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Introduction to Business

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CHAPTER TWO BUSINESS OPPORTUNITIES Seeing, seeking and acting on opportunities is one of the characteristics of successful entrepreneurs everywhere. It is also the basis for starting and maintaining successful ventures. It involves not only generating ideas and recognizing opportunities, but also screening and evaluating them to determine the most viable, attractive propositions to be pursued. WHAT IS A BUSINESS OPPORTUNITY A business opportunity may be defined simply as an attractive idea or proposition that provides the possibility of a return for the investor or the person taking the risk.

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Such opportunities are represented by customer requirements and lead to the provision of a product or service which creates or adds value for its buyer or end-users. However, a good idea is not necessarily a good business opportunity. For example, you may have invented a brilliant product from a technical point of view and yet the market may not be ready for it. Or the idea may be sound, but the level of competition and the resources required may be such that it is not worth pursuing.

Sometimes here may even be a ready market for the idea, but the return on investment may not be acceptable.

To underscore the point further, consider the fact that over 80% of all new products fall. Surely, to the inventors or backers the idea seemed a good one, yet clearly it could not withstand the test of the market. So, what turns an idea into a business opportunity? A simplified ansiwer is when income exceeds costs = profit. In practice, to be comprehensive you need to examine the factors listed and illustrated below. CHARACTERISTICS OF A GOOD BUSINESS OPPORTUNITY To be good, a business opportunity must fulfil, or be capable of meeting, the following criteria: •Real demand, i. . respond to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to exercise that choice. •Return on investment, i. e. provide durable, timely and acceptable returns or rewards for the risk and effort required. •Be competitive, i. e. be equal to or better – from the view point of the customer – than other available products or services •Meet objectives, i. e. meet the goals and aspirations of the person or organization taking the risk •Availability of resources and skills, i. e. e within the reach of the entrepreneur in terms of resources, competency, legal requirements, etc. Identifying and Assessing Business Opportunities Ideas and opportunities need to be screened and assessed for viability once they have been identified or generated. This is not an easy task, and yet at the same time it so important. It can make the difference between success and failure, between making a fortune and losing everything you had. Whilst the exercise does not guarantee success- but then nothing in this world does, except Divine intervention it certainly helps in minimizing the risk and thus the odds for failure.

Identifying and assessing business opportunities involves, in essence, determining risks and rewards/returns reflecting the following factors: •Industry and market: Is there a market for the idea? Are there are customers people with money who are able and willing to buy the product or service? Can you provide what they need or want? How many are there? •Length of the ‘window of opportunity’: Can you create or seize the opportunity whilst is lass? •Personal goals and competencies of the entrepreneur: Do you really want venture into the business? Do you have what it takes?

Are you motivated enough •Management team: Who else will be involved with you in the business? Do the have the experience, know-how, contacts or other desirable attributes required? •Competition: Who are your competitors? Do you have something customers was that your competitors do not have? For example, can you produce or market lower costs? •Capital, technology and other resource requirements: How much capital technology or other resources are required? Do you already have them or couple you get them? •Environment: Are the political, economic, geographical, legal, and regulator contexts favourable?

Will the business do any damage to the physical environment? The above questions are typical of the type of issues that need to be addresses. Responses to these questions will determine the attractiveness of any business opportunity. KEY SUCCESS FACTORS IN SETTING UP A SMALL BUSINESS Motivationidea and market And determination Entrepreneur Resources Ability Planorganization + management •The framework is adapted from Gibb, A. A. (1981). A workshop approach for •stimulating new enterprise development. Durham University Business School, UK. CHAPTER THREE

PROCEDURE FOR SETTING UP AND MANAGING ONES ENTERPRISE Process over view; -Product Identification -Identification of Basic Resources -Decide on the type of business organization -Take note of legal regulations and requirement. Also protect your intellectual property -Write Business Plan -Start operation PRODUCT IDENTIFICATION: What product/service to produce? -Venture Opportunity -Two major issues are most important •Look for a need (gap) and think up the product/service to satisfy that need •Determine the extent of the need to see if it justifies operationalizing the product/service idea. LOOK FOR A NEED Study existing industry in terms of supply and demand -Analyze population trends and demographic data (School items, women’s items etc) -Examine economic trends and policies -Analyze social changes -Study effects of legislation -Analyze the Nigeria and foreign environment relevant to the product. PRODUCT SELECTION CRITERIA -3 Criteria are important in selecting the product or service to produce -The product serves a presently unserved need -The product serves an existing underserved market -The product can successfully compete with similar products because of an ‘advantageous’ feature or characteristic (e. . price, quality, quantity etc) IDENTIFICATIN OF BASIC RESOURCES •These are mainly materials, money and men (The 3 ‘M’s) Raw Materials Requirements -Survey relevant natural resources available in the immediate environment -Ascertain adequate and continuous supply Machinery, Equipment and Premises Scan the environment to see if the machinery/equipment required to produce the good/service is available locally. Sources include Research Institutes like FIIRO, PRODA, trade missions and Embassies, Magazines and Trade Journals, trade fairs.

