What are Entrepreneurial Opportunities?

"Don't start a company unless it's an obsession and something you love. If you have an exist strategy, it's not an obsession". - Mark Cuban, American businessman, investor, and owner of the NBA's Dallas Mavericks, Landmark Theatres, and Magnolia Pictures.  

To explore the roles of entrepreneurial thinking and opportunity identification, an introduction to entrepreneurial opportunities is in order. 

As we examine entrepreneurial opportunities, we're going to expend this chapter discussing the foundational elements of entrepreneurship. we'll also explore modern interpretations of the term entrepreneurial opportunities and discuss emerging opportunities.

Casson defines entrepreneurial opportunities as "those situations in which new goods, services, raw materials, and organizing methods can be introduced and sold at greater than their cost of production".

Drucker classifies entrepreneurial opportunities into three categories: "(1) the creation of new information, as occurs in the invention of new technologies; (2) the exploitations of market inefficiencies that result form information asymmetry, as occurs across time and geography; and (3) the reaction to shifts in the relative costs and benefits of alternative uses for resources, as occurs with political, regulatory or demohgraphic changes".

By all definitions, entrepreneurial opportunities differ from the larger set of general business opportunities. Entrepreneurial opportunities require the discovery of new relationships and interactions in the marketplace that are uncertain and dynamic. 

Differences of opinion by individuals may highlight entrepreneurial opportunities, with some seeing opportunities while others view the same situation with doubt or disinterest. Therefore, understanding decision-making in the context of entrepreneurial thinking is central to joining this population that sees opportunities. 

How have entrepreneurs evolved over time?

When we look at the history of opportunity and how humans have created value over time, and what has been at the forefront of being able to do that, at first it was the hunter, the grower and the warriors. It then became the craftsmen and the explorers, and the merchants and the merchanizers. It went on to the industrialists. More recently, it's the corporate path, the corporate executive. Today, investment banking and private equity are popular career ambitions. 

What is the next phase as we think about where great value will be derived? Where are those individuals with the highest need for achievement going to be attracted? 

It's the startup companies. It's those who can make useful things faster than corporations. It's those willing to take larger risks for larger rewards. By being more innovative and creating more value in the marketplace, startups will lead the future. 

In addition to full-time entrepreneurs, we see entrepreneurial activities via independent contractors and side-preneurs. 

Independent contractors are gaining a lot of momentum in the U.S. and globally. Outsourcing , traditionally limited to manufacturing and call centers, is taking hold in software development and research and development (R&D). There are a variety of different pieces of the organization that are being outsourced. In many cases, it's  small, entrepreneurial firms that are playing a role in providing that outsourcing. 

Side-preneurs have a day job, but they also work nights, or weekends or on their days off on independet projects for hire. these projects are typically in their field of expertise. They may be employed as a graphic designer by day with a company, but they are also going to do graphic design work at night for other individuals outside of their company. 

We're also seeing entrepreneurship growing via new online communities. New marketplaces are emerging whereby for reasonable affordability, entrepreneurs and small businesses, and even large businesses, can contract out jobs to freelancers online to deliver that work. Cumulative transactions for these online communities are in excess of a billion dollars. There's oDesk, Elance, Freelancer, 99 designs, and dozens of others. I've personally benefited from using a number of these services individually for my own projects.

When we look at the number of freelancers who are out there, the number of people who are doing graphic design, the number of people who are writing web copy, the number of people who are doing computer programming assignments and tasks, the total number exceeds 10 million. When you look at the number of jobs that have been posted, we see tremendous numbers there-millions and millions of jobs posted. 

The economics work for the freelancer. If you pay a $300 fee to oDesk-to have a logo designed, for example-10% of that will stay with oDesk, and that's essentially their management fee. The remaining 90% goes to the individual who's actually designing that logo. This often exceeds their compensation for completing a similar project as an employee of a large company.

Futurists who are thinking about the businesses of the future forecast that many more of us will become entrepreneurs. They see employee healthcare and financial benefits, pension plans and retirement packages, all disappearing in the future for most employees of most companies. Everybody's going to be an entrepreneur. Now you're going to broker your skills and negotiate your own contracts for everything. Now it may not reach 100% of companies, but it certainly is an interesting future to think about, and it's an interesting concept to be aware of on the path to becoming an entrepreneur.

Entrepreneurship continues to evolve over time, as do the opportunities that entrepreneurs pursue. 

How have entrepreneurial opportunities changed over time?

