CHAPTER SIX

ENTREPRENEURIAL OPPORTUNITIES

Introduction
Starting a business requires knowledge, skills, abilities and values. It is therefore important
for entrepreneurs to develop viable business ideas by identifying community needs for
products and services.

Meaning of business opportunity

A business opportunity is an attractive idea which provides the possibility of a return for the
entrepreneur taking the risk. Such opportunities are presented by customer requirements and
lead to the provision of a product or service which creates or adds value to the buyers or end
users.

Characteristics of a good business opportunity

A good business opportunity must fulfil or be capable of meeting the following:
• Real demand i.e. it should respond to unsatisfied needs or requirements of customers
who have ability to purchase and are willing to exercise that choice.
• Return on investment – provide durable, timely and acceptable returns or rewards for
the risk and effort required.
• Competitive – Equal to or better – from the viewpoint of the customer – than other
available products or services.
• Meet objectives – meet the goals and aspirations of the person taking the risk
• Available resources and competencies – be within the reach of the entrepreneur in
terms of resource, competency, legal requirements etc.

Ways of Generating business ideas

What is a Business Idea

• An opportunity in the environment which, can be translated into a business activity.

• The existence of a situation in the environment which, can be advantageously turned
into a business activity.
• The existence of an opportunity which can be exploited for making money through
the operation of business activities.
• It is the response of a person (s) or organisation to solving an identified problem or to
meeting perceived needs in the environment (markets, community)

Why search and evaluate business ideas?

• You need a great idea to start a new business. A good business idea is essential for
successful business venture both when starting a business and to stay competitive
afterwards
• Business ideas need to respond to market needs. Customers have needs/wants waiting
to be satisfied. Firms that are able to satisfy these requirements are rewarded.
 • Business ideas need to respond to changing consumer wants and needs. i.e. provide
opportunities for the entrepreneur to respond to demand with new ideas,
products/services
• Business ideas help entrepreneurs stay ahead of competition. Challenge is to be
different or better than others. If you don’t come up with new ideas products/services
a competitor will.
• Business ideas use technology to do things better. Technology has become the major
competitive tool in today’s markets as a result of which many people have to come up
with new ideas.
• Business ideas are needed because the life cycles of products are limited. Products
have a finite life, they become obsolete or outdated. Firms have to introduce new
products
• Business ideas help to ensure that businesses operate effectively and efficiently.
• There are so many business opportunities available at any one time and the
requirements for translating them into business activities differ between each of them.
• The need to develop a competitive edge by providing something new that has little or
no competition
• The success and profitability differ between various business opportunities, hence
need to pick one with profit and success potential.
Finding a good idea is the first step into transforming the entrepreneurs desire and creativity
into a business opportunity.

Sources of business ideas

Ideas can be generated from:
i) Hobbies/personal interests
ii) Personal skills/experience
iii) Franchises – An agreement where manufacturers or sole traders of a trade
mark, product/service gives exclusive rights for local distribution to
independent retailers in return for their payment of loyalties and their
willingness to conform to standardized operating procedures. Common
type of franchise is those that offer name, image and method of doing
business and operating procedure.
iv) Mass media (newspapers, magazines, TV, internet)
v) Business exhibitions
vi) Surveys
vii) Customer complaints
viii) Changes in society
ix) Brainstorming
x) Being creative

Ways of generating business ideas

There are various ways through which business ideas can be generated. These include:
i) Identifying a need in the community: people usually have many unsatisfied needs. By
carrying out a market survey on the location where you need to establish your business and
talking to the potential customer may reveal gaps in that market.
iii) Market research: Conduct a market survey and try to identify business opportunities
existing in the market. People may be requiring new product/services or the ones existing
could be having several weaknesses. These are good opportunities for you.
v) Listening to complaints of customers so that you improve an existing
business.
vi) Brainstorming- this involves sitting in a group and trying to think of as many possible
businesses as possible using the ‘freewheel ’policy. take time and digest all the suggested
ideas as a basis for making the final decision on the one most suitable for you.
v) Creativity – By looking at things in a new way and combining two or more ideas in a
new way, such as, one stop shopping spots for customers e.g. a restaurant and a salon
combination.
Business ideas can also be generated through developing personal hobbies and discussions
with friends
Guidelines for Business Idea Generation Process:
• Think of as many ideas as possible
• Go out, look and listen.
• Always analyze ideas carefully before finally selecting which ones to implement.
• Be simple
• Start small. “If you want to go somewhere start small” Schummacer

Evaluation of business opportunities for viability.

Ideas and opportunities need to be screened and assessed for viability once they have been
identified or generated. This is not an easy task though important because it makes the
difference between success and failure.
The exercise certainly helps in minimising the risks and thus the odds of failure.
Identifying and assessing business opportunities involves determining risks and rewards/
returns reflecting the following factors.
i) Personal goals and competencies of an entrepreneur.
It is important for an entrepreneur to possess competencies, knowledge, skills and abilities
before starting a business where these competencies are lacking, it’s vital to develop or bring
in others/managers that compliment what is already available.
ii) Length of the ‘window of opportunity’.
Opportunities do not exist forever. The entrepreneur has to assess how long this window will
be opened in order to make an investment decision.
iii) Industry/market.
Is there a need for the product/service? It is also important to know the size of the market.
iv) Management skills.
Those businesses that require high level of capital injection, require proper management
skills.
v) Competition
Check out whether the business has a competitive edge over other competitors e.g. potential
constraints and if the industry faces existing entry barriers.
vi) Resources
Availability and access of these resources determines whether certain opportunities can be
pursued.
vii) Environment
This refers to political, economic, geographical, legal, regulatory and also
physical environment within which a business operates.
viii) Business plan
The process of examining the factors discussed above is often the initial step in developing a
business plan. Investors and lenders may require these issues to be considered and set out in
form of a business plan.