Determine the type of premises required. FINANCIAL REQUIREMENT •Personal Saving, Family Sources, Friends and relations •State Ministry of Commerce and Industry •Development Banks •Venture Capital Companies •Private Finances PERSONAL REQUIREMENT Scan environment for availability of different types and categories of labour required. (skilled, semi-skilled and unskilled. Type of Business Organization Decide on the type of business organization and fulfill the necessary statutory requirement for the choice.

Three main types available: Sole trade, Partnership and Company (limited and unlimited), please remember what thought you in the last semester about types o business organization. Below are the process involves; LEGAL REGULATIONS AND REQUIREMENTS Certain legislative requirements must be met: -Registration of Business -Business permit if applicable -Certificate of incorporation -Certificate of Compliance -Location approval Need to be familiar with factory Act, Labour Act, Workers Compensation Act; Standard Organization of Nigeria Act with respect to product.

Quality and quantity, environmental Act (Pollution Federal or State Environmental Protection Agency FEPA or SEPA) BUSINESS PLAN Develop your business plan There are four components: Marketing, Operation, Organization, finance. When the Business Plan is in Place and the resources are in place, operation can then start.. CHAPTER FOUR Meaning and Scope of Enterprise 1. An enterprise is any identified idea that is translated into a planned and satisfactorily implemented activity. 2. It refers to a business venture or undertaking 3. ractically all projects and undertakings can be referred to as enterprises if the following five steps are in place: a. idea b. identification c. planning d. implementation e. successful completion of an activity f. accepting the reward 4. You become are enterprising man or woman if you are consistent in systematically following the above process whenever you are involved in dealing with issues in your life. 5. By understanding the enterprise concept, you appreciate that most people have the potential to be enterprising, and that even you can set up your own business enterprise. . Being enterprising can bring benefits to you as an individual, and also help you to become a valued member of your family, community, place of work and society in general. 7. Being enterprising will enable you to achieve a great deal, and you will stand out in the crowd due to your attitude and systematic approach to issues. 8. adopting an enterprising approach will enable you to appreciate the challenges of life because you will generally be able o translate them into positive results. 9. to help you become enterprising, you will need the following tools: ENERGY 1.

Working hard, but also in a smart way, is key in entrepreneurship 2. To sustain this energy, you need to stimulate your brains and all your senses – sight, hearing, touch, smell and taste – so that they all stay alert in identifying what needs to be done in different situations. 3. You also need to be healthy and physically fit, and this can be achieved through appropriate diet and exercise. NEED TO ACHIEVE You have the motivation to achieve success and accomplish all the activities you engage in. your attitude and perceptiveness enable you to work towards acceptable results whenever you set out to do something.

This approach enables you to work harder than the ordinary man or woman. TASK ORIENTED You are convinced that to gain satisfying rewards tasks have to be well executed and completed on time. Efficiency, effectiveness and time management are important aspects that enable you to complete tasks. Being able to focus on results helps you to concentrate on whatever you set out to do. EMPATHY You are able to mentally put yourself in the position of the person or persons you intend to influence. You want to feel what they are feeling. You are able to put yourself in their shoes.

In the case of a business enterprise you are able to imagine how a potential customer would feel. RESOURCEFULNESS You are able to provide the leadership and guidance needed to realize the enterprise. Identification, mobilization and effective utilization of both the physical and the non physical resources needed in undertaking a venture are very important in the enterprise process. PLANNING 1. To be able to see the total picture of the enterprise in terms of why it should be set up, what needs to be done, how it will be done, who will do it and when it will be done, it is necessary to establish a written plan. . This will help to clarify the situation and permit decisions to be made as to whether to engage in activities that will result in an enterprise being set up or not. In the case of business ventures it is through planning that indication on whether there will be profits or loses will be made available. RISK-TAKING 1. The decision to go ahead and start the enterprise or undertake the activity mut be made only after you have done a certain amount of research, so hat in the end you are able to achieve the results, succeed and receive the rewards. 2.

