Identification and Selection of

Business opportunity
 Business Idea
“Today’s successful companies live and die
according to the quality of their ideas”
-Warren Buffett

“90% of India’s startups fail within the first five

years because of lack of pioneering innovative
ideas”
-Institute for Business Value

Idea vs. Opportunity

 Business Idea
• Ideas that make a business sense are the
foundation of any new business

• Selecting a business
– Can be done as haphazardly as tossing a coin or
rolling a dice.
– On the other hand, a team of consultants may
be hired to thoroughly analyze the situation and
come up with recommendation
 Creative Thinking
• It requires unprecedented degree of creativity
to deal with the continuously changing
business world.

“ Creativity has become more important

leadership quality than attributes such as
management discipline, rigour or operations”
- Samuel J. Palmisano
(CEO & Chairman – IBM 2002 to 2012)
Creativity and Entrepreneurship
• Creativity and innovation are double-edged
sword for the survival and success of an
enterprise
• Very low success rate of new ideas – Only
5-6 percent of ideas that goes through the
concept and prototypes stages materialize.
 Finding match between Solution and
Need:
Push and Pull Factors
• Pull Factors:
– Find solution for an existing pain point
– Look for alternative solution which best meets the need at
an alternative cost
• Push Factors:
– Innovator has a solution for which he tries to find out use.
– In case of push start they think whether or not their solution
meet the need of the existing target market
– But also requires to find out how the rivals will react
 Two major ingredients of a
business opportunity
1. Good market scope i.e. gap between
demand and supply
2. An attractive/ acceptable return on
investment
The Creative Process
 Creative Process
• Germination: (Recognition of a problem) The
seeding stage of a new idea – look for fertile
ground to take roots

QUESTION: What is the pain point?

i.e. What is the problem that the entrepreneur
is trying to solve?
 Creative Process
• Preparation: (Rationalisation) – Conscious
search for knowledge about the market

• QUESTIONS:
1. Whom are you solving the problem for?
2. How is this problem addressed currently?
3. Is there any other competitor providing the same
service?
 Creative Process
• Incubation: (Fantasizing) – Subconscious
assimilation of information

QUESTION:
How is this Problem solved?
 Creative Process
• Illumination: ( Realization) – Recognition
of idea as being feasible

• QUESTION
Can you do it differently from existing
players?
 Creative Process
• Verification: (Validation) – Test to prove
that the idea has value

• QUESTION:
1. Can I change my Customer? How Much?
Way of thinking for the new Idea
• Causation vs. Effectuation way of thinking
 Sources of Idea
Consumer
• Observe consumers
• Understand consumers psychology –
the way they think, feel, reason and choose from
among different alternatives
• Understand environment influencing consumer
Social, cultural, technological, demographics,
regional sub culture, religious, family and house hold,
peer groups
 Sources of Idea
Consumer

• Entrepreneur needs to seek answer to the

following simple questions
What do individuals, groups, and organization
buy?
What do they want but are not able to buy?
What do they buy and are not happy with?
When, how and where do they prefer to buy?
What more are they looking for that is not
available?
 Sources of Idea
Existing Product and Services

• Get ideas from existing market

– Existing product
– The way it is distributed
• There are four possibilities
– New Product for Existing Market
– Existing Product for New Market
– New Product for New Market
– Existing Product for Existing Market
 Sources of Idea
Existing Product and Services
• Change/ Modification in Existing Product/Service
– Making them larger/smaller, Lighter/Heavier, Faster/ Slower
– Color, Material or Shape
– Quality/ Quantity
– Increase mobility, easy access, ease in transportation
– Simpler ways and means to repair, maintain, replace and clean
– Introducing convenience through automation or technology up
gradation
– Add new features
– Changing the distribution and delivery mode
– Altering packaging material, size, shape for convenience and
cost reduction
 Sources of Idea
Distribution Channels
• They often are the best link to the customers as they
deal directly with the end users
• Train people involved in the distribution channel to
be conscious and alert to questions such as
– What problems your customers are trying to solve when
they buy from you?
– Are there competitors providing similar products, and if
so what are their unique features?
– What other features in your product or service can
dramatically enhance value for the customer?
 Sources of Idea
Government Policies and Priorities
• Changing government policies give ideas
regarding the direction in which the economy
is going to progress
 Sources of Idea
R&D
• Entrepreneurs own research and
development endeavors
• This is more feasible for larger firms having
large funds for R & D and having large
markets for diversifying the risk of
launching new products
 New Business idea Ideas and
Direction of Business
• Resource Based Ideas
- Minerals, Agriculture, Marine, forest products
- Waste-based products
• Linkage Related Ideas
- Backward and forward integration of existing manufacturing
- Ancillary Development
- Industry based on substitution
• Export/ Import related Ideas
- Export orientation and Import substitution
- Cont.
 New Business idea Ideas and
Direction of Business (cont.)