Software and hardware entrepreneurs have monopolized discussions of startups in recent decades. While Bill Gates, Steve Jobs, Elon Musk, and our modern celebrity entrepreneurs are creating tremendous products and new markets, they're neither the first nor the wealthiest entrepreneurs in history. 

In the gilded Age in the U.S during the late 1800s, new factories, oil production, shipping, lumber and railroads generated tremendous sums of wealth for entrepreneurs. A top 10 list of entrepreneurs in their day would read John D. Rockefeller, Jay Gould, Henry Clay Frick, Andrew W. Mellon, Andrew Carnegie, Henry Flagler, Henry H. Rogers, J. P. Morgan, Leland Stanford, and Cornelius Vanderbilt.

In the century prior, mechanization during the Industrial Age created another generation of entrepreneurs who identified and acted on opportunities. Benjamin Franklin and James Watt were of this class. 

While the term entrepreneur is popular today, the practice of entrepreneurship has been ever-present in society.

Today, we see the influence of entrepreneurs on a global scale. Unprecedented globalization is taking place with new access to financial capital, partners, and customers. One way to quantify that is through rising GDP among nations. Heightened wealth and a larger middle class globally can buy items that were once unaffordable. This new middle class can participate in markets with access to new products and services. Consider the opportunity that this presents to aspiring entrepreneurs. 

We also see that the adoption rate of new products and new technologies is rapidly rising. From the time that automobiles, washing machines, and telephones were invented, it took over 20 years for them to reach an 80% adoption rate in the market. Modern technologies-cell phones, the Internet and personal computers - have in a very short time span reached 60%, 80%, even 90% market penetration in less than 10 years. This rate of adoption of new technologies is unprecedented. 

Virtual teams and a global network of collaborators are now easier to establish than ever. I can find co-founders and advisors with CoFoundersLab. LegalZoom, in the U.S., can assist with my corporate formation and porvisional patents. I can crowdfund my idea while reaching customers globally via KickStarter, and secure equity funding via Crowdcube in London. I'll use Elance to hire my development team in the Middle East. With Fiverr I can spend $10 on a logo designed in South America.

The globalization of entrepreneurshp also brings unparalleled competition. These terrific online networks and collaborators are available to your competitors as well. Those of us with entrepreneurial ideas need to execute on them reasonably soon. A good idea now will be someone else's business later if you don't execute.

We will examine how to be better, faster decision makers. We will discuss how to bring our ideas to market quickly, and how to leverage the changes taking place with new technologies and new products, to capitalize on the globalization of entrepreneurship.

What is Amazon.com's approach to entrepreneurial opportunities?

The history of Amazon is a great example of how to identify and act on entrepreneurial opportunities. In 1994, Amazon set out to sell books on the Internet at an affordable price and with a selection of titles as vast as the Amazon rainforest. A decade later, Amazon was a leader in printed books and CD-based music. It soon became a leader in DVD sales as well.

Today, 43% of their sales are from media and digital goods, not their historic strongholds of physical products. Amazon is not waiting. They didn't wait to see what woudl happen with eBook adoption in the marketplace. They did not wait long to see what happened with online music. They're not waiting to see what happens with streaming music, and media, and television, and movies. They're leading the charge.

We will explore what they've done to enter the new markets, be leaders in these spaces, and not be comfortable as the successful incumbent. Amazon is an interesting company to examine, and a company that we will continue to explore in this book.

What is our approach to studying entrepreneurial opportunities?

Entrepreneurial opportunities differ from the general set of business opportunities. There are new relationships that are uncertain and dynamic. There are always new players involved. There is a race to bring new products and technologies to market.

I aim to help you understand that opportunity identification is a critical first step to success as an entrepreneur. Together, we will improve your ability to see entrepreneurial opportunities and make entrepreneurial decisions. You will be better prepared to make decisions that have significant consequences quickly and comfortably. You can more confidently take the neccesary steps to capitalize on your entrepreneurial ideas.

When we discuss entrepreneurial opportunities, this is a term that is well entrenched in universities and research centers, and widely studied in recent decades. I will bring information to you from the acdemic arena as well as from the practical arena based on my experience as a founder, executive, adviser, and investor with startup companies. Through this book you can validate or enhance opporutnities that you are already considering, and identify new entrepreneurial opportunities.

Decision making, is the foundation for entrepreneurial success. While we could skip this topic of decision making, and dive into how you create business models or marketing plans, we recognize the value of decision making and the importance of the entrepreneur. For us, the next step is a discussion on strategic decision making.