Entrepreneurial opportunities are not equally obvious to everyone, but they are equally available to anyone with the experiences and the knowledge of discovering them.
Opportunities are themselves unstructured and advantages and disadvantages of opportunities are largely dependent of the individual differences in personal experience and training. Perhaps we should analyze a little on why people move differently into various activities associated with entrepreneurship.
Entrepreneurial behaviour is assumed to be intentional, but is limited by the demands made by the society. We emphasize here on the effect of norms, motivation and family-related factors and the interaction between them. Austrian-economic model states that depending on the unique experience of individuals, some people will be at an advantage discovering some specific opportunities. This advantage is provided by the prior experiences of these individuals and social networks generated by these experiences.
How individuals choose education and career paths has therefore important effects on whether or not they become entrepreneurs and what kind of opportunities they discover and exploit because differences in training and work experience lead to different idiosyncratic experiences and enable them to identify only certain types of opportunities.
For example, a person who has worked all her life as a teacher is more likely to identify an opportunity related to her teaching experience than to identify an opportunity related for example to aeronautics or to computer science. Many other examples abound.
Seeing, seeking and acting on opportunities is one of the characteristics of successful entrepreneurs everywhere. It is also the basis for starting and maintaining successful ventures. It involves not only generating ideas and recognizing opportunities, but also screening and evaluating them to determine the most viable, attractive propositions to be pursued.
What is a Business Opportunity?
A business opportunity may be defined simply as an attractive or proposition that provides the possibility of a return for the investor on the person taking the risk. Such opportunities are represented by customer requirements and lead to the provision of a product or service which creates or adds value for its buyer or end-user.
However, a good idea is not necessarily a good business opportunity. For example, you may have invented a brilliant product from a technical point of view and yet the market may not be ready for it. Or the idea may be sound, but the level of competition and the resources required may be such that it is not worth pursuing. Sometimes there may even be a ready market for the idea, but the return on investment may not be acceptable. To underscore the point further, consider the fact that over 80% of all new products fail.
Surely, to the inventors or backers the idea seemed a good one, yet clearly it could not withstand the test of the market.
So, what turns an idea into a business opportunity? A simplified answer is when income exceeds costs – profit. In practice, to be comprehensive you need to examine the factors listed and illustrated below.
Characteristics of a Good Business Opportunity
To be good, a business opportunity must fulfill, or be capable of meeting, the following criteria:
- Real demand, i.e. respond to unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to exercise that choice.
- Return on investment, i.e. provide durable, timely and acceptable returns or rewards for the risk and effort required
- Be competitive, i.e. be equal to or better – from the viewpoint of the customer than other available products or services.
- Meet objectives, i.e. meet the goals and aspirations of the persons or organization taking the risk.
- Availability of resources and skills, i.e be within the reach of the entrepreneur in terms of resources, competency, legal requirements, etc.