• Market Shift or Growth Related Idea

- Purchasing Power,
- Increase in Population
- Change in Lifestyle
• Special Product Idea
– Research and invention-based products
– Skill/knowledge based products
– Products based on institutional/government purchase/ hospital/
schools etc.
– Foreign collaboration
 Assessing the Idea
For assessing your idea, you should try and
answer these questions:
1. What pain point are you trying to solve?
2. Who are you solving it for?
3. How are you trying to solve it?
4. Is anyone else doing it?
5. Can you do it differently from them?
6. Can I charge my customer? How much?
 Basic Considerations for Viability of
the Project
Business Concept
Operational Issues
Technical Know-how •Raw of raw material
•Utility consumption
•Implementation time
Calculation of Cost
•Basic Investment
•Contingency and escalation
Estimating the Market
•Working Capital Requirement
•Estimated quantity of sale
•Selling Price
Arranging for Capital •Positioning Possibility
•Capital-Loan Subsidy
•Cost of Capital
 Techniques For Generating Ideas
• Understanding the Problem
– Tries to simplify problem, without over-simplifying it.
• Towards Solving the problem
– Check all assumptions and their implications
– List the obstacles that seems to block the path in solving the
problem
– List all possible solutions to the problem with open mind
– Compile a list of solutions that are feasible to work with the
resources at your disposal
– Select the best solution
– Check solution from all possible angles.
– Evaluate and concretize the implementation programme,
specifying dates or times for completion
– Again have a relook at the entire programme.
Techniques of generating and testing
ideas
• Mind Mapping
• Focus Group
• Brian Storming
• Reverse Brain Storming
• Gordon Methods
 Mind Mapping
• Pictorial way of giving shape to ideas and
concepts
• It is a visual –thinking techniques that
facilitates structuring information, better
analysis and synthesis, quick recollection of
information and generation of new ideas
 Focus Group
• In a FGD group of individuals provide information
in a structured format.
• A focus group engages would-be customers in an
interactive experience that exposes them to your
business idea.
• It’s a moderated session that gathers feedback,
opinions, and criticisms based on questions or
activities that you create.
• If well executed, they can offer a return of
invaluable insight and help guide decisions on if and
how to approach your new business (or launch your
new product).
 Advantages of Focus Group
• Very useful to help you gain detailed insight
into your potential customers opinions and
perceptions of your new business idea
• Less expensive and time consuming than
holding a series of one-on-one interviews
• Gives you an opportunity to clarify on the
spot
• Beyond validation, they can also help build
the foundation for how you market to the
same customers
 Disadvantage of FGD
• Without experience, they can be tricky to
manage
• There’s risk that disagreements or irrelevant
discussion can derail the group
• Some participants may find group situations
intimidating which may lead to
“groupthink” (more on this later!)
• May not be as in-depth as one-on-one
interviews
 Brainstorming
• Brain storming is a group method for obtaining new
ideas and solution
• It allows people to be stimulated to greater creativity
by meeting with others an participating in a
organized group experience .
• Four important rules
– No criticism , no negative comments
– Freewheeling is encouraged – wilder the idea, better it
is
– Quantity of ideas is desired
– Combinations and improvements of ideas are
encouraged: ideas of others can be used to produce still
another new idea
 Reverse Brainstorming
• It is similar to brainstorming, except that
criticism is allowed.
• The technique is based on finding faults by
asking the question “in how many ways can
this idea fail?”
• The objective is to identify the weaknesses
of the idea in order to workout the effective
solution.
 Gordon Method
• It is a method for developing new ideas when
the individuals are unaware of the problem.
• This ensures that the solution is not clouded by
pre conceived ideas and behavioural pattern
• The discussion begins with by mentioning a
general concept associated with the problem
• The group responds with a number of ideas
• The actual problem is than revealed to enable
the group to give suggestions for refinement of
final solution..
 Factors to be Considered while
identifying Opportunity

• Look at your self

• Spring boards for ideas
• Exploring opportunities
• Government Policies
• Compare advantage and disadvantages
 Look at Yourself
• Educational qualification
• Work experience
• Financial Resources
• Preference for particular industry or sub-sector
• Expectations about returns from the business
• Contacts industry and financial sector
• Assess own strengths and weaknesses
 Springboard for Ideas
• Natural resources
• Existing/ upcoming enterprises
• Market extension/ Modification in product
• Creative Efforts
• Export/ Retail Ideas
 Exploring Opportunities
• Environment –
- Basic features of the area and its resource inventory
- Population, its composition, socio-demographic background
• Current Business Scene
- Present pattern of trading
- Local Consumption, Need for industrial goods
- Emerging trends and pattern of trading and business
• Technology Change
- Anticipating new opportunity because of technology change
 Government Policies
• Permissions and licenses required
• Regulations and control
• Government Support
 Compare advantage and
disadvantages
• General assessment about the future scope
and feasibility of undertaking the specific
project.
• Consider
– Complexity of Technology
– Returns on investment
– Market Potential
 Final Selection of Project
• It involves assessment of all major criteria
of viability – technical, financial, market
and commercial.
 A Word of Caution
• Do not plunge into a project only because
someone else is doing well.
• All good product ideas may not be capable of
being saleable products
• Consult experts, but take your own decision
• Start with common product, rather than going for
specialized one.
• Advisable to check if many similar projects are
coming up
• Think in long run – select project which ahs
flexibility for diversification