You will always have to take this first step, as it marks the difference between enterprising and non-enterprising men and women. Success begins with the decision to start moving in the right and desired direction. INNOVATION 1. The ability to apply new ideas that will enable you to undertake activities differently is another hallmark of enterprising men and women. 2. Through individual initiative, imagination, intuition and insight you will be able to change things around or devise ways of doing things to accommodate whatever new situation you may find yourself in. 3.

Information on different issues and fields is an important input for being innovative 4. Enterprising men and women therefore place great value on information and are always alert and constantly engaging in research. SKILLS 1. Enterprising men and women have the ability or know how that enables hem to undertake and complete activities 2. Most men and women have a certain amount of knowledge, attitudes and practical skills that can be useful when realizing an enterprise. You should therefore evaluate the talents and level of skills you have and how they can be harnessed to realize an enterprise. 3.

Talents and acquired skills have to be constantly utilized and applied, otherwise they can also be forgotten and wasted. ENDURANCE 1. There are many challenges to be faced when trying to se up an enterprise. 2. Women face specific challenges, some of which are negative and discouraging 3. To ultimately realize the enterprise that will provide you with the rewards you desire, the ability to keep on track despite the many challenges along the way is critical 4. Patience, persistence and confidence are some of the attitudes you will need to adopt to enable you to endure the physical and mental challenges you may encounter.

DIFFERENT FORMS OF ENTERPRISE •Private vs Public •Profit vs Non-profit •Formal vs Informal •Individual vs Communty •Local vas Foreign •Business vs Social •Small vs Large •Manufacturing vs Service •Consumer vs Industrial ROLES OF ENTERPRENEURS IN BUSINESS 1. Promoters: Entrepreneurs are promoters because they can scan the environment, identify opportunities, marshal resources and implement the business idea. 2. PARTNERS: Entrepreneurs solicit the participation of other persons in a business project because of the following: a. The degree of success or failure . The complexity of a business idea may require more than one person to run it. c. The influence, experience and capacity of others may be useful, and d. Friendship or acquaintanceships may be consolidated through joint business association 2. Shareholders: Potential entrepreneurs would participate as shareholders under the following circumstances: a. When the enterprise requires too much investment b. When they do not want to commit their full time to the enterprise c. When risks may be reduced by spreading their investment portfolio, and d. When hey do not have the capacity to manage such an enterprise. DIRECTORS Entrepreneurs participate as directors by contributing positive ideas to advance the enterprise’s objectives. Such would include: a. ensuring compliance with all legal requirements b. safeguarding the interests of employees, especially women, particularly in the context of decent work c. safeguarding the interests of shareholders in the context of return on investment d. ensuring that business is conducted honestly and diligently, and is devoid of fraud and deceit e. Ensuring social responsibilities and expectation are met. ORGANIZERS

For an entrepreneur to effectively control or monitor operations and facilitate communication with workers, it is advisable to have an organizational structure for the enterprise. Organizational structures can be formal or informal, for instance: a. various members of a family are assigned various positions b. Various employed assistants are assigned administrative positions in the running of a small business. 5. Initiating ideas Entrepreneurs come up with new ideas. This is an important area for an entrepreneur as it determines his/her rate of expansion in business, e. g. new designs and use of products.

TAKING RISKS Entrepreneurs take risks in business, e. g. starting business which have an equal chance of success or failure. Resigning from a secure job to start a business is also risk-taking. PLANNING Entrepreneurs are aware of the importance of planning and of the limitations of planning in the context of the above roles. CONTROLLING Entrepreneurs are leaders rather than followers; they make the final decisions and control all aspects of business operations. COORDINATING Entrepreneurs most coordinate all the production factors needed in the business, i. e. capital, labour and land.

