Entrepreneurship, as the definition goes according to Oxford Dictionary, is the activity of setting up a business or businesses, taking on financial risks in the hope of making a profit.
Entrepreneurship serves as a great opportunity for the youth to create opportunities for themselves and others. When we look at the employment data, one can only be overwhelmed because of the fact that only a fraction of young people are gainfully employed.
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The Institute of Social, Statistical and Economic Research (ISSER) came out with some data some years back which revealed that about 10% of tertiary graduates are able to secure jobs in their first year of graduation. And it would take the remaining 90% up to 10 years to gain jobs.
In order not to fall under this, you may choose the path of entrepreneurship. Entrepreneurship is very fascinating, can be scary and exciting at the same time. But for those who are willing to carve their own paths, by building their own business, you need an idea.
If you should ask anyone if it has ever crossed their mind to start a business of their own, you will probably receive a ‘yes’ as an answer.
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But why is it that these people haven’t started their businesses yet? Many will complain that lack of capital has hinder them from starting business of their own.
Starting a business often seems like it’s all about the money. But the problem is lack of business ideas. There are people who want to start a business but don’t have any business idea in mind.
How do you start a business when you lack business idea?
The more common problem isn’t a lack of money but rather lack of ideas and resourcefulness. A resourceful person can do more with little but if someone who isn’t resourceful can hardly do much with abundance. This is why the business idea matters a lot.
Sometimes, you may even have to use a minimum viable product to gain insights into the customers and how a good product should be. Most big businesses started small. Big things come with patient. Start small, focus on big things later.
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It is very beneficial to start small and sometimes even when you have the means to start big, you need to do something small. Many big businesses we see or hear of today started as small businesses years ago. Starting small is often despised but it is the foundation.
How to recognize business/entrepreneurial opportunities
Business ideas can be very hard to recognize. There are people who has the capital but has no business idea. There are others who have the idea but lack the capital to start.
Instead of simply feeding you with some tricks, I want to open you up to entrepreneurship so that you understand what at all is entrepreneurship.
The basis of entrepreneurship is the entrepreneur. Dangote was influenced by his Grandfather’s trading activities.
Osei Kwame Despite returned to Ghana from Nigeria with a chainsaw and a CD player. He started a chain saw business but lost his chain saw on his first day. He then relied on his CD player, used it to sell CDs then used the proceeds to go into media and trading.
What I am going to expose you to today is not just how to spot entrepreneurial opportunities but also how to operate as an entrepreneur. It is based on a theory called Effectuation, coined by Saras D. Sarasvathy in the University of Virginia. Effective use of the theory can make you think like an entrepreneur. The theory has a number of principles.
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Who on this earth don’t have anything (friends, some small amount of money, skills, knowledge/education) at all?
To come with the best business idea, you need to use the five (5) principles of effectuation. It starts with you and what you have. Everyone has something, maybe not be money but we all have something to offer.
The principles of Effectuation are;
Bird-in-hand principle — start with your means.
You need to consider what you have in terms of the amount of money you can commit to it without crying later when you lose it. You also need to consider what you know. You can’t start a business that you don’t have enough knowledge about.
George Samuel Clason, in his book, the richest man in Babylon wrote about five (5) laws of gold. The fourth law was; “Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.”
You might be at risk of losing money and resources when you invest in a business you know little or nothing about.
In addition, ask yourself, who do I know? Especially those who you can work with on business initiatives. This is more or less like finding a co-founder you can work together with to achieve success in your business.
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Affordable-loss principle — focus on the downside risk.
You must work with only what you can afford to lose else your emotions will run the business instead of your head. When you feel the stakes are high, you will naturally make bad decisions if you aren’t trained to act properly under pressure. So, stay away from using what you wouldn’t want to lose.
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Lemonade principle — leverage contingencies.
The lemonade principle simply requires that you make the best of any situation. Who knew that Toyota was first a loom making business? But they saw other opportunities and took advantage of them.
You may make up your mind to do a certain business but get disappointed. But in your disappointment, you may realize another thing that really works and people would patronize.
You must seek to find the best out of the current idea to jumpstart another that stands a higher chance of taking off.
Crazy-quilt principle — form partnerships
The crazy guilt principle stresses on friendship and partnership which can be fruitful to your venture. In the world of business, you cannot everything by yourself.
For example, if you want to start an app, but don’t know how to program, you can get an app developer as the co-founder. You will fuel the idea and the person takes care of product development.
Pilot-in-the-plane principle—control the future.
The pilot in the plane principle says that you are the boss. Even though life happens, you have complete control to determine your own attitude and to make the right decisions that will make you successful.
You cannot predict the future, but you can at least try to create it instead of sitting on the sidelines. You must use the lemonade principle when you face difficulties and you must focus on the loss that you can afford. You must actively seek the partnerships that can help you grow.
Spotting Entrepreneurial Opportunities
The principal source of entrepreneurial opportunities is in problem identification.When one is able to identify a problem and is able to provide a solution to that problem, he or she has discovered a business opportunity. Problem identification is also a wealth making opportunity.
Most successful entrepreneurs and rich men attain their wealth by providing a solution to a societal problem. Jeff Bezos and other e-commerce companies solved the world problem by placing the market in the hands of potential buyers.
Providing solutions to a problem can be in the form of invention or innovation. On the basic level, you can invent something to solve a problem or you can innovate an already existing solution or product.
For invention, a Ghanaian called Isaac Sesi invented a product to detect moisture in grains to help farmer prevent post-harvest loses.
But Isaac has an engineering background. He also is passionate about farming. He knew that farmers in Ghana suffer from loses because their produce are sometimes not well dried hence, they get bad.
He relied on what he had, his knowledge in engineering and farming. He started as a student and operated in a lab in KNUST.
That’s how he started; he now has a team and is making waves in Ghana and the world helping farmers.
Peter Thiel in his book zero to one used a term called vertical progress to describe this type of invention. He stated that, “Vertical progress is harder to imagine because it requires doing something nobody else has ever done.”
The second is innovation. So, say, another person who is a farmer realizes a serious fault with Isaac’s invention and decides to make a better one, he is innovating on Isaac’s idea. He can equally build a business making that same product but in a different way. He is a farmer and knows more about the challenges farmers face. But he doesn’t know to engineer so he uses the crazy-quilt principle to get someone knowledgeable in engineering. They start together to build prototypes that they can use to secure funding.
Some product ideas will need a lot of funding so if your idea falls into that, you will have to learn how to pitch and raise capital.
Studying trends is another way to spot business opportunities. Peter Thiel described it as horizontal or extensive progress in his book Zero to One. Horizontal or expensive progress is copying things that work. When you study trends, you copy things that work somewhere and doing it in another place.
In Peter’s book, he used Chinese as an example. China had a 20 years plan to become like the United States. China copied straightforward things that worked in the developed world.
Entrepreneurship is a great opportunity for oneself and others. It can be a path of fortune creation. To be an entrepreneur, you need a business idea.
Entrepreneurship is all about recognizing business opportunities and acting accordingly. One of the effective ways of recognizing business opportunities is through the use effectuation principle.
The best way of spotting business ideas is problem identification. Business ideas hides in problems. Providing a solution to a problem through invention and innovation can be a start of a business.
Studying trends is another way of recognizing business opportunity. Find something that work at a certain place and do same at another place.
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