, music, shoes,
entertainment, dance, sports, hobbies, and even
careers have evolved over the years.
3. What piques customers is a great source of
opportunities.
4. Before the customer is won over, there is first battle
for the mind. Next, there is a battle for the heart.
Finally, there is a battle for the wallet.
5. The longer the customer wants to use the product, the
greater the chances of creating lasting loyalty.
6. Opportunities abound in shaping consumer
perceptions or occupying spaces in their minds or
places in their hearts that have not yet been filled.
7. New inventions, new systems and work processes,
new insights about the human psyche, new
applications for old knowledge, new revelations about
how the physical world works, new interpretations,
new combinations based on the convergence of
previous technologies, new outlooks about how life
should be led, and a host of the other new things are
tremendous sources of opportunities.
8. Determining personal preferences and competencies
lay the foundation for a new business venture.
9. Unexpected occurrences in both the external and
internal environment of the enterprise indicate that
significant changes are happening and opportunities
are sprouting.
2.2 OPPORTUNITY SCREENING
It is important to come up with a short list of a
few very promising opportunities, which could be
scrutinized in detail.
The Personal Screen
1. Do I have the drive to pursue this business
opportunity to the end?
2. Will I spend all my time, effort and money to
make the business opportunity work?
3. Will I sacrifice my existing life style, endure
emotional hardship, and forego my usual
comforts to succeed in this business opportunity?
THE 12 Rs OF OPPORTUNITY SCREENING
1. Relevance
2. Resonance
3. Reinforcement of Entrepreneurial Interests
4. Revenues
5. Responsiveness
6. Reach
7. Range
8. Revolutionary Impact
9. Returns
10. Relative Ease of Implementation

11. Resources Required

12. Risks
The Pre-Feasibility Study
The idea is to focus on a few key items that could
make or break the business concept. This time, the
entrepreneur must go down to the details and take
time to consider the following factors that are
contained in a pre-feasibility study:
• Market potential and prospects

• Availability and appropriateness of technology

• Project investment and detailed cost estimates

• Financial forecast and determination of financial

feasibility
Market Potential and Prospects
Market potential is based on the estimated number of
customers who might avail of the product or service.
The customers would oftentimes, make the final choice
on what to buy according to several factors such as (1)
Purchasing power or disposable income (2) Proximity
or accessibility to the goods or service (3) Individual
desires and preferences (4) Age or general grouping (5)
Social, cultural or ethnic background (6) Peer group
preference (7) gender (8) season of the year (9) personal
identification with trend setters (10) educational
attainment (11) technical proficiency and product
expertise (12) motivational impetus (13) lifestyle
preferences (14) susceptibility to certain advertising
and promotional appeals and many others.
Segmenting the Market
Using a set of demographics (gender, age, place of
residence, income class, etc.) will be the most
basic approach in determining the target segment.

Assessing Competition
Market potential is also affected by the number of
establishments supplying and serving your target
customers. This process would determine how
saturated the market is in the given area of the
coverage. The more suppliers and competitors
there are within confined area, the greater the level
of saturation.
Estimating Market Share and Sales
After estimating the number of potential target
market or segment, the nest thing that the
entrepreneur should assess is the potential market
share he or she can attract. The final task of the
entrepreneur in this portion of the pre-feasibility
study is to determine what slice or share of the
targeted market segment he or she wants to carve
out. Having determined the forecast or derived
market share, the entrepreneur should then
estimate potential sales. The sales forecast can be
computed using the following formula: (Estimated
Sales Volume x Estimated Price)
Technology Assessment and Operations Viability
In order to get the enterprise going, the
entrepreneur must go through the intricacies of
detailing the operations that would be required by
the business, which also includes technology
assessment. There are at least four target customer
expectations affecting the scale and complexity of an
enterprise’s operations:
1. Quantities demand
2. Quality specifications demanded
3. Delivery expectations
4. Price expectations
Investment Requirements and Production/Serving
Costs
The entrepreneur needs to determine how much
money is needed to start the business opportunity
with consideration to the technologies and operating
levels required. In this respect, there are three
investments that need to be funded:
1. Pre-Operating Costs
2. Production/Serve Facilities Investment
3. Working Capital Investment
 Employee salaries, wages and benefits

 Rent and lease expenses

 Utilities, Transportation, Fees and Licenses,

Commissions and Other Office Supplies

Financial Forecasts and Determination of Financial
Feasibility
Financial forecasts refer to the monetary transactions
that the business is expected to engage in. Financial
forecasting calls for the creation of the four critical
financial statements namely: (1) income statement (2)
balance sheet (3) cash flow statement and (4) funds flow
statement

