ELE 350 -SECTION 4

SOURCES OF BUSINESS OPPORTUNITY

Business opportunities have to be sought out as they do not present themselves for anyone to
pick. Ability to spot these business opportunities is what distinguishes an entrepreneur from all
others.
There are all sorts of business opportunities to explore and which are already present in the
market, but not all of them will make a perfect match for such an individual. There are various
sources from where the would-be entrepreneur could get ideas; from which he will then choose
and develop into viable business opportunities. Inegbenebor (2006) identified several ways by
which an entrepreneur can spot business opportunities by examining various sources from
which useful ideas can be generated.
(i) Copy of existing successful business forms: This is the commonest source from which useful
business ideas can be generated. It is a good source if and only if there are no entry barriers.
The business that is already in existence is a model that can be copied or modified significantly
by ensuring that the product or service is more convenient, less expensive, faster and easier to
handle.
(ii) Personal or other people’s human experience: One‘s human experience whether pleasant
or unpleasant may be use to stimulate a creative response or solution to a problem. For example,
many people who buy street food may not be aware of the health hazards of their actions. But
the fact that there is such a risk can enable an entrepreneur to come up with the idea of
producing a product that does not entail such health risk and promoting it in such a way that
consumers will perceive the merit of the new product over the existing ones.
(iii) Work Experience: As a result of work experience, aspiring entrepreneurs may become
conversant with problems associated with existing products, target market not yet attacked,
difficulties experienced by customers, limitations of suppliers, etc. Through work experience,
creative solutions to problems may emerge for which potential customers are willing to pay for
and in turn yield profit to the entrepreneur.
(iv) A Hobby: An activity done regularly in one‘s leisure time for pleasure, for example,
singing, playing football, etc. can be converted into a profit yielding venture.
(v) Franchise: This is when a license is granted by a government or company to a person or
group, allowing him/them to use or sell certain products. This may create opportunity for the
individual or group to attack a market that is currently not being served.
(vi) Vocation: Possession of vocational skills or professional skills, for example, hairdressing,
catering, etc. suggests ideas of services that can be rendered.
(vii) Consultants: The vast experience and knowledge gained by consultants in the course of
seeking solutions to the problems encountered by organizations is a major source of business
idea.
(viii) Joint Effort: As the saying goes, two good brains work better than one. Two individuals
may come together in an attempt to spot business opportunities in the environment. This move
may then lead them to forming a partnership
Some Possible Business Ideas
(i) Baby-sitting service (ii) Baking (iii) Art and Craft (iv) Bicycle/Auto/Appliance Repair
(v) Catering (vi) Distributing fliers (vii) Entertaining (viii) Gardening/Lawn cutting
(ix) Handicraft (x) Holiday selling (xi) House/Office Cleaning (xii) Laundry service (xiii)
Messenger service/Delivery service (xiv) Music lessons (xv) Painting/Furniture refurbishing
(xvi) Pet care (xvii) Photography (xviii) Tutoring (xix) Typing services(xx) T-Shirts (xxi)
Thrift and Credit (Oseghale, 2010: 20)
Conducting a Market Survey
Inegbenebor (2006) opines that a great business idea is not necessarily a good business
opportunity. An idea has no definite form. To give it form requires the entrepreneur to:
1. identify a gap in the market that he/she can fill, understand the characteristics and
buying behaviour of the potential customers;
2. understand who the competitors are and the nature of the products/services they are
offering to the customers; and
3. develop a product/service with features that give customers benefits that are different
from or better than what competitors have.
A business opportunity exists for the entrepreneur if he/she has a product or service to satisfy
a clearly defined market need at a satisfactory return to him/her Market survey or market
research is a systematic way of gathering, analyzing and interpreting marketing data that will
aid the entrepreneur in making marketing decisions. The information gathered helps the
entrepreneur to decide on the nature of product or service that will suit the needs of customers,
the target market to be selected and the most appropriate way to position the business relative
to competition.
Market survey provides answers to two main questions namely: (i) Market Question and (ii)
Competition Question
(i) Market Question: Who buys the product or uses the service?
What are the characteristics (age, sex, education, occupation, income, etc.) of potential
customers?
