How to Identify Business Opportunities With Examples
How to Identify Business Opportunities With Examples
Merriam Webster dictionary defined opportunity as a favorable juncture of circumstances. You can also describe it as a chance to take advantage of a situation. Opportunities apply to almost every aspect of our lives, including in career, sports, business, etc. Opportunity can be the difference between winners and losers.
In entrepreneurship, no venture ever looked like it from beginning. But the ability of an individual to quickly sport an opportunity and work swiftly on it is what births the business venture as they were.
But what really is a business opportunity? What are the characteristics of these business opportunities, why are business opportunities important, how do you identify business opportunities? These and many other questions are the subjects of this blog post.
But let’s start by answering the basic question about what business opportunities are.
What is Business Opportunity?
To be able to identify business opportunities you have to first of all know what they are.
A business opportunity (bizopp) is the chance to take advantage of an occurrence or situation around you for business gain. Sometimes the opportunities are not very glaring. In fact, sometimes it disguises in form of a problem. In that case only very very few are able to spot it. That is while foresight and ability to spot opportunities are important attributes of successful entrepreneurs. Of course such entrepreneurs understand what is known as opportunity indicators.
A business opportunity is what makes some businesses succeed while others fail. Business leaders are successful because they see opportunities before other people spot them. And from those opportunities they draw their plans and build business models to capitalize on those opportunities.
Did you remember Uber? It is a perfect example of what we mean when we talk about business opportunity.
Why is Business Opportunity Important?
Would you want to waste time trying to identify business opportunities if they are not important? I doubt.
In entrepreneurship, an opportunity is an indispensable tool to success. Without it, a business cannot begin, let alone expand, or succeed. It is usually the premise upon which any action that will results in profit and business growth is built.
Here are some of the reasons a business opportunity is important:
The chance to build a business
Once a real entrepreneur (visionary and action oriented) spots opportunity the next thing he begins to think about is how to build a business around that opportunity. Of course the the business opportunity can be an existing problem that no one seems interested in solving. And it can also be a new problem arising from current trends or advancement in technologies. But which ever way the entrepreneur just knows that it is a chance to build a business.
The chance to avoid business failure
It is opportunities that keep a business going. As a matter of fact, a business is likely to fail without opportunities. Okay, let me put it this way, a business is likely to fail if you fail to leverage opportunities. This is because opportunities are essential for implementing ideas and innovations that can make a business successful. Opportunity is about making the right call at the right time. Did you remember the business lessons from the sale of Yahoo to Verizon?
The chance to grow
Opportunities allow businesses to create and implement ideas and innovations that bring about growth. It is also a chance to improve performance by solving existing problems better, providing a more refined value proposition to the target market, and building a more efficient business model. Once this is achieved, growth is inevitable.
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The chance to maximize profits
A business opportunity involves favourable conditions that can be used to increase profits. Your goal as an entrepreneur is to find opportunities that allows you maximize profits while solving problems.
Types of Business Opportunities
There are different types of business opportunities. And each of them serves as the bedrock for important decisions that help businesses succeed. Here I identify and share types of business opportunities:
- New market opportunity: A new market opportunity involves an undiscovered market, which gives businesses the chance to create and implement ideas and innovations without facing much competition. Once again, Uber is an example of a new market opportunity. Another good example is Amazon. These guys discovered these opportunities way before others realized how big a business opportunity they could be. With new market opportunity one enjoys first mover advantage.
- Untapped resource opportunity: An untapped resource opportunity is a type of business opportunity that involves underutilized or unexploited resources that can be used to create added value. Most business that focus on value chain development fall into this class of opportunities.
- Repressed demand opportunity: A repressed demand opportunity capitalizes on existing demands that the current offerings don’t cater to. In Nigeria, roasted plantain was a hot selling product and a delicacy many people love to have. But for many years everyone thought it is a service only widows can offer by the road side and in dirty looking environments. This automatically cut off some elites and those that are conscious of the hygiene of what they eat, even though they could have love to have it. Eventually someone saw that opportunity and set up a well packaged quick service restaurant to serve the high class and boom, that was how Bole King became a big hit.
Other Types of Business Opportunities
- Technology-induced opportunity: A technology-induced opportunity is a type of business opportunity that allows businesses to introduce new technologies that can be used in existing markets. Apparently this is an opportunity that is very common among tech entrepreneurs today. It is as easy as looking for any thriving industry and introduce tech to accelerate its growth.
- Competitive opportunity: A competitive opportunity allows businesses to introduce new products or services that can provide more value than their competitors while solving the problems of the target market better. Usually a competitive opportunity arises as a result of service dissatisfaction.
- Strategic partnership opportunity: A strategic partnership opportunity involves the chance to collaborate with businesses from complementary industries, allowing them to access new resources, strengthen their product offerings, and increase their competitive advantage. Most dispatch riders are in business specifically to complement logistics and courier companies in last miles delivery. That is an example of a strategic partnership opportunity. Most outsourcing companies also come under this.
Characteristics of Business Opportunities
When you identify good business opportunities, how do you recognize them?
As you know business opportunities are the core of every successful business. They help in identifying problems and in creating solutions that can potentially help businesses grow.
But what are some of the characteristics of a good opportunity:
- Clarity: Clarity of purpose is key in every business. So good opportunities must be clear, well defined, and straightforward not just to the entrepreneur, but also to potential investors. The opportunity should be clear on the problem it wants to solve. It should be clear on the market it is addressing. And it should be clear on the value it intends to create. Of course, it should equally be clear on the revenue model.
