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Identify an Entrepreneurial Opportunity
* Opportunity, Opportunity, Opportunity…. It sounds like I am selling something when I see these words typed three times in a row. I am not selling anything. I am trying to help you with information from a very good text book I read when I was in college. It is called... 'Entrepreneurship, Successfully Launching New Ventures' and the information is golden. I had to pass it along, this is my summation attempt for one portion of one chapter... I encourage you to buy and read the entire text book. ( I have the 2nd edition but a link to the 5th edition is below. This book is worth the small investment.)
If you look up the word opportunity, you will find a definition similar to this … “A favorable or advantageous circumstance or combination of circumstances.”
However, if seen through the eyes of an entrepreneur, the definition is more like… “a favorable set of circumstances that creates a need for a new product, service or business.” It is not easy to spot a genuine opportunity. You must be sure that it is not just a different version of something somebody else is already doing. A common mistake made when choosing an opportunity is choosing a product or service that is already available and then trying to build a better version if it. This approach does seem like it makes sense, but it usually does not work out for the new entrepreneur. The key to distinguishing a real opportunity is to recognize a product or service that people lack and are willing to purchase, not one that you just want to sell because you like it.
There is a difference between an idea and an opportunity. It is important to understand that an idea may not meet the standards of being an opportunity. Businesses fail because of being launched on the basis of an idea alone and not on a solid opportunity. So, before you get all juiced up on your new idea, it is very important to know if the idea fills a need and meets the criteria for an opportunity. Let’s take a look at three ways to identify an opportunity.
1. Observing Trends
Economic factors, social factors, political action, regulatory statutes and technology advances are the most important trends to watch. You can follow and study them closely on your own or you can pay independent research firms to provide you with customized trend forecasts and market analysis. When looking at economic factors and how they affect opportunities, first you should evaluate who has money to spend.
When incomes are high in a particular group or there is disposable money available, people are more willing to buy products and services that enhance their lives. A great example of this would be the teen and pre-teen market. When kids have money, they buy stuff. Products and services such as designer clothing, downloadable music services, new smart phones and all the other things that these kids buy are a huge market and therefor have opportunistic possibilities. Another gigantic market is the aging baby boomers. These folks have spent a lifetime saving money and preparing for their retirement and they have disposable income.
Understanding social factors and the impact it has on trends if a vital piece of the puzzle. It is not a big secret today that people are busy and don’t have enough time during the day to get everything done that needs to get done. This provides opportunity for products and services that relieve stress and the burden of being overwhelmed by everyday life. Here are a few categories that could provide opportunities related to social factors:
- Family and work patterns
- The age of the population (baby boomers, etc..)
- Increasing diversity in the workplace
- Increasing focus on healthcare and fitness
- Computers and the internet
- Mobile technology
Advances in technology co-exist with social factors and economic factors to create opportunities. Technological advances can provide opportunities to help satisfy basic needs in a better, more convenient way. Once new technology is created, new products to advance it are usually not far behind. Political action and regulatory changes will also provide opportunities for the entrepreneur. New laws, political instability and global terrorism have all provided business opportunities. A good example for this would be the need for more and advanced security for companies and governments looking to protect physical assets and intellectual property from attack.
2. Solving a Problem
In the quest to recognize entrepreneurial opportunities, one must find a problem and solve it. You can find these problems through observing challenges people encounter in their everyday lives, by intuition or by chance. A large amount of the problem solving that goes on is a result of personal problems or challenges that someone has in their own lives. Haven’t you ever thought to yourself that there has got to be a better way to do the thing that is aggravating you? Well, maybe there isn’t a better way (Research it.). That is an opportunity. A constant trait with entrepreneurs is that they are always looking for problems, or should I say, always looking for opportunities to solve a problem.
3. Finding Gaps in the Marketplace
Finding gaps in the marketplace is the third way to identify an opportunity. It involves the ability to recognize a need that is not being met in a customer’s life. These gaps can be hard to identify but can be potentially very rewarding. This is the world where the niche market lives. Giant superstores have become a staple in our lives and try to have just about anything and everything our hearts desire, but the reality is they can’t possibly do that. A niche market is a place within a larger market that represents a narrower group of people with similar interests. It covers the not so usual products in a boutique shop, to the service that doesn’t even exist yet.
Opportunity is the word and you should always be on the look-out for it. Remember… capitalizing on opportunity is one of the things that made this country so great and it is why people from all over the world want to come to America. Without the chance of opportunity, there is despair. *
* Information, research and certain phrasing for this article came from the text book… Entrepreneurship, Successfully Launching New Ventures, Second Edition 2008, Bruce R. Barringer, R. Duane Irland, Pearson, Prentice Hall Publishing.*
© 2010 Jamie Page