Introduction to Business – Characteristics of a Good Business Opportunity
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CHAPTER TWO
BUSINESS OPPORTUNITIES
Seeing, seeking and acting on opportunities is one of the characteristics of successful entrepreneurs everywhere. It is also the basis for starting and maintaining successful ventures. It involves not only generating ideas and recognizing opportunities, but also screening and evaluating them to determine the most viable, attractive propositions to be pursued.
WHAT IS A BUSINESS OPPORTUNITY
A business opportunity may be defined simply as an attractive idea or proposition that provides the possibility of a return for the investor or the person taking the risk. Such opportunities are represented by customer requirements and lead to the provision of a product or service which creates or adds value for its buyer or end-users.
However, a good idea is not necessarily a good business opportunity. For example, you may have invented a brilliant product from a technical point of view and yet the market may not be ready for it. Or the idea may be sound, but the level of competition and the resources required may be such that it is not worth pursuing. Sometimes here may even be a ready market for the idea, but the return on investment may not be acceptable. To underscore the point further, consider the fact that over 80% of all new products fall. Surely, to the inventors or backers the idea seemed a good one, yet clearly it could not withstand the test of the market.
So, what turns an idea into a business opportunity? A simplified ansiwer is when income exceeds costs = profit. In practice, to be comprehensive you need to examine the factors listed and illustrated below.
CHARACTERISTICS OF A GOOD BUSINESS OPPORTUNITY
To be good, a business opportunity must fulfil, or be capable of meeting, the following criteria:
Real demand, i.e. respond to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to exercise that choice.
Return on investment, i.e. provide durable, timely and acceptable returns or rewards for the risk and effort required.
Be competitive, i.e. be equal to or better – from the view point of the customer – than other available products or services
Meet objectives, i.e. meet the goals and aspirations of the person or organization taking the risk
Availability of resources and skills, i.e. be within the reach of the entrepreneur in terms of resources, competency, legal requirements, etc.
Identifying and Assessing Business Opportunities
Ideas and opportunities need to be screened and assessed for viability once they have been identified or generated. This is not an easy task, and yet at the same time it so important. It can make the difference between success and failure, between making a fortune and losing everything you had. Whilst the exercise does not guarantee success- but then nothing in this world does, except Divine intervention it certainly helps in minimizing the risk and thus the odds for failure.
Identifying and assessing business opportunities involves, in essence, determining risks and rewards/returns reflecting the following factors:
Industry and market: Is there a market for the idea? Are there are customers people with money who are able and willing to buy the product or service? Can you provide what they need or want? How many are there?
Length of the window of opportunity: Can you create or seize the opportunity whilst is lass?
Personal goals and competencies of the entrepreneur: Do you really want venture into the business? Do you have what it takes? Are you motivated enough
Management team: Who else will be involved with you in the business? Do the have the experience, know-how, contacts or other desirable attributes required?
Competition: Who are your competitors? Do you have something customers was that your competitors do not have? For example, can you produce or market lower costs?
Capital, technology and other resource requirements: How much capital technology or other resources are required? Do you already have them or couple you get them?
Environment: Are the political, economic, geographical, legal, and regulator contexts favourable? Will the business do any damage to the physical environment?
The above questions are typical of the type of issues that need to be addresses. Responses to these questions will determine the attractiveness of any business opportunity.
KEY SUCCESS FACTORS IN SETTING UP A SMALL BUSINESS
Motivation
idea and market
And determination
Entrepreneur
Resources
Ability
Plan
organization + management
The framework is adapted from Gibb, A.A. (1981). A workshop approach for
stimulating new enterprise development.Durham University Business School, UK.
CHAPTER THREE
PROCEDURE FOR SETTING UP AND MANAGING ONES ENTERPRISE
Process over view;
Product Identification
Identification of Basic Resources
Decide on the type of business organization
Take note of legal regulations and requirement. Also protect your intellectual property
Write Business Plan
Start operation
PRODUCT IDENTIFICATION:
What product/service to produce?
Venture Opportunity
Two major issues are most important
Look for a need (gap) and think up the product/service to satisfy that need
Determine the extent of the need to see if it justifies operationalizing the product/service idea.
LOOK FOR A NEED
Study existing industry in terms of supply and demand
Analyze