CH. 3 - Business Idea Generation and Initial Evaluation

The process of generating ideas will result in a list of three to five business ideas that: (Check all that apply.)

- Appear to be an opportunity - Match the founders' skills

What is the method used to identify an opportunity that exists between the demand for a product and the supply by firms in the market?

Gap analysis

What is the method used to identify an opportunity that exists between the demand for a product and the supply provided by firms in the market?

Gap analysis

Which of the following is NOT an example of family experiences that build knowledge and can grow into a new business opportunity?

Attending SBA courses with your sibling

A gap _____ is the relatively simple process of systematically examining the difference between what is expected and what occurs.

analysis

Once a list of skills, abilities, and interests has been developed, the next step is to:

perform a gap analysis.

All new businesses have an inherent amount of _____ associated with the starting and operation of the business.

risk

Threats to profit margin, threats to operational financing, and threats to sales generation schemes are three threats to business success that entrepreneurs consider when they examine and characterize business _____.

risk

An individual's hobbies and past work experience contribute to the individual's personal _____ set.

skill

An individual's work experience builds _____ sets that can have direct applicability to the pursuit of a new business.

skill

Without the needed ______, the founders would be faced with not holding any advantage over the competitors who have the necessary depth in the area.

skill

Successful business ideas are determined by the following:

the creativity of the entrepreneur.

The business owner whose business is both a(n) _____ and a(n) _____ is difficult to beat.

vocation; avocation

The initial analysis is a process of:

moving from three to five ideas to a single idea.

In hobbies and activities, individuals develop _____ specific to the hobbies. (Please enter one word for the answer.)

skills

The nature of the effort required for an entrepreneur to carry out an effective due diligence analysis necessitates _____

a focus on a single business idea

If done well, the process of generating ideas will result in: (Check all that apply.)

- Ideas that match the founders' skills. - A list of three to five business ideas. - Ideas that appear to be opportunity.

What are included in the first column of the chart used in the gap analysis? (Check all that apply.)

- The business idea - A brief explanation of the idea

_____ is the creative process in which a group of individuals are brought together and asked to generate ideas related to a specific topic, with little effort given to evaluating the potential of the ideas.

Brainstorming

True or False: One's skills from either educational training or experience does not have a critical impact on the direction of one's business.

False

______ are uniquely positioned to provide a much-needed honest perspective on your efforts toward creating a new business.

Family members

Which of the following is NOT a common source of entrepreneurial skills?

Genetics

The process involved in the gap analysis is more _____ than _____.

art; science

The desire to own and operate a business is the ______ step in entrepreneurship.

first

What is included in the second column of the chart used in the gap analysis?

Categories of analysis

Each type of business started will require different _____ frames.

time

True or False: Family experiences are an often overlooked source of skills for a new venture.

True

If you prefer to work extensively with people, in which of the following businesses should you probably NOT pursue a business opportunity? (Check all that apply.)

- Billing - Bookkeeping

Which category on the gap analysis chart would examine companies doing the same thing as the new potential business?

Competitors

Which of the following is a principal cause of new business failure?

Insufficient financial resources at founding

Without the needed skills, the founders would be faced with not holding any advantage over the ______ who have the necessary depth in the area.

competitors

High development costs, rapid expansion plans, and high inventory needs are considered threats to:

operational financing.

One type of gap analysis, called _____, examines the opportunities in the marketplace side-by-side with the individual's ability to address those gaps.

opportunity analysis

Perhaps as important as the entrepreneur's skills in a particular area is the need for the entrepreneur to have _____ for starting a business in that domain.

passion

Examining _____ around the region, nation, or world that may not have reached a particular location is one way of identifying business opportunities or gaps.

trends

Which of the following statements make interviewing key successful entrepreneurs an attractive way to identify opportunities or gaps? (Check all that apply.)

- Most successful entrepreneurs are too busy with their own business to pursue new ventures. - Most successful entrepreneurs have great ideas. - Entrepreneurs have a keen eye for what businesses are needed in an area.

Along with the business idea, what else should be included in the first column of the gap analysis chart?

A brief explanation of the business idea

Which of the following is a characteristic of a gap analysis methodology for a new venture?