(1) INCOME STATEMENT

Is a financial statement that measures an enterprise’s
performance in terms of revenue and expenses over a
certain period. Simply put the formula is:
REVENUES – EXPENSES = INCOME OR PROFIT
(LOSS)
(2) BALANCE SHEET
Assets represents all the investment in the enterprise
including the initial investments that you considered
in the pre-feasibility study (investment requirements).
Financing the assets or investments are the liabilities
and equity. Liabilities represent the enterprise’s
debts to suppliers, to banks, to governments, to
employees and other financers. Stockholder’s equity
represents the investor’s investments in the stock (or
shares) of the business.
The balance sheet equation is:
ASSETS = LIABILITIES + EQUITY
Financial Ratios and Measurements
In any business endeavor, the investor or the
entrepreneur himself or herself will always be
interested in knowing the payback period or how long
will it take for him or her to get back what he or she has
invested in the enterprise. This will only be possible if
the entrepreneur can come up with financial
statements. The income payback period can be
computed as follows:
____TOTAL INVESTMENT_______
PAYBACK PERIOD = ANNUAL NET INCOME AFTER TAXES
INCOME PAYBACK PERIOD = 1,500,000/500,000
= 3 YEARS
In the cash Payback period, the entrepreneur should
add back the non-cash deductions from the income
statement, which is the depreciation expense. Thus, if
the depreciation expense is Php250,000 a year, the net
income after taxes plus depreciation would amount to
Php750,000 a year.

There is also the return on sales (ROS) ration where the

entrepreneur calculate show much profit the enterprise
is earning for each peso sold. The formula is as follows:
NET PROFIT AFTER TAXES
RETURN ON SALES = SALES
RETURN ON SALES = 500,000/5,000,000
= 10%
Furthermore, if the entrepreneur is interested to
know the return on the investments made, which
come in the form of assets, then he or she can
compute for the return on assets (ROA) OR return on
investments (ROI) shown by the formula:
NET PROFIT AFTER TAXES
ROA or ROI = TOTAL ASSETS/INVESTMENTS
500,000
ROA = 1,500,000 = 33%
The Feasibility Study
A feasibility study is prepare to convince bankers and investors
to put money into the business opportunity. As compared to pre-
feasibility study, a feasibility study is more comprehensive and
detailed.
1. A more in depth study of market potential to ensure that
the business proposal will reach the forecasted sales figures
2. Proof that the product or service being offered has the right
design, attributes, specifications and preferred features
3. Proof that the entrepreneur and his or her team have the
necessary experience, skills and capabilities to maximize
the venture’s chances of success
4. Legal visibility
5. More detailed costing on the different assets and more
justification for the production and operating expenses and
6. More thorough analysis of the technology and its
sustainability
2.3 OPPORTUNITY SEIZING
After Opportunity seeking and screening, the entrepreneur is ready for
Opportunity Seizing, the final stage. It is the idea of where to locate the
business and how he or she will market the product or service.
‘’Will I be able to manage, to my advantage, the critical success factors and
avoid the critical failure factors?’’

Crafting a Positioning Statement

Going through the process of questioning, the entrepreneur will be able
to come up with each of the competing products’ Main Value Proposition
(MVP) and form there, work on his own positioning. The following key
points can help out the entrepreneur on how to go about this ‘questioning’
1. What are the main customer segments?
2. What are the different product attributes and features of each of the
competitors?
3. What are the existing marketing practices of the various competitors?
4. What are the market preferences of consumers when it comes to the
products being offerred?
Conceptualizing the Product or Service Offering
After making an assessment of the competing products, the
entrepreneur must then conceptualize his or her own products.
A concept is an idealized abstraction of the product or service to
be offered to the preferred market of the entrepreneur.
1. The first is to create a concept similar to the winning
products in the marketplace and ride with the obvious
market trends.
2. The second is to find a market niche that has not been
filled by the competitors
3. The third is to conceptualize a product in a positioning
category where the participants are rather weak.
4. The fourth is to conceptualize a product that would change
the way the customer think, behave and buy, thus making
existing products ‘’obsolete’’ and ‘’old fashioned’’
Designing, Prototyping and Testing the Product
Designing means that the entrepreneur must
render the concept and translate it into its very
physical and very real dimensions (measurement).
This entails building a prototype of the product that
will be ready for actual testing by the entrepreneur
and then, later on subject to testing by potential
customers through focus group discussions (FGD),
surveys, product demonstration sessions and the
like.
Implementing, Organizing and Financing
First is to choose the correct technology, the one that
would produce the output that would meet the quality
specifications of the customers.
Second is to choose the right people who can perform the
technical and the managerial functions necessary to
realize the desired end results.
Third is to design the operating workflow that would
assure the effective, economical, and efficient production
of the output.
Fourth is to specify the systems and procedures that
would govern the enterprise, motivate and discipline the
work force, and satisfy the customers.
Fifth is to design the organizational architecture that
would allow the people to function at their best.
The End…