What are the benefits that customers expect from using the product or service?
What are their buying habits? For example, frequency of purchase, quantity purchased, reasons
for buying or not buying.
Where do they buy at present?
What is the size of the market?
Is the market growing or getting smaller?
(ii) Competition Question
Who are the competitors?
How many are they and where are they found?
What are the major characteristics of competitors?
What are the key features of competitors‘ product or service?
In what ways are the products/services of competitors deficient in meeting customers‘ needs?
Is there a gap that can be filled?
What are the strong points in favour of competitors‘ product or services?
The specific objectives of the market survey need to be stated clearly in order to conduct a
market survey effectively. The specific objectives of the survey will highlight the type of data
that need to be collected thereby saving a lot of time, energy and resources.
Market research data is usually divided into primary or secondary sources. Primary data
involve first-hand information through the use of questionnaire, interviews, observation or a
combination of these methods. Secondary data is collected from existing records in the
organization or from various published sources such as the publications of trade associations,
annual reports of companies, official publications of the Central Bank of Nigeria, National
Bureau of Statistics, and other regulatory agencies of government.

It is usually difficult or very expensive to examine the entire population of potential customers
and competitors. To avoid this problem, a sample must be chosen to be representative of the
population of interest. To guarantee the validity and reliability of the data in making decisions,
care must be taken in choosing the sample. The idea behind this to ensure objectivity that will
guarantee the quality of the data and hence of the decisions based on them.

Marketing
The starting point of marketing is assumed to be at the point of creating the idea of a particular
business venture. An entrepreneur‘s first commitment to his business is the determination of a
felt need of a defined customer or consumer. This is done by deliberately judging and
evaluating the environment.
Environmental scanning is the process of evaluating the environment with a view to identifying
business opportunities. Environmental scanning helps the entrepreneur to identify goods and
services that are needed, the extent of the demand, the nature of competition in that market and
the chances of taking deep advantages to make the business successful and profitable. Market
research is one of the tools of environmental scanning.
Another marketing challenge facing the entrepreneur is the issue of producing and delivering
the products or services in the form of quality that will adequately satisfy the taste and desires
of the consumer. Therefore, one of the functions of marketing involves making input into the
processes of production, packaging and effective delivery of the goods and services to the
satisfaction of buyers and consumers. Until these basic requirements are met by the
entrepreneur, marketing would become a major problem against business success.
It is possible for an un-informed small business owner to go into the business of producing
goods and services without this necessary background market information. Atuma (2012)
outline the following marketing issues which should agitate the mind of any entrepreneur:
What goods and services are needed by the society in which the entrepreneur is interested in
operating?
What kind of goods are being demanded: industrial or consumer, perishable or durable, retail
or wholesale?
What motivates the buyers, consumers or decision makers?
What economic, social, technological, cultural or legal factors determine or affect the demand
for the goods and services under consideration by the business?
What market communication platforms are necessary to position the products in the market?
What is the position of the product in the value chain?
How will the image of the business be enhanced by the product?
What level of quality standard is planned for the product?
What will be the most effective distribution channel for the product in the market?
How best will be the goods be packaged for best appeal to buyers, users or consumers?
The analysis of these issues and the adoption of appropriate and rational position about them
will constitute what is generally referred to as marketing strategy: a set of decisions and actions
designed to achieve market goals and targets. Market strategies drive and direct the actions of
the entrepreneur. According to Aluma (2012 pp 174-175), marketing, therefore, for the
entrepreneur involves designing actions that would touch on the following:
(i) Product: what to produce, what value will the product convey and bestow to the consumer,
what quality is embedded, what size, what standards, what expectation in terms of services, are
embedded?
(ii) Price: what is the price to charge? How competitive and quality embedded? How affordable
is it considering the status of the buyer or consumer?
(iii)Place: what logistics are needed to make the product available? What are the channels of
distribution and the network in place? What delivery arrangements are needed?
(iv) Promotion: what efforts are needed to bring awareness of the product in terms of value,
availability, utility in use and ownership? How can incentives be provided for current users
andpotential consumer? This is related to advertising to enhance sales.
(v) People: who are involved in the whole marketing effort? Are distributors required? Are
retailers required? Are agents needed in the marketing effort?
