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Chapter 2 2-1Copyright © 2007 by Nelson, a division of Thomson Canada Limited.

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Spotting Trends and OpportunitiesSpotting Trends and Opportunities

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Prepared byPrepared byRon KnowlesRon Knowles

Algonquin CollegeAlgonquin College


Business Plan Building BlockBusiness Plan Building Block

A business plan begins with the “big “big picturepicture”— the industry or market overview.

Chapter 2 will:Chapter 2 will:

Help you describe the industry and market trends—to see the big picture—for your business.

Show you how to expand your knowledge of customer needs and your market niche.

Help you begin writing the description of your business.ch

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Learning OpportunitiesLearning Opportunities

• Use mind mapping and brainstorming to discover business

opportunities.• Identify trends and market signals that will create opportunities.• Discover market forces that underlie the trends.• Understand how to analyze the potential for small business success by

applying the life-cycle yardstick to industries, products, services, and

locations.• Use diagrams and mind maps to explore market segmentation.• Determine what business you are really in.• Begin describing your business.


Recognizing OpportunitiesRecognizing Opportunities Welcome to the entrepreneurial age Welcome to the entrepreneurial age

A new craft economy distinguished by quality, small A new craft economy distinguished by quality, small customized quantities, technology, and service.customized quantities, technology, and service.

Where change creates opportunities for fast, flexible, and Where change creates opportunities for fast, flexible, and focused firms.focused firms.

To be successful you will need to conduct market research and To be successful you will need to conduct market research and constantly respond to the changing needs of the marketplace.constantly respond to the changing needs of the marketplace.

The best business ventures to pursue are those which:The best business ventures to pursue are those which:• You enjoyYou enjoy• Make use of your unique experiences, skills and aptitudesMake use of your unique experiences, skills and aptitudes• Serve a market needServe a market need


Idea Generator—Brainstorming

Brainstorming is:Brainstorming is:

A free and open exchange of ideas. A free and open exchange of ideas.

A powerful technique used to help identify market trends and A powerful technique used to help identify market trends and opportunities.opportunities.

Used by many entrepreneurs who often record their Used by many entrepreneurs who often record their brainstorming ideas using mind maps.brainstorming ideas using mind maps.

Successful when generated through an open, non-threatening Successful when generated through an open, non-threatening environment that stimulates the creative juices. environment that stimulates the creative juices.


Be a Trend Watcher

• Trends help identify growth opportunities• Five major trends small business must embrace

are:1. Globalization. Winning companies export. What are your

plans?2. Technology. How will technology give you a competitive

edge?3. Internet and E-commerce —How will you profit from this

connectivity?4. The Boomers. It’s a wave you can’t ignore5. Splintering of the Mass Market. How will you customize

your product or service?


The Splintering of the Mass Market

Today’s consumers are informed, individualistic, Today’s consumers are informed, individualistic, and demanding.and demanding.

5 key factors have splintered the mass market:5 key factors have splintered the mass market:

1.1. Shrinking middle classShrinking middle class

2.2. Shifting sizes of age groupsShifting sizes of age groups

3.3. New living arrangementsNew living arrangements

4.4. Ethnic groups are shifting and growingEthnic groups are shifting and growing

5.5. Improved information accessImproved information access


Trends Create Opportunities—Six Major Environmental Categories

Competition

Economic International

Technology

Social/ Cultural

People (demographic)


Trends Create Opportunities—Trends Create Opportunities—ExamplesExamples

Continued increase in dual-income families

Cocooning

Both adults working

Internet

Rapid expansion of ethnic diversity

Exercising for fitness

Corporate downsizing

TRENDS

Child care, private education, and home security systems

Home security

Teleconferences, fast-foods, and easy-to-fix meals

On-line shopping

Helping schools and business integrate

Attractive sports clothes

Helping people start their own business

OPPORTUNITY


Life-Cycle StageLife-Cycle Stage ExampleExample

Embryo (birth) Senior-Adult Day Care

Growth Internet

Maturity Microwave Ovens

Decline Tobacco Products

Life Cycle StagesLife Cycle Stages


Market SegmentationMarket Segmentation

• Market segmentation involves:Market segmentation involves:

Breaking down potential markets into as many similar sub-segments as possible.

Identifying opportunity gaps and seeing combinations of gaps that may constitute markets.

A good example is shown in Figure 2.5.


Know Your Real BusinessKnow Your Real Business

Software sales

Small business teaching

Auto manufacturing

Mattresses

Cameras

Gourmet cookware

Coffeehouse owner

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If you’re in...If you’re in... Try saying...Try saying...


Develop Your PitchDevelop Your Pitch

Begin to formulate your elevator pitch.

What is the market? How does your business satisfy this market

need? How do you, the business and the target

market benefit from this venture?


Checklist and Actions to Checklist and Actions to Develop Your Business PlanDevelop Your Business Plan

What trends will influence your small business idea?

What business are you really in?

What segment of the market will be your niche?

What gaps will you fill within that segment?

Is it a growth segment in a growth market?

Initially define your target market and determine how large that customer base is.

Identify the secondary sources you will use as part of your market research.

Does this business fit your vision and values?

Other than making money, what are the goals of your proposed venture? (You should be able to establish four to six over the next three years.)

For your business, what objectives do you wish to achieve in the next year?

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