It is intended to be completed by the entrepreneur or entrepreneurial team.

Which of the following questions should NOT be explored to identify additional skill sources? (Check all that apply.)

What are my worst accomplishments in life?

An individual's professional background and hobbies are excellent resources for new business ideas because: (Check all that apply.)

- See the current needs that are not being met - Knows these very well - See the shortcomings in the current business offerings

Which of the following are questions an entrepreneur should address regarding education? (Check all that apply.)

- Have you attended any unusual education programs? - What courses taken were particularly enjoyable? - Have you taken specialized training in any specific area?

A founder or founding team must have synergy, which is a combination of: (Check all that apply.)

- Competitive advantage - Understanding of an industry - Skill set

Which of the following businesses could be most likely pursued by individuals who do NOT prefer to work with people? (Check all that apply.)

- Bookkeeping - Order fulfillment - Internet-based businesses

Which of the following statements are true regarding skills? (Check all that apply.)

- Derived from hobbies - Education and work experience - Derived from our history

Which of the following are required in the initial analysis of a business opportunity? (Check all that apply.)

- Focus - Financial investments - Time

The founder(s) of a business need to be intimately involved in the: (Check all that apply.)

- Funding of the business - Design of the business - Running of the business

What are the typical categories used to analyze a business idea? (Check all that apply.)

- Non-financial resources - Competitors - Time - Finance - Risk

Entrepreneurs can examine business risk by considering three threats to business success. Those three threats are: (Check all that apply.)

- Profit margin - Operational financing - Sales generation schemes

Why is discussing potential businesses with family members an attractive way to identify business opportunities? (Check all that apply.)

- Provide an honest perspective - Know your abilities - Know your diposition

Which of the following are true regarding the process of generating ideas? (Check all that apply.)

- Requires iteration - Requires consideration - Requires interaction

Which of the following are probable questions potential business owners should ask themselves regarding hobbies? (Check all that apply.)

- What products/services were used in these hobbies? - What is it about the hobby that is exciting? - What specific skills were required of the hobby?

True or False: If individuals are not detail oriented, then a business that is procedurally complex and involves managing a wide variety of tasks may be appropriate.

False

_____ is key in successfully starting a new business venture.

Making quick adjustments using lean startup and evolution

Which of the following questions should be addressed by an entrepreneur when reflecting on family experience? (Check all that apply.)

- Are there unique things your family does that others are interested in? - What skill sets exist within your nuclear family? - What is your family history with new business ventures?

What is the suggested starting point for generating business ideas?

Analyzing the skill set of the potential founders

Which of the following are questions an entrepreneur should answer regarding work experience? (Check all that apply.)

- In what businesses have you worked? - What skills were critical to the jobs you performed? - What aspects of the job were most enjoyable? - In what areas would you be considered an expert?

Which of the following are examples of family experiences that build knowledge and can grow into a new business opportunity? (Check all that apply.)

- Maintaining the family property - Working on the home - Cooking with family members - Tracing the family history

Which of the following support the rationale for starting a business idea generation process by analyzing the skill sets of the potential founders? (Check all that apply.)

- Millions of opportunities - Without the requisite skill set wastes time and money

Which of the following questions could be explored to identify additional skill sources? (Check all that apply.)

- What type of magazines and books do I read? - In what industry would I prefer to work? - What skills were involved in the three greatest accomplishments of my life?

Which of the following questions should be considered by an entrepreneur when analyzing the nonfinancial resources category of a gap analysis for a new business? (Check all that apply.)

- What unique skills will be required to run the business? - What unique capabilities provide the entrepreneur a competitive advantage?

List the steps that are important to the development of a quality business idea. Start from the first or initial step.

- List and evaluate one's personal skill sets. - Analyze the market and look for a gap or a need that is not being met effectively. - Compare one's ability to fill the identified gaps with an opportunity available

Which of the following statements are true regarding education as it relates to skill sets? (Check all that apply.)

- Knowledge gained from formal education provides a skill set. - Technology skills acquired through education can be particularly valuable. - An opportunity that uses your education is another source of a business.

Which of the following are the characteristics of a gap analysis methodology for a new venture using a chart? (Check all that apply.)

- It is a reasonably quick analysis - It requires minimal research