Qualities of a Good Business Opportunity

  

Date Posted: 11/21/2017 9:38:41 AM

Posted By: Alambi  Membership Level: Gold  Total Points: 2017

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What is a business opportunity?

Opportunity – It is an exploitable set of circumstances with uncertain outcome requiring commitment of resources and involving exposure to risk.
Business Opportunity - It is a consumer need or want that can be potentially met by a new business (Goss, 2015).

Sources of opportunities include;

Problems - Many well-known companies were started because an entrepreneur wanted to solve a problem.
Changes - Our world is continually changing. Change often produces needs or wants that no one is currently meeting e.g. washing machines were invented to reduce the burden of washing loads of laundry (Goss, 2015).

New discoveries - The creation of totally new products and services can happen through research and innovation e.g. the migration of televisions from analog to digital generation led to the creation of decoders.

Existing products and services - You can get ideas for opportunities from businesses that already exist by looking for ways to improve a product significantly.
Unique knowledge - Entrepreneurs sometimes turn one-of-a-kind experiences or uncommon knowledge into a product or service that benefits others.

Qualities of a good business opportunity

Ready and Available Market. - The first thing that one ought to take into account before planning to start a business is to ask themselves whether there is a significant market for the particular product or services. This also implies that your product should be on demand so that you can satisfy customers’ need.

Return of Investment. - One should have in mind a business opportunity that has the potential of bearing fruits within a set period of time and which can cover the capital that was used in addition to bearing profits (Goss, 2015). If this is the case then there is a chance you have got the right deal but if it only requires more and more capital with minimal or no possibility of having

any returns any time soon then you ought to tread carefully.

Availability of Resource. - You should have all the resources needed to take advantage of that particular business opportunity as well as a time frame for implementing it lest someone else beats you to it. If a lot of money is required to start a business either because costs are high or it will take a while to become cash flow positive, resources will be required either from investors of founders. For instance, you can lose some control over your business and you have to give up equity (and therefore upside). The more cash you need to start, when your valuation is the lowest, the more equity you will have to give. (Mole, 2017)
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Adequate Skill. - You need to have the experience required to tap into that particular business opportunity. If the skills required to execute the business plays to the strength of the team, execution risk should be less. For example, if you want to start a bakery but don’t know a thing about baking them that is not a viable business opportunity. An entrepreneur would start a business with a sales distribution strategy of his or her knowledge. He or she would want to start a business that requires skills that he or she has. One can learn, but it becomes an extra cost, time constraint and extra risk. (Mole, 2017).

Scalability. - Scalability basically refers to the growth of a business. Most of the businesses start really small. Probably just you, your laptop and an idea. Overtime, the business should be able to expand and increase revenue growth while minimizing increases in operational costs to ensure maximum profit is attained. Therefore, it is important to find out the probability of the business scaling after a period of time before venturing into the business.

No or Few Competition. - Lack of competition in the market will enable you win over your targeted persons in the market wholly. With this you will be able to gain much profit. However, the more innovative the product or service you offer the fewer the competitors you get and the higher the price you will be able to charge hence more profit (Mole, 2017). In some cases it is possible to have no competitors because the market is not viable.

Effective Marketing Strategy. – An entrepreneur needs to communicate a persuasive message to his or her clients and build a loyal customer base. This is done by first compelling a creative message about the business, then developing technical expertise, coordinating the message and focusing on the branding of the business. (Entrepreneurship Hub)

Identifiable Risks. - The future of a startup is always uncertain, therefore identifying a risk is the first step to understanding how they can be monitored and then mitigated. The more strategic options you have identified, the greater your chance of success. (Entrepreneurship Hub)

Supportive Government Policies. – Policies of a government can impact businesses directly or indirectly and so when the government puts in place policies that are favorable, for example low interest rates, low exchange rates and low taxation, it encourages investment by making these business friendly decisions to strengthen local businesses. (Mole, 2017).

Cultural and Ethnic Dynamics. – The first main area of opportunity is the market provided by an ethnic group’s own consumption patterns. This assumes of course that there are sufficient openings in the labor market to create a large enough demand for the provision of ethnic products and services for this to be a viable form of business. It is also wise to create something that may also be attractive to outsiders as this may spell the difference between survival and prosperity in business. (Mole, 2017).

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