- Relevance: Good opportunities are relevant to the scenario in which they exist. They provide added value to customers, markets, and industries. This means they do not only represent potential but also relevance for solving existing problems or creating added value for others.
- Feasibility: Before you start investing any resources into any opportunity no matter how appealing it may appear ensure to carry out a feasibility study. Good opportunities are realistic and feasible.
- Profitable: Like we said earlier a good business opportunity should be able to state clearly the revenue model. But it does not stop there. As long as it is a business it should show potential for profitability. It is able to achieve its objectives while capitalizing on the available resources, strategies, and assets more efficiently.
- Scalable: My advice is simple, if it is not scalable don’t venture. You don’t want to get yourself into something that will remain at the same level for years. And as such a good business opportunity is scalable. This means it can be expanded to a big or a wide scale. It can extend to various markets and industries.
How to Identify Business Opportunities
The core of this blog post is actually about how to identify business opportunities. But I needed to lay a background of why this is important and how you can identify the good ones.
This is so because identifying business opportunities is an important part of business development and growth.
In this section we shall together look at the process you have to go through to properly identify business opportunities.
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The Customer Research Stage
The first stage in order to be able to identify business opportunities is the customer research stage.
When you spot something that looks like an opportunity, the first thing you should do is to ask questions.
Yes, ask customers. You can use a simple survey form or create a questionnaire to get the information you need. Your research questions should be aimed at finding out from the customers their pain points and experiences regarding the proposed service. And it should also seek to find out their goals, and expectations.
The past and present trends of the target market must also be identified to help businesses better understand customer preferences.
It is a advisable to gather as many data as possible so that you don’t work with inaccurate information. Before I started HTS Shuttle Services, I interacted directly with 40 tricycle operators and hundreds of passengers on the road.
The objective is to ensure that what you are seeing is truly what it is.
Problem Hypothesis Stage
You have interacted with customers to find out the problems they are having. The next thing is to investigate what is the root cause of that problem. This is like a business diagnosis stage. And if you make the wrong diagnosis, you will be lost forever. Remember that saying that “before you start climbing the ladder of success, you should first of all ensure it is leaning on the right wall”. That is basically what this stage is all about.
Once the problem is clearly identified along with its root cause you can now begin to explore solutions. The goal is to formulate a well-focused hypothesis that can be tested with market research.
Product Hypothesis Stage
Businesses opportunities should be able to determine what kind of product or service will solve customers’ problems or address their needs. The product or service should target specific customers based on the information gathered during the customer research stage.
Market Hypothesis Stage
The market hypothesis stage involves testing certain key assumptions about the business opportunity with customers to determine the demand for a particular product or service in the real world, and how it solves problems in the specified market.
It also involves doing in-depth research to identify existing players in the targeted market, and determining customer expectations for the product or service.
Product Development Stage
Once a business opportunity is confirmed, the next step is to develop a product or service that will solve the problem.
The product or service should be designed and tested using various methods to ensure its viability and effectiveness.
Businesses need to consider their target market, competitive threats, and business models as they develop the product or service.
Examples of Business Opportunities
Business opportunities are everywhere, and it is important for businesses to identify and tap into them.
- Uber: Uber found a business opportunity in the unorganised transportation industry by introducing an on-demand cab system.
- Airbnb: Another popular example of business opportunity is Airbnb . It introduced the concept of sharing economy by allowing people to rent out their homes as an alternative to hotels or motels. You recall how the idea of Airbnb all came about. It was a clear example of an opportunity that one was not going to miss. Brian Chesky and Joe Gebbia were simply broke and looking for money to pay their rent. Then they decided to try something; rent out their air mattresses to conference attendees and boom, the rest is history. It is a perfect example of a new market opportunity because hotels were the only service providers for this kind of accommodation before Airbnb came along.
- GoPro: GoPro is a new camera brand that saw an opportunity to introduce a unique product in the market where smartphone cameras and existing digital cameras were already popular. It catered to a repressed demand of capturing high-definition videos of sports activities, something traditional cameras were not capable of doing.
- TikTok: TikTok is another great example of business opportunity. The founders saw an opportunity in the music and video streaming market by introducing a unique take that allows users to create 15-second videos set to music. It found a repressed demand of getting recognized and untapped technology of user-generated video content.
- Crate and Barrel: Crate and Barrel saw an opportunity to introduce a unique concept in the furniture industry by selling ready-to-assemble furniture. This is different from other players in the market who only sold expensive, high-quality pieces of furniture.
What is The Difference Between Business Opportunity and Business Idea?
I have seen many people use this two terms interchangeably. But as close as they may sound, they are still not exactly the same thing. Business ideas are actually products of business opportunities.
Opportunities are identified when companies find issues or problems in existing markets, untapped needs, new or improved technologies, customer feedback, market research and other sources of information.
Business ideas on the other hand are created through creative thinking and brainstorming on business opportunities to explore possible solutions to certain problems.
Is Business Opportunity Location Dependent?
Though it is important to explore business opportunities with a possibility of global reach, but there are also so many opportunities that can only lead to viable business in a particular locality. It is important you analyze this possibility critically so that you don’t stumble on an opportunity in UK and fly to Ethiopia where the need probably does not exist for implementation.
Is Business Opportunity Time Bound?
An idea whose time has not come will hardly manifest as an opportunity. So let this not bother you at all.\
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