Starting a Small Medium Scale Enterprises Part II


It is useful to distinguish between two basic approaches as people ideas The search for opportunities for entry to business.

Some entrepreneurs approach the task by looking at their own skills, abilities, background, and so on to determine what kind of business they should start.  This  is the  *INSIDE-OUT APPROACH* which is based on notions or that the key determinant of business success is afterall,  the Entrepreneur himself /herself.  This method of entry into business is sometimes referred to as IDEA GENERATION.

while many prospective entrepreneur follow the inside-out approach some turn this process around, looking first for existing opportunities. This is the *OUTSIDE-IN APPROACH* also called OPPORTUNITY RECOGNITION, has as is basis the idea that a business can succeed only if it responds to, or creates a need in the market.  This means deliberately search for developments that can be translated into economic opportunities. News about these opportunities can be find in publications (advertising of product)

Finally, it should be acknowledged that many business are established as the result if something other than a deliberate plan or search on the part of the entrepreneur /founder

To summarize, the genesis of business idea has many forms, ranging from self approval in the hope of finding something upon which to base a business, to a systematic search of the environment for opportunities,  to simply being the right place at the right time, getting the idea of what the business is to in the first step;  the next examine why Lou different, our concern here is whether the idea make sense. Will the business success?


Very few business create new market; majority of new businesses take customers away from the current serving ones. With this in mind we can see  why the needed advantage of new business will bring to the market. The advantage can be classify by capital letter.

No firm regardless of size, can serve every market. Mass marketing has given way to market segmentation. Market may be segmented in several ways.  The commonly use method of segmentation are *DEMOGRAPHIC, BENEFIT, GEOGRAPHIC and SOCIO ECONOMIC*. Regardless of the basis of segmentation the idea is to group individuals by a characteristic that has relevance to their buying, decision “E.g, the large number of breakfast cereals are many that are intended for children an example of demographic segmentation. Some cereals are prepared and marketed for people who are concerned about having a nutritious breakfast;  the manufactures are using benefit segmentation. Some firm have cereals sold only in a certain part of the country – geographic segmentation. As a final example, one of socio-economic  segmentation, consider the case of the lowest – priced cereal On The self.  It is intended to consumers for whom price plays,  the most significant role in the purchasing decision.

OBSTACLES* Barriers to entering a new industry.

Among the barriers to entry that new firm into an industry face are (i) customers attitudes and habits (2) switching cost (3) response of existing competitor. 


There two basic routes exist for a start-up.  The new can introduce a product that is not available to customers, or it can add it, product to those already being marketed. Each of these present it own opportunities and difficulties.

Strategy consider for use in market entry that of FOCUS. This strategy is customer oriented in that it basis is to understand  and respond to the needs, of a segment of the market in the most complete way possible. 

A supplier of office products,  for example, may find that it’s real strength is it’s ability to anticipate and serve the needs of the educational market.  Such a focus may allow the firm to establish itself as the segment  leader and thereby protect itself – at least to a degree – from the difficulties of competing strictly on price.

THE PEOPLE* Who Will Be Involved 

Most business are started by an individual. That’s the way entrepreneurs (solo approach) are and thats, the way they do thing ” does this approach make Sense? 
Among the probable reasons that people choose to do it alone is  the appeal of uncontested control of the enterprises.

Things are decides by entrepreneur in a way he or she see fit; there is 100% need to clear decision with anyone and this makes life simpler.  While the motivation is understood, the choice deserves careful consideration. There some compelling reasons to enlist another person as the business is started.  First is the old, and scientifically sound, adage two heads are better than one. Having a partner may be regarded as measure towards mistake prevention.

A good partner will ask the kind of questions and provide the kind of input that will led to the exposure of flaws in  the plans or strategy of the firm. 

Finally, a partner can provide the skill that the entrepreneur lacks but there business needs it to succeed. Many entrepreneurs are technically talented but have poorly developed people skill.  Some are terrific sales people but need the kind of discipline provided by an accountant.


When starting a new business there are many issues that the entrepreneur must consider. The business plan helps the entrepreneur to fully consider all topics that must be addressed in order for the business to be successful. It helpful to develop the plan and give it to others for feedback. Often entrepreneur is so optimistic that the flaws in the proposed business are not evident.  Giving the plan to others who objective may provide insight on how potential customers will see the business and may prevent costly mistakes. 


For someone who is seeking the independence of small business ownership but not interested in undergoing the trial so frequently encountered in starting a new one, the purchase option should be explored, while both routes – starting a new business and buying an existing one – have as their goal ownership of a business, the routes themselves differ considerably. 


A number of reasons for buying and existing business,rather than starting a new one, can be classified. (a)  less risk (b)  less time and effort required (c) the possibility of buying at a bargain price (d) there is an existing market for the business.


As been identified, there are good reasons for buying, rather starting a business, but problem should be acknowledged. Put differently although an ongoing business does not  required the entrepreneur to look the many details and problems of start-up,  it does provide certain limitations. Before an entrepreneur decides on the  buy option,  he or she should have understood the kind’s of inherent limitations  that may be encountered in the purchase of an existing business. The limitations, can be categorized as (a) external (environmental) (b) internal, and (c) departure of the current owner.

Conclusively, starting a new business is a difficult undertaking which requires painstaking analysis and planning. The idea for the business can originate from a variety of source and variety ways. A new business entering an established market faces the task of having customers from firms that have been serving those customers; the entrepreneur must examine the question of how the firm will land those customers.  One important issue the entrepreneur must deal with is whether to start firm alone or have a partner.  Although many individuals insist on complete independence as a condition of starting a business while partnerships have important advantages that should be acknowledged.

Buying an existing business can provide an entrepreneur with an expeditious route into small business. The  processes of locating, selecting and negotiating for the enterprise require preparation.

Without solid information, the  odds of striking a favourable deal diminished considerably. 

The summary establishing a new business and buying of existing one can be achieved and sustain iff

* Innovation relationship with entrepreneur 
* Various sources of idea is available to entrepreneur in starter a new business 
* Entrepreneur has lucid reason why new business is needed 
*Entrepreneur knows the people that will he involve  in starting up the business 
*Entrepreneur understand the advantages and disadvantages of buying an existing business