How to identify

BUSINESS OPPORTUNITIES

A
Business Opportunity
may be defined as a
business proposal an
entrepreneur would
like to pursue considering
risk and the reward involved
in the proposal which may
be manufacturing or
servicing or trading.

How do people generally identify business opportunity?

World wide most of the entrepreneurs identify the Business Opportunity based on the
following three simple ways:

1. My father or someone in my family is doing it successfully, so I want to do the

same
2. I have related experience, hence I am pursuing this opportunity
3. Someone is doing it successfully whom I know. Hence, I am pursuing this
Opportunity

If the line of thinking continues to this then the number of sellers will be more than buyers
which has already led to unhealthy competition. This is the cause for high mortality rate
in micro enterprises. In order to rectify this problem, there is need for a scientific
approach to identify business opportunities.
This approach calls for a scientific way of classifying Business Opportunity based on
its origin, application, user or source. Based on this, it has been categorized
under the following broad nine categories. They are:

• Resource based
• Demand based
• Skill based
• Ancillary/ vendor
• Inputs to primary sector
• Inputs to secondary sector
• Inputs to tertiary sector
• Waste based
• Innovative

Resource based

Industries which are based on available local resources are called as resource based
industries. For example, as far as Mandya Disrict is concerned, rice mill, jaggery
units, milk processing units comes under this category.

Demand based

Industries which cater to the local requirement, availability of resources is not a pre-
requisite, such a category of industries are placed under this sector. Eg: Manufacturing
series light sets in Mandya district for which raw material is not available locally but there
is local demand.

Skill based

These are the industries where skills available with the local people are used to
manufacture various goods and services. For eg. Production of wooden toys in
Chennapatna near Bangalore, sarees at Ilkal etc.
Ancillary/ vendor

As per the approved definition of Government of India, any Industry supplying raw
material or components to any medium or large industry at least to an extent of one shift
load of its installed capacity (per day), such industries are categorized as Ancillary
industry.

Inputs to primary sector

Mining, agriculture, sericulture, horticulture, cattle rearing, aqua culture etc., comes
under primary sector. Industries which cater to the requirement of these sectors are
categorized as input to primary sector. For eg., production of vermicompost, agri clinics,
sprayer service centres - these are all input to agriculture sector.

Inputs to secondary sector

Existing industries offer ample opportunities in terms of spares, packing materials etc.
Industries which are manufacturing goods and services as per the requirement of
existing industries immaterial whether it is large, medium or small are categorized under
this category. For eg supply of corrugated boxes, PP caps, washed glass bottles to a
Pharmaceutical unit.

Inputs to tertiary sector

Existing trade and commerce offers ample scope for supplying goods and services -
particularly the service sector has a pivotal role to play. Eg. A computer accounting
system catering to the requirement of existing trade and commerce – this type of service
providers are classified under this category.

Waste based

While harvesting the resources lot of waste materials are generated. These unused
materials offer ample opportunity to convert as a value added goods. Industries which
are engaged in such activities are categorized as waste based industries. Eg. Production
of paper/ board using Bagasse – a waste from sugar industry.
Innovative

These are the created goods and services by innovative entrepreneurs. These are the
services which are non-existent till they are launched.

Resource based Industries

Resources of a place offer ample opportunity to produce goods and services on a

sustainable basis. In order to identify possible business opportunities under this category
there is need to categorise the resources according to their origin. They are broadly
classified as Agriculture resources, Forest resources, Marine resources, Mineral
resources and Cattle resources.

Agriculture Resources

Agriculture resources are

broadly classified as:

• Cereals eg. Rice,

wheat, jowar,
maize, ragi
• Pulses e.g. Tur,
Bengal gram,
Blackgram,
Horsegram, Peas, Greengram etc.,
• Oilseeds e.g. Groundnut, Sunflower, Safflower, Til, Soyabean, Mustard etc.,
• Plantation e.g. Areca, Coconut, Rubber etc.,
• Commercial e.g. Sugarcane, Cotton, Tobacco etc.,
• Spices e.g. Ginger, Chilli, Pepper, Cardamom, Coriander etc.,
• Vegetables e.g. gourds, leafy vegetables, ethnic vegetables, roots etc.
• Fruits e.g Banana, Mango, Sappota etc.

