Francis Bacon said, “Wise men create more opportunities than they find.” The majority of opportunities come from the creative process of looking at old ideas in a new light. The sources of new ideas are not as important as the real-world viability of those ideas. Whether internally or externally generated, the ultimate outcome may be a new direction for your organization, or a new “spin-off” venture. The idea is a seed that, when selected, planned, cultivated, and harvested, becomes the opportunity upon which market value is based.
In fact, many entrepreneurs don’t rely on their own ideas. It’s dangerous to become too attached to an idea because it is your idea, because attachment can impede the ability to objectively assess business potential. Patent brokers have made a business out of marketing the ideas of other individuals like universities, inventors, research organizations, or think tanks. The National Patent Development Corporation in New York is quite popular. Another source is the Federal Laboratories. Regional Technology Transfer Centers have been established for over a decade around the United States to promote the commercial application of federal technologies, for example the Southern Technology Applications Center in Alachua, Florida, and the Technology Commercialization Center for NASA Technologies. The output of national laboratories is a valuable source of potential opportunities that should not be overlooked.
Informal networking sometimes provides a new line of ideas, and an outside perspective that can be refreshing and innovative. This resource is so rich and productive that several areas have established formal networking groups whose sole purpose is to stimulate new venture development, and generate new customer leads related to the new venture. Graduate Student Associations are ready-made with like-minded individuals in your field of interest, such as the UCLA Graduate Student Association. A Strategic Expertise Group (SEG) is a loosely affiliated, small group of high-quality organizations and individual consultants, and Venture Philanthropy Partners (VPP) is a philanthropic investment organization that has two SEGs related to comprehensive planning and human capital development for non-profit organizations. Another formal network is the 128 Venture Group in the Boston, MA area. Venture Capital Clubs or Groups are all over the country, and offer a wide range of industry-specific information to the aggressive entrepreneur.
Professionals (attorneys, accountants, commercial bankers, etc.) are a wealth of information and a good idea source, because these individuals are very often in constant contact with potential customers and new product ideas through constant use of older technologies. Through casual contact and informal networking, entrepreneurs can use their personal good reputation as a fair and enthusiastic individual, to build budding relationships with inventors or technology workers.
Quick-Screening Opportunities
1. Market and margin issues:
Has the Need/Want been identified?
Does the target market exist, and is it available?
Create a statement of need.
What are critical purchasing decisions?
What is the investor payback timetable?
What is the potential market size?
+20% market growth rate is ideal
What is the Gross Margin? Less than 20% is fragile.
2. Competitive Advantages:
Low fixed/variable cost?
What is the degree of control on price vs. cost?
What are the entry barriers?
Primary product differentiation characteristics?
3. Value Creation:
What is profit after tax?
How long to break even?
How long to positive cash flow?
Can this be funded? How?
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