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SMALL BUSINESS STRATEGIES | ENTREPRENEURSHIP 101

Open Your Eyes

You Need to See an Opportunity Before You Can Seize It

October 14, 1998

Starting and running your own business can be tough, but choosing what kind of business to start can be even tougher.

The first step is to look around you, said Debra Esparza, a consultant and former director of USC's Business Expansion Network who developed Entrepreneurship 101 with The Times. The series appears Wednesdays in the Business Section.

Open your eyes to your neighborhood and notice the variety of small businesses. Find out which small businesses exist along your daily commute, near your workplace and where you want to start a business.

Next, begin thinking entrepreneurially.

"Assess your role in small business," Esparza said. "Are you a consumer, an employee or an owner? Become more active in all of those roles."

As a small-business consumer, compliment business owners if they provide extra service for you. If a problem arises, don't just grouse to yourself or chew out the owner; come up with a suggestion.

If you work in a cafe and 15 people ask for bacon with their burger, tell the owner. Suggest that a package of bacon might bring more sales at a higher price for minimal cost and effort.

An entrepreneur recognizes opportunity and acts on it. But the first step is seeing, Esparza said.

"In market terms, it's perceiving a need or finding a need and thinking of a way to meet that need," Esparza said.

For example, a shopping mall sits across the street from a major Southern California university. Susan, a hypothetical would-be entrepreneur, walks through the mall and asks, "What is not here?" and comes up with an idea for a stationery store. Bingo! After all, college students need pens, notebooks, reams of white paper and computer disks.

But further investigation would reveal that two stationery stores catering to students have gone out of business at the mall. Why? By asking students, Susan might discover that they prefer to shop at the more convenient campus bookstore and discount stores outside the area, or receive supplies from their parents.

"In business, there are usually two reasons why something is not there: No one has thought of it yet, or someone has thought of it and has already gone out of business," Esparza said.

Knowing that two stationery stores failed, Susan could instead cater to residents in the neighborhood, perhaps stocking crayons, gum erasers, pencils and white glue for elementary schoolchildren, or greeting cards, wrapping paper and small gifts for adults. If the neighborhood has many Latino or Chinese immigrants, cards in Spanish or Mandarin might be appropriate.

Now take our quiz at the top of this story and try your hand at thinking and seeing entrepreneurially.

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SHOULD YOU BUY A BUSINESS OR START ONE ON YOUR OWN?

Home office experts Paul and Sarah Edwards devised this quiz to help prospective business owners narrow their options. Choose the statements that best describe you:

A. I like following guidelines and step-by-step procedures to get things done.

B. I like making things up as I go along. By my nature, I like to do things differently, not follow a mold, wing it.

*

A. I am willing to pay someone else for their information, training and support.

B. I will do something on my own rather than pay someone else to teach or do something for me.

*

A. My primary objective in having my own business is to find a way to produce income.

B. My primary objective in having my own business is to make my own mark on the world through work.

*

A. I have no trouble taking direction from others.

B. I hate being told what to do.

*

A. I dislike starting a major project unless I have something to work from.

B. I enjoy starting major projects from scratch.

*

A. I perform better work with supporters and colleagues to turn to in a stressful situation.

B. I have no difficulty keeping myself consistently motivated about work.

*

A. I feel more secure working within a system.

B. My security comes from knowing I rely on myself in a tough situation.

*

A. I like to follow a pattern that others have set.

B. I really don't care what others think when I know I'm right about something.

*

A. I like the idea of buying a business that others have proved will work.

B. I'd rather do things myself because I know they will be done correctly.

*

A. I like to follow trends.

B. I like to set trends.

SCORE: Tally all the A and B statements.

If you had six or more B scores, you are probably best off starting your own business from scratch instead of buying a franchise, an established business or joining a direct selling organization.

If you selected fewer than six B scores, you might consider businesses you can buy.

*

Paul and Sarah Edwards write a column for the Los Angeles Times and have authored nine books on self-employment, most recently "Home Businesses You Can Buy." They can be reached via e-mail at http://www.workingfromhome.com

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Finding Your Dream Business

1) Visit a local small business and observe who the customers or clients are and where they came from.

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