CHAPTER FIVE ENTREPRENEUERSHIP AND INNOVAION Introduction: •The importance of innovation, especially in a business enterprise, has been established long time ago. For example, •Joseph Schumpeter (1911), in his publication, “The theory of Economic Development”, described the motor of develop-ment as the innovation itself. •Peter Drucker alsowrote that, from the business management point of view, there are only two main tasks: marketing and innovation. That is, whereas the marketing function is to satisfy current needs of the consumers, innovation goes further to satisfy consumers future needs. Therefore, it can be concluded that without ability for constant innovation, enterprise disappears once the consumers’ needs, technology or competition changed. Issues in an Innovation •The most important force behind the dynamism of capitalism is the firms’ generation of new consumer products, new methods of production and transport, new markets, and new systems of industrial organization (Schumpeter, 1935). •Hence, innovation is at the heart of economic development •However, the factor which is responsible for establishing these new combinations is entrepreneurs. •Innovation is therefore the centre piece of entrepreneurship.

This is because an entrepreneur is somebody who establishes new combinations, thus fulfils the entrepreneurial function. •The essence of innovation is to fulfill the entrepreneurial function of making new combinations. •Successful entrepreneur in the present day knowledge economy depends on the ability to mobilize and combine knowledge and expertise for innovation. Invention and Innovation •For the purpose of clarity, it is important to make a distinction between innovation and invention. •Invention is the first occurrence of an idea for a new product or process, while the innovation is the first attempt to carry I t out into practice.

In other words invention is a new product, where as innovation is a new value •Hence, one of the characteristics of the innovation is that innovation is a continuous process. Innovation has been studied in a variety of contexts, including in relation to technology, commerce, social systems, economic development, and policy construction. However, a consistent theme is identity, as innovation is typically understood as the introduction of something new and useful, for example, introducing new methods, techniques, or practices or new or altered products and services. INNOVATION DEFINED

For the purpose of this course, innovation is defined as: The renewal and enlargement of the range of products and services and associated markets; the establishment of new methods of production, supply and distribution; the introduction in changes in management work organization, and the working conditions and skills of work force. •Inherent in this definition are the various types of innovation, which include introduction of: •New products (Product innovation), which refers to any new or improved product, equipment or service that is introduced in the market. •New methods of production (Process innovation).

While product innovations create new products and services, process innovations however reduce the cost of producing existing products or enable the production of new products. Here a process innovation is defined as an investment into a company’s skills and resources, which allows the company to bring about product innovations. •New ways to organize business (Organizational Innovation). This refers to the introduction of new approaches to managing or organizing the firm. It is therefore the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation. Other areas where innovation can be created are: •In the discovery of new sources of supply •The exploration of new market •Furthermore, there are various classifications of innovations according to degrees of innovativeness •One distinction is between: •Radical (or revolutionary) innovation, which is a newly marketed product whose functionality, technical construction, performance characteristics, design and use of materials and components is new or substantially changed. For example, introduction of compact disc (CD) was a radical innovation in the music and film industry. Incremental (or evolutionary) innovation, which is an existing product whose technical characteristics have been enhanced or upgraded. The introduction of 32- bit chips to replace 16-bit chips, or an upgrade from Pentium I through to IV is an example. SOURCES OF INNOVATION •The source of the innovation can be described as the system of factors that are shaping innovation at the firm level, and is referred as the innovation dynamo. •There are several ways through which innovation can be created: •It may be in the form of invention.

Research and Development (R&D) is a major contributor to innovation, generating a flow of technical ideas and continually renewing the pool of technical skills. •An enterprise may be innovative by taking an idea from another business sector and adapting it for use in its own production processes or market •The search for new, untapped, market space is another driving force. This may rely on technological innovation or on reconfiguring existing products and services so as to present a radical change that will be perceived by customers as offering more or better value (“value innovation”). It may be through introduction of a comprehensively new approach to a business, such as new business models of on-line retailers, with the objective of creating new market space or increasing profitability in an existing market. •Therefore, according o Organization for Economic Cooperation and Development (OECD) (1997), a firm which wants to innovate can be categorized into three groups: Strategic, R&D and non- R&D. •Strategic:- Constantly making decisions concerning the types of market to serve, or create, and types of innovations to attempt there. •R & D: This includes experimental development that goes beyond an applied research.

