Opportunity Identification

Lesson 3
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What are Opportunities

• Opportunities are chances, openings or
prospects that exist or can be created for
personal or business exploitation
• Business opportunity represents a possibility for
the entrepreneur to successfully fill a large
enough unsatisfied need through sales and profit
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Opportunity Recognition
• It involves searching and capturing new ideas
that lead to business opportunities –
• Creative thinking that leads to discovery of new
and useful ideas is crucial in this process
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Opportunity Recognition
• Recognizing an opportunity often results from the
prior knowledge and experience of the entrepreneur
• Knowledge stems from
▫ Education and experience
▫ Relevant work experience
▫ Personal experience or events
▫ Technology transfer and licensing
• The entrepreneur needs to be aware of his
knowledge and experience and desire to make
it useful
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Areas of Opportunities
• This mainly refers to areas where one can exploit
a business opportunity
▫ Product and services
▫ Selling and marketing
▫ Processing and manufacturing
▫ Supplies and sources
▫ Administration and management processes
▫ Strategy
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Types of Opportunities
1. Recognized opportunities
▫ Where both demand & supply exist
2. Discovered opportunities
▫ Where either demand or supply exist
3. Created opportunities
▫ Where neither demand nor supply exist
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Sources of Opportunities

• Markets
▫ Customers
 Demographic changes (age, gender, occupation,
education)
 Lifestyle changes
 Needs and wants
 Increasing Disposable incomes
▫ Competition
▫ Sources of supply
▫ Value chain linkages
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Sources of Opportunities cont’

• Technological changes (new innovations)
▫ Technological change in products
▫ Technological changes in process
▫ Technological changes in distribution – delivery
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Sources of Opportunities cont’

• Political and regime changes
▫ Policy direction (Tax regimes)
▫ Projects and programmes focus
▫ Health & education
▫ Poverty reduction
▫ Employment generation
▫ Infrastructure development
▫ Acquisitions & expenditure adjustments
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Sources of Opportunities cont’

• Events
• Franchises
• Networks – Personal & Business
• Changing Business Models
• Creativity – Created opportunities
• Internet
• Strategy
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Business Administration
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How to Spot Opportunities

1. Scan all possible sources of opportunities
▫ PESTLED Analysis
▫ Porter’s 5 Forces Analysis
▫ Value chain analysis
▫ Strategic options analysis
2. Conduct market researches and analyses
3. Use your creativity – created opportunities
4. Inquire through networks
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Characteristics of Good Opportunity

Spotters
• Entrepreneurial alertness
• A special set of observational and thinking skills
that help entrepreneurs identify good
opportunities.
• Creativity
• Imagination, inventiveness, resourcefulness
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Opportunity Analysis and Assessment Plan

• This is not a business plan
• Entails verifying if the identified opportunity is
viable before investing in a full business plan or
execution of the idea
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Business Administration
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Opportunity and Assessment Plan

• An has four sections:
1. Develops the idea, analyzes competitive
products and companies, and identifies the
unique selling propositions.
2. Focuses on the market—its size, trends,
characteristics, and growth rate.
3. Focuses on the entrepreneur’s and management
team’s skills and experience.
4. Develops a time line indicating the steps to
successfully launch the venture.
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Opportunity Analysis
• Ideas
• Idea Screening
• Preliminary Feasibility Study
• Final feasibility study
• Business Plan
• Act
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Key Answers From Opportunity Analysis

And Assessment
• Is there sufficient demand for the product or
service?
• Can the product or service be provided on a
profitable basis?
• Is there value to be created from the change?
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Screening the Opportunity

• What is your product or idea?
• What is the technology that underlies your
product/idea?
• Is your underlying technology unique?
• Is your product or idea innovative?
• How would you define the best initial set of
customers?
• What market place needs does your product
address better than any other option?
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Screening the opportunity

• Describe how you create value for your
customers?
• What is the market and its size?
• How do you anticipate developing Invention
Patent (IP) protection for your technology?
• Who are the people behind the idea?
• What resources are needed to take the idea and
sell it to the customer?
• Can the idea generate sufficient profit?
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Feasibility of the Opportunity

• The extent to which an idea is viable and realistic
and the extent to which you are aware of internal
and external forces that could affect your
business
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Feasibility Study
• A feasibility study involves gathering, analyzing
and evaluating information that answers:
"Should I pursue the idea?“
• Should contain clear supportive evidence for its
recommendations dependent on market
research and analysis
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Feasibility Study
• Market Analysis: Survey of potential customers’
▫ Willingness to buy
▫ The price at which they would be willing to pay
▫ Where they would like to get the product from
▫ Why they would not want to buy
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Preliminary Feasibility Report

• Define the product or service
• Brief assessment of market and demand
• Assessment of idea/ opportunity consistency
with business mission
• Brief assessment of the industry (size & growth
trends)
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Idea Selection Criteria

• Can it be profitable in 2 years?
• Is all expertise available?
• What will be the impact of business mission?
• Is it compatible with other business plans?
• Does potential gain justify potential risk?
• Has the market been clearly identified?
• Is it a long term opportunity?
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Final Feasibility Report

• Define the business
• Outline the industry
• Identify capital, staffing & other support needs
• Outline markets, market demand and pricing
• Define assumptions of markets & business
• Develop the Pro-Forma Financials
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Idea Selection Criteria

• Has a strong need been verified?
• Can we reach the market?
• Can we provide a competitive product or
service?
• Can we make money and cover costs?
• What would be the impact of failure?
• Is it viable for at least 5 years?
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Feasibility Report Recommendations

• The Feasibility Report may be assessed by
potential investors
• Market viability
• Technical viability
• Business model viability
• Exist strategy viability
• Likelihood of success (ROI, Risk Management)
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Business Plan
• Final Feasibility Report plus
• Product or service in detail
• Production, purchasing and facility plans
• Marketing plan
• Operations and staffing plans
• Equipment and materials lists
• Milestones for the three year start-up
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General Personal Considerations

• Are your personality characteristics such that
you can adapt to and enjoy small business
ownership/ management?
• Do you like to make your own decisions?
• Do you enjoy competition?
• Do you have will power and self-discipline?
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General Personal Considerations

• Do you plan ahead and get things done on time?
• Can you take advice from others?
• Can you adapt to changing conditions?
• Do you have the physical stamina and emotional
strength to handle a business?
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General Personal Considerations

• Do you understand that owning your own
business means working 12-16 hour days, maybe
six days a week and on holidays?
• Are you prepared to lower your standard of
living for several months or years?
• Can you afford to lose your savings?
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Specific Personal Considerations

• Do you know why you are considering this
business opportunity?
• Do you know which skills and areas of expertise
are critical to the success of your business?
• Do you possess these skills and know how to
effectively utilize them?
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Specific Personal Considerations

• Can you find personnel who have the skills,
abilities, and expertise you lack?
• Can you perform the feasibility study or have the
time or money to do so?
• Will this business opportunity effectively meet
your career aspirations?
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