Entrepreneurship - Rhonda Abrams

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       Entering a Mature Industry: How Zipcar Created a New Business Model

      

Critical Thinking Exercise

       Wouldn’t It Be Nice If…?

       learning objectives

       In this chapter, you’ll learn how to:

      ■ Recognize business opportunities within specific industries

      ■ Understand the factors that contribute to a successful business concept

      ■ Identify the factors that differentiate a company from its competitors

      ■ Distinguish between a practical, viable business and a highly successful one

      ■ Articulate a concept for an actual business

      ■ Choose a business model

      ■ Conduct a feasibility analysis—the opportunity to ask yourself some tough questions, and to modify, refocus, or change your idea if necessary

      ■ Develop a product prototype

      Business opportunities are all around you. You may be impatiently standing in line waiting for a service, or frustratingly using a product you think is inferior, or working for a big corporation you feel overlooks potential customers, and suddenly you realize—“there must be a better way.” And there’s your business opportunity.

      Interestingly, most solid, profitable businesses are developed from rather mundane ideas. While it might take a Levi Strauss to invent blue jeans or a Steve Jobs and Steve Wozniak to create a personal computer, many other businesses are required for selling jeans or providing services, software, and components for computers. That could lead you to start a company like the Gap (which began by only selling Levi’s) or Adobe Software (used by scads of graphic designers who also loved Mac computers). Many great business opportunities are to be found building on others’ concepts, and they do not require strikingly new ideas.

      Granted, if you hope for a huge investment from professional venture capital firms, you’ll probably need a big, bold, market-changing idea. Those ideas create and change industries, and economies depend on entrepreneurial inventiveness. If you’ve got a great, new idea, you may be able to change the world.

      But you don’t have to be the most inventive or original person to become a highly successful entrepreneur. Planning a business around a totally new concept can be more risky than building an enterprise on more commonplace possibilities. After all, many business opportunities lie out there.

       Are you an industry insider?

       Precisely because they are so immersed in a particular product or service industry, some people see opportunities that others less familiar with the territory would miss. For example, no one would be in a better position to know what types of new kitchen utensils would be useful for restaurants than a working chef. Likewise, a manager of rock bands might see the need for better software to track bookings and billings than would a software engineer. No matter what your industry or area of expertise, you should be constantly looking to spot these kinds of opportunities.

      A business opportunity occurs when you see a chance to provide a product, service, or information to other people. What you provide can be something new. Or it can be a better or cheaper version of an existing product or service, or just a more convenient way of delivering an existing product or service. In its most basic form, an opportunity means that something is missing from current market choices, and that circumstances are ripe for taking advantage of that lack.

      Lots of business opportunities exist, but that doesn’t mean they’re all viable. To be viable, an opportunity must lead to a sustainable business, one that

      1. Is profitable, that is, it can bring in more money than it costs to operate

      2. Reaps profits of sufficient volume to meet your financial goals

      A lot of business ideas simply can’t be made profitable. Others are profitable but don’t generate sufficient income to support the entrepreneur, much less employees. Often solo inventors or craftspeople, who may create a much-needed or desirable product or service, find the market so small or so expensive to reach, that they can’t generate enough revenue to make producing their wares worthwhile.

       en·tre·pre·neur·ship key terms

       B2B

      A business that sells a product or service to another business, either for that company’s own use or for that company to resell to consumers.

       B2C

      A business that sells a product or service directly to the consumer or end user.

       Business model

      Describes what a company does and the structure it puts into place to make money. Business models include designing and manufacturing a product that is sold to other businesses (B2B); providing access to a software application online and selling it on a subscription basis; or providing a marketplace online for people to sell their products or services and charging a commission on sales.

       Feasibility analysis

      A preliminary study undertaken to determine whether something is viable, and whether to proceed.

       Niche

      A specialized, clearly identifiable group within a larger target market that a company chooses to focus on and serve.

       Opportunity identification

      Discovery and evaluation of conditions that could potentially lead to a successful business. These conditions include changes in the market, such as customer preferences, trends, or purchasing patterns, and changes in the competitive landscape, such as when competitors leave the market or weaken. In many cases, opportunities can be identified by understanding how new technology, new distribution channels, new business models, or new emerging markets can be leveraged.

       Prototype

      The initial design that will become the standard for your production.

       Shared ownership model

      With this type of business model, a company provides a product, a service, or information to a group of customers who do not need access to the commodity so frequently that they need or want to own their own personal version. In other words, several people “share” one commodity.

       Subscription model

      With this type of business model, customers receive and pay for a product or service on a regular, ongoing basis, usually monthly.

      In looking at where business ideas come from, entrepreneurs usually report that their business inspiration came from one or more of the following.

      ■ Previous work experience. Many entrepreneurs get their inspiration when they realize that they could offer something

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