History teaches that if an idea is a solution without a problem, the business will soon become a problem without a solution. Every great idea is not a business opportunity. A successful entrepreneur has the ability to separate valid opportunities from the cacophony of ideas jumbled in his head, and through this adds value to the marketplace through innovation. It is imperative that the entrepreneur use product, process, or service innovation as the tools to exploit change. In fact, the enduring strength of the entrepreneurial-driven economy is the continuous creation of value through innovation. Sifting through ideas for useful opportunities is not an exact science; there are some basic concepts that can guide you through the process. The bottom line is that for an idea to become an opportunity, real benefits must occur; and when implemented in the market, the stakeholders must achieve some kind of tangible benefit.
Step 1: The idea must have a well-focused target market and satisfy a real market need.
Opportunity analysis is dependent on the behaviors of the target market
Do an in-depth analysis of target market demographics
Do an in-depth analysis of the nature and behavior of potential competitors that already exist in the market
Identify the competitive vacuum and identify the competitive advantage
Step 2: Clearly define what value the idea offers to the customer in return for the money, opportunity loss, and ego invested by the customer.
Even if a product is different, this is no guarantee that the customer will be willing to buy at anticipated prices, or, really, for any price.
Study customer pricing demand through market research
Clearly define the consumer need being met by your idea
The proposed idea must be market driven
Customer group must consistently, over time, receive something of perceived value from the idea
Step 3: Identify the stakeholders involved in the proposed venture.
Define what “value” means for the stakeholders
Estimate the value expected to accrue for each stakeholder
Estimate the timing of anticipated benefits
Estimate duration of anticipated benefits
Step 4: Determine the extent to which the idea will provide the amount and types of monetary rewards anticipated by investors.
Investors typically seek capital appreciation or income over a predetermined period of time at an anticipated rate
New ventures are fueled by risk capital
Be sure that the idea will satisfy investment objectives of the targeted investors
Step 5: Evaluate relevant risks (competitive, financial, legal, technical)
Consider that some risks can be eliminated by proactive strategies
Consider if it is possible to spread the risk
Consider if it is worth it to manage the risk
Consider the national and international economy, including current elements and general forecasts
Identify sociopolitical, legal, and technological environments
Remember that the analysis of potential risks and uncertainties must be performed for each idea to ascertain it’s opportunity value, and this must be done diligently, and continually for product changes or upgrades. Removing the uncertainty through this provocative operation cannot only help ensure success; it can also ease the mind of the entrepreneur and increase confidence.
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