How to Identify and Evaluate Business Ideas and Opportunities

Generating a Business Idea

Every business comes out of an idea. Businesses are started by men and women who see that people want to buy a particular product or service. When you have a first vague thought about a business opportunity you need to develop it into a business idea. A good business idea is essential, or even a prerequisite, for a successful business venture.

However, good business ideas do not usually just occur to an entrepreneur. Rather, they are the result of hard work and effort on the part of the entrepreneur in generating, identifying, and evaluating opportunities.

What is a Business Idea?

A business idea is the response of a person or persons, or an organization to solving an identified problem or to meeting perceived needs in the environment (markets, community, etc). Finding a good idea is the first step in transforming the entrepreneur’s desire and creativity into a business opportunity.

Creativity, as used here, refers to the ability of enterprising individuals or potentially enterprising individuals to design, form, make or do something in a new or different way.

The ability to come up with creative solutions to needs/problems and to market them often marks the difference between success and failure in business. It also distinguishes high-growth or dynamic businesses from ordinary, average firms. Real, successful entrepreneurs are creative in identifying a new product, service, or business opportunity.

To be creative, you need to keep your mind and eyes open as you work through the principles of generating and assessing business ideas and opportunities explained below, and apply the techniques.

Two things should, however, be noted;
(a) although it is a prerequisite, a business idea is only a tool;
(b) an idea by itself, however good, is not sufficient for success.

In other words, notwithstanding its importance, an idea is only a tool that needs to be developed and transformed into a viable business opportunity.

In other words, a business idea is a short and precise description of the basic operations of the business. Your business idea will tell you:

What product or service your business will sell.
Who your business is going to sell to.
How your business is going to sell its products or services.
Which need your business will fulfill for the customers.

What?

What product or service will your business sell? Your business idea should be based on what you are good at. Maybe you have experience in a specific line of business or have been trained in a skill. The business idea will help you to focus on what you could do.

Who?

Who will buy your product or service? Your customers can be individuals or other businesses. They may all be within a small area or they can be spread over a large area, maybe the whole country. Will you only try to sell to a specific type of customer or to everyone in an area? It is important to be clear who you intend to sell to.

How?

How are you going to sell your product or service? If you plan to open a shop this is clear, but a manufacturer or service operator can sell in many different ways. A manufacturer can, for example, sell either directly to customers or to retailers.

Which?

Which need will your product or service fulfill for customers? Your business idea should always have the customer and the customer’s needs in mind. It is important to find out what the customers want and to listen to your future customers when you work out your business idea.

It is difficult to attract customers to a new business. Your products or services must offer something “special” for the customers to come to your new business.

If you offer many different products or services to many different kinds of customers, it is almost impossible to stand out and be noticed by new customers. If you specialize in one or a few similar products or services that you sell to a specific group of customers, it is easier to be “special’ and attract customers.

Many new entrepreneurs make the same mistake when they develop their business idea.
They think because their business is introducing a new product or service, there must be a demand for it. But just because the product or service is new does not mean that there is demand for it. Make sure that there is a demand for your product or service.

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