In order to identify Business Opportunities based on agriculture resource, first one has to
list down agriculture resources available in the location where he/she wants to set up a
unit. Care should be taken to plan meticulously and go step-by-step manner as
suggested above. Give priority to those produces which are produced in
large/economically viable quantities. Once this exercise is completed, decide what shape
or form of the raw produce is to be used. For eg. Most of us eat rice – origin for rice is
paddy. Hence, the opportunity to convert paddy to rice exists which may be
accomplished by pounding, hulling or by milling.

Forest Resources

Resources available in Forests are both renewable and non-renewable in nature. It is

unfortunate that most of the entrepreneurs/ Government focus more on non-renewable
forest resource like timber. In fact, renewable forest resources like leaves, fruits, flower,
barks and tree oozings offer a good scope for
establishing forest based industries without
destroying the forest.

Marine based Resources

Karnataka is blessed with coastal line and

offers good marine resource base for
entrepreneurs to exploit on a sustainable
basis. These marine resources can be
classified into living and non-living things.
Fish, corals comes under living things while
sea shells come under non-living things.

Mineral based
Resources

Minerals are classified

as major and minor
minerals. Iron, cobalt,
manganese containing
ores is classified under
major minerals while
limestone, sand, grey
granite is classified as
minor minerals. To identify business opportunities under this category, list down and
quantify various minerals that are available locally. Consult an expert who can help you
in listing down possible business opportunities.

Cattle Resources

Cattle rearing is an age old tradition in this country which is almost a major economic
activity undertaken by villages. These animals provide us perennial outputs and non-
renewable outputs e.g. milk, wool is perennial outputs while meat, hides, blood, horns
are non-renewable.

Demand based

The criteria for opting to this sector are the local requirement. Raw material may not be
available and required raw material may be imported from neighbouring areas wherever
it is available e.g. production of plastic pots. To identify goods and services under this
category just list down various objects/ goods/ services which you use or see around
you. With this an exhaustive list of demand based products could be listed.

Skill based

List the skills available with local

people. Think how best this skill
could be commercialized. For
e.g. if there is a cluster of
carpenters, generally these
people are engaged in the
manufacture of wooden furniture
to meet the local demand.
Instead these carpenters may be
encouraged to produce high value
toys, industrial products like wooden bobbins, electrical accessories etc.

Ancillary

Large and medium scale industries existing locally may be assessed for their goods and
services requirement. For e.g. existing L & M Industries may be offering lunch to their
employees. This may be exploited by locals and ready packed foods are supplied to
parent industry.

Input to primary sector

The key player under this sector is agriculture. To identify business opportunities under
this category, list the various goods and services needed by the agriculture sector.
These goods and services includes seeds for sowing purpose, saplings, implements,
hand tools, fertilizers, pesticides, insecticides, baskets, irrigation systems etc.

Input to secondary sector

Existing local industries irrespective of their size offers good number of opportunities.
For e.g. if there are a number of bakeries, list the various goods and services needed by
these bakers. Generally, bakers need dry fruits, bakery flour, sugar powder, khoa etc.

Input to tertiary sector

Trade and commerce require lot of support from goods and services. For e.g. packed
food grains, spices etc. are needed by departmental stores and provision stores.
Pickles, papads are needed by hotels. Laundry services are needed by lodgers, nursing
homes etc., and Accounting services are needed by all traders.

Waste based

In every day life lot of wastes are generated. These waste become a threat to living
beings because it is not being managed properly or put to different applications. For e.g.,
blood obtained in a slaughter house is a waste and disposing is a problem but a high
value blood product could be manufactured by using this waste.

Innovation

These are the new goods and services created by a few innovative entrepreneurs to
create new goods and services. Think of problems confronted day in and day out or in an
existing product. These problems can be converted to lucrative projects.
# N. Ramesh
Faculty
Entrepreneurship Development Institute of India
Regional Office :
# 419/4, 1st Floor, 12th Main Road, 6th Block
Dr Rajkumar Road, Rajajinagar
Bangalore - 560 010
Tel: 080-23119361 / 23119360