This could be: •* Basic research for expanding knowledge about fundamental processes related to the production processes in the firm; •Strategic research (research with industrial relevance but no specific application) to broaden the range of applied projects that are open to the firm, and applied research to produce specific inventions or modification. •Develop product concepts to judge whether they are feasible and viable, a stage which involves: (i)Prototype design (ii)Development and testing; and (iii)Further research to modify designs or technical functions •Non- R & D: These are activities that do not have straight forward relation to

R & D, and are not defined as R & D, yet play a major role in corporate innovation and performance. Included here are: •Identification of the new product concepts ad production technologies: •i. via marketing side and relations with users; •ii. Via the identification of the opportunities for commercialization resulting form firm’s own or others’ basic or strategic research •iii. Via design and engineering capabilities; •iv. By monitoring competitors; •Development of pilot and then full scale facilities; Human skills relevant to the production can be developed (through internal training) or purchase (by hiring) or tacit and informal training – “learn – by – doing” •Investing in process equipment or intermediate inputs which embody the innovative work of others (components, machines or entire plant); •Management systems, production system and its methods reorganization including new types of inventory management and quality control, and continuous quality improvement •Purchase of technical information, paying fees and royalties for patented inventions (which usually require research and engineering work toadopt and modify) engineering and design consultancy of various types; •Internal Innovation: By using firm’s own resources and capabilities to innovate •Cooperating to Innovate: When two or more firms form an agreement to join some other resources and capabilities to innovate •Acquiring Innovation: Through buying ownership of another firm’s innovations and innovation capabilities. •Spillover: This occurs when there are changes in technological capabilities of the domestic firm due to the presence of foreign firms. This could arise as a result of: •Competition •Labour mobility Backward or Forward Linkages •Demonstration effect CHAPTER SIX GOVERNMENT SCHEME FOR HELPING ENTREPRENEURS Government Policy on small and Medium Enterprises (SMEs) on the economic development front, NEEDs and now the 2nd NEEDS (2008-2011) are anchored on private sector as the engine of growth. The Nigerian private sector enterprises cover a wide range of types as distinguished by various criteria, such as: Size, Sector, Ownership Structure, Employment and Technology. As regards Micro, Small and Medium Enterprises (MSMEs), the following are recognized in the national policy: •Cottage Food Processing Enterprises •Cottage Arts and Crafts •Textiles and Clothing Wood Processing and Furniture •Leather and Leather Products •Basic Metal, Metal Fabrication and Engineering Enterprises •Solid Mineral Enterprises •Electronic and Information Technology Enterprises •Building and Construction Enterprises •Oil and Gas Related Good and Services •Entertainment Enterprises •Women – Owned Enterprises •Youth – Owned Enterprises •Special enterprises for the physically challenged •In recognition of the importance of SMEs component in achieving growth and sustenance of the Nigerian Economy, the following are the Schemes and strategies for helping entrepreneur in SMEs; 1. The Small and Medium Enterprises Equity Investment Scheme (SMIEIS).

Under this scheme banks are mandated to set aside 10. 0% of the profit before tax for SME’s finance. It has been in operation for the past four years; 2. National Credit Guarantee Scheme:- Conceived to help mitigate risks associated with lending to SME’s. 3. Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) •The agency was established in 2003 to nurture the Micro, Small and Medium Enterprises Sub-sector to operate efficiently and enhance sustainable economic development of Nigeria. •It is expected to facilitate the access of Micro, Small and Medium Entrepreneurs/investors to all resources required for their development. •Among the programs of SMEDAN are: 1.

Enterprise Development – This involve provision of entrepreneurial education and training for business plan development, marketing and Accounting to enhance competitiveness; 2. Business support/information Services – To ensure access to necessary information to make informed business decision 3. Advisory and Advocacy Services – Coaching, Counseling, mentoring, and serving as voice for the MSMEs. 4. Market Development – Trade fair exposition to expose MSMEs to market opportunities. 5. Business Linkages – run programmes targeted to link MSMEs with leasing firms, large enterprises for out sourcing opportunities, promotion of clusters and self help groups. 6.

Engineering and Technology Development Services – Programmes to up-date local technology and promote current technology to enhance competitiveness 7. Access to Finance – this is done through: -Assistance to prepare bankable business plans. -Appraisal and recommendation of MSME’s projects to partner financial institutions. -Collaboration with promoters of specialized (miro) finance schemes for the benefit of MSMEs. 8. Other Institution in SMEs promotion are: 1. Micro-finance institutions 2. Cooperative Societies 3. Different Local government initiatives – involving distribution of machines, motorcycles and other assets to promote SMEs initiative in Local communities.

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Introduction to Business. (2018, Jun 10). Retrieved from https://graduateway.com/introduction-to-business-essay/

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