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Chapter_3_Defining_Opportunity_Jan_19_2009

Chapter_3_Defining_Opportunity_Jan_19_2009 - CHAPTER 3...

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C HAPTER 3 D EFINING Y OUR O PPORTUNITY "Starting a new business happily taps into our spirit as well, because the process enlivens our heart and fuels our imagination--the linchpins of our existence. As an entrepreneur, your work is an expression of yourself. Without your ideas, beliefs, fortitude, skills and sense of adventure, your business cannot succeed." R. Wolter ( Entrepreneur's Start-Ups magazine, December 2002 ): 3.0 E NTREPRENEUR ' S D IARY Most games are not won because one of the players knows the rules better than the others. Most of us will soon know the rules of the entrepreneurship game (especially after you finish reading this text), but only a few of us who want to be successful entrepreneurs will become one. Why is it that some coaches seem to be consistent winners, even though the talent pool available is fairly similar? I think it is mostly doing your homework. That's what this chapter is about---doing the necessary preparation before launching your business. This is not fun, this is work. Understanding your market is probably the key aspect to creating a successful company and therein recognizing whether or not you have a winning product. Your market analysis will be a key part of your business plan But how do you analyze a market that does not exist? Markets always exist, they may be untapped, but they do exist or are ready to be created. Henry Ford could not analyze the market for automobiles when he was ready to start cranking out those Model T's but Ford knew quite well that there were markets for horses, carriages, trains, and other forms of transportation that he was going to try to capture. You will often have to use your imagination in trying to define and analyze your market. Guest speakers are often invited to university classes to talk about how they successfully launched their business. Almost invariably the speaker will start out by describing his previous involvement in some particular industry. And then, while involved in this previous business 1
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life and in the process becoming extremely knowledgeable about its market and associated dynamics, an opportunity was recognized. The rest of the story goes on to describe how financial success was achieved. The stories may vary in particulars, but always seem to revolve around success being highly correlated to really knowing the market that one was about to compete in or against. There really is no substitute for knowing your market. Potential investors will often go to the market analysis of your business plan first to see if they think you have identified a significant market opportunity. You must convey complete knowledge of your market to be a successful fund raiser and to execute a successful business strategy. 3.1 M ISSION S TATEMENTS You probably think you have a pretty clear idea of what your business is all about, right? OK, then tell me what your business is all about in one sentence. This single sentence represents your mission statement. I think one of the most critical things you can do at the
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