EVALUATING A POTENTIAL BUSINESS OPPORTUNITY- CRITERIA AND INDICATORS

In this previous article, we talked on deciphering a business opportunity from a business idea.

After generating a business idea, refining, research, and feasibility study are carried out on the idea, to evaluate the potency of the idea as a business opportunity.

A business opportunity is regarded as a potent one, when it meets the following criteria

+ High gross margin (i.e. high gross profit margins)

+ Realistic and providable startup capital investment

+ Break-even cash flow periodicity within 1-3 years

+ High enthusiasm, persistence and ability to drive business into success

+ Low liability risk levels

+ Possible improvement with time

Indicators of Business Opportunity

The potency of an idea to create an opportunity is not always visible. However, certain indicators can predict, with high accuracy, the existence of an opportunity(ties) in an idea. Drucker (1986) called these indicators ‘sources of systematic innovation’, and they include:

+ The unexpected- the unexpected success, failure and  event

+ The incongruity- between reality of ‘as it actually is’ and reality of ‘as it ought to be’

+ Demographics- population changes

+ New scientific and non scientific knowledge

+ Sudden changes in industry or market structure

+ Innovation based on process need

+ Changes in perception, mood and meaning

The success and potency of a business venture is large dependent these indicators. However, because a proposed business idea or opportunity does not fulfil these criteria and indicators does not mean it is bad and should be discarded.

It should rather be worked and refined based on research discovery.

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