Promotional Mix
This includes advertising, sales promotion, publicity, and personal selling.
Adverting – is a personal form of promotion and involves transmitting standard messages to
large numbers of intended receivers.
Sales promotion – involves activities which are essentially used to complement advertising and
personal selling. It can be in the form of exhibitions, point – of – sale displays, or
demonstrations.
Publicity – is concerned with the presentation of the firm‘s image, its products, services or
ideas in a
favorable light to the public. Publicity is free but although publicity people get paid, they seek
to
attract public attention to a company and its product without paying media costs.
Personal selling – aims to marry specific products with specific customers on a person – to –
person basis to secure ownership transfers
Consideration for Choosing a Business Opportunity
An entrepreneur that wants to start a business must consider one of these three critical
decisions namely: the first is whether to take the plunge at all. The second dwells on the type
of business to start and the last is to decide on how to proceed on the new venture in terms of
basics such as financing, organization and lifestyle adjustment. However, the second decision
which required a choice of the opportunity to exploit to set up is usually by far the most difficult
and tasking decisions that an entrepreneur will ever make. A potential business owner can
usually identify several business opportunities, each of which is attractive for one reason or the
other.
Some of the factors to be considered in choosing a business opportunity are:
(i) Business Experience: this is a fundamental ingredient for the success of any business
venture. To succeed in the undertaking, the entrepreneur must possess the relevant and
appropriate experience required to excel in his/her chosen niche. There exists a wide array of
differences in the practices and mode of operation in the different industries in the economy.
For instance, there are differences in the purchasing practices, production processes, customer
relations practices, ethics and modes of relating with the relevant government agencies. Also
the technicalities and concepts used vary from industry to industry. Overcoming these problems
will usually be easy for an entrepreneur who has had some years of working experience in the
chosen industry.
(ii) Skills Required for the Successful Operation of the Business: Every business requires
certain skills for successfully running it. Different businesses require different constellation of
skills or group of skills. But for each group of skills, there will be one skill which is core and
critical for success. The entrepreneur must therefore choose a business for which he/she has
the relevant core skills. Though it may be possible to acquire such skills by employing
experienced workers, the risk of being cheated and exploited is high if the entrepreneur does
not have the relevant skills required.
(iii) Financial Capability: Just as it is with every form of business, the financial implications
is very important. Funds will be needed to provide the relevant raw materials to be used for
production. Furthermore, there will be need to acquire the relevant technology and skills which
also borders on finance. Without adequate finance, the entrepreneur is unlikely to succeed in
the chosen business.
(iv) Risk Profile of the Entrepreneur: The entrepreneurs‘ tolerance for adventure in a new
livelihood is an important component in choosing a business. We all have different risk levels
or tolerance levels. Therefore, the entrepreneur must ensure that he/she selects a business
within his/her acceptable risk class.
(v) Support from Friends and Family Members: Usually many businesses fail because of the
inability of the entrepreneur to gain the support and encouragement of their families and
friends. The support of family members is particularly crucial in the early stage of the business.
(vi) The Owners Personal Interest: If the entrepreneur loves the kind of activities that the
business will entail, the easier it is for the business to succeed. At all times, the entrepreneur
must ensure that there is no conflict between the chosen business venture and his/her preferred
life-style.
(vii) The Desired Level of Income: The income expected from the business venture must be
adequate to meet the entrepreneurs need for housing, clothing, food, recreation, entertainment
etc. While the business owner may accept a reduced standard of living at the initial stage, in
the long run, the business must have the potential of providing the desired level of income for
the owners.
(viii) Legal or Regulatory Constraints: In some cases, the law specifies the minimum
professional training and/or experience that is required to operate certain types of businesses.
Persons desiring to operate such businesses are required to obtain a license from the appropriate
authorities. Examples are pharmacy shops, hospitals and clinics and stockbroking firms
(Inegbenebor, 2006:22).
Conclusion
This unit has attempted to show how opportunity recognition is a key part of the entrepreneurial
process. There is also an insight on the distinction between business idea and business
opportunity. The factors that entrepreneurs should considered when choosing business
opportunity were also highlighted.