Most good business
opportunities result from an entrepreneur being alert to possibilities. Some
sources are often fruitful, including consumers and business associates.
Channel members of the distribution system-retailers, wholesalers or
manufacturer's reps-are also helpful. Technically-oriented individuals often
identify business opportunities when working on other projects. Each
opportunity must be carefully screened and evaluated-this is the most critical
element of the entrepreneurial process.
The evaluation
process involves looking at-
a. The creation and length of the opportunity
b. Its real and perceived value
c. Its risks and return.
d. It's fit with the skills and goals of the entrepreneur
e. Its differential advantage in its competitive environment
f. It is important to understand the cause of the
opportunity, as the resulting opportunity may have a different market size and
time dimension.
The market size and the length
of the window of opportunity are the primarily bases for determining
risks and rewards. The risks reflect the market, competition, technology, and
amount of capital involved. The amount of capital forms the basis for the
return and rewards. The return and reward of the present opportunity needs to
be viewed in light of any possible subsequent opportunities as well. The
opportunity must fit the personal skills and goals of the entrepreneur. The
entrepreneur must be able to put forth the necessary time and effort required
for the venture to succeed. One must believe in the opportunity enough to make
the necessary sacrifices.
Opportunity analysis, or an
opportunity assessment plan, should focus on the opportunity and provide the
basis to make the decision, including:
a. A description of the product or service
b. An assessment of the opportunity
c. Assessment of the entrepreneur and the team
d. Specifications of all the activities and resources needed
e. The source of capital to finance the initial venture
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