What is Entrepreneurial Opportunity ?


An entrepreneurial opportunity can be identified every time when there is a challenge, want, need, or problem that can be dealt with, resolved and/or fulfilled in a creative or novel manner. The situations in which new things like goods, services, production methods, raw materials, etc., can be introduced and sold at prices more than their actual costs, are termed as entrepreneurial opportunities.

There are many factors involved in launching a new business venture successfully besides having an ingenious business concept, arranging capital sources and presenting the good or service in the market. It is essential for the entrepreneurs to become proficient in studying the market and comprehend the business environments, in which they should function. Entrepreneurial opportunity makes the entrepreneur able to identify and execute several things which are out of control or difficult (like defaulting contractors and opening & closing of business niches).

The limit to which probabilities for new business ventures prevail and the level of flexibility entrepreneurs have to impact their odds by their actions for achieving success is known as opportunity. Explaining it in simpler terms, opportunity is an ascertained mode of income generation that have neither been exploited at an earlier stage nor being exploited by others presently.

It is one of the major challenging tasks for the entrepreneurs to identify a suitable business opportunity for them. Generally, entrepreneurs use one of the following ways to start their ventures: 
  1. Offering new products or services to satisfy the unmet needs.
  2. Offering the existing products or services into totally new market.
  3. Starting as a franchisee of a well-established business.

It is significantly noteworthy that in an ongoing process, opportunity identification is only the first step and is entirely different from feasibility analysis and economic evaluation of the opportunities. It is relevant to understand that how an entrepreneur finds out and determines a new business opportunity having the maximum possibility to attain success. Finding a solution to an unfulfilled need or want in the market is the most crucial part of all successful start-up enterprises. The products which add value always attract customers. The major concern for buying a product is need fulfilment or solution to a problem. Actually, there is no other option available for an enterprise rather than to fulfil the unmet customer needs.

Characteristics of Entrepreneurial Opportunity


The characteristics of entrepreneurial opportunity are as follows:

1) Market-Oriented: 
An entrepreneurial opportunity is considered as good opportunity when it is market-oriented. It must be something receivable by others in exchange for money. It should be something which has a value and can be either bought by someone or sold by someone.

2) Feasible: 
An opportunity must be practicable, i.e., viable to be attained. It must be identifiable and exploitable by entrepreneurs.

3) Profit-Oriented:
A workable business opportunity should be sought by an entrepreneur. A business opportunity must be one which earns profit for the organisation as profit is indispensable for business's existence. This opportunity must be such which offers the entrepreneur that profit to sustain in the market.

4) Specific: 
An entrepreneurial opportunity should be such which has a meaning, name and scope. It should be observable, defined, explicit and precise to be a good business opportunity. It must necessarily be accurate and specific.

5) Motivational: 
A sound entrepreneurial opportunity is one which has the potential to encourage an individual to conquer his individual desires or attain his personal aims. In order to carry an entrepreneurial opportunity as an opportunity, it must have the ability to earn certain amount of profits.

6) Legal: 
A good entrepreneurial opportunity lies within the legal framework of the country. It is not against the rules and regulations of the government. In case, it is observed that it does not abide by such rules or regulations, the legal agencies can take necessary actions.

7) Ethical: 
Since each and every business has its own moral principles and ethics, a true entrepreneurial opportunity must be ethical. Every business has its set of do's and don'ts which are expected to be followed meticulously. Hence, an entrepreneurial opportunity should not be something that will have conflicting interests to the ethics and morals of the business. Advertising which are misleading or ambiguous, degraded food or drags, cheating/defraud, manipulation and adopting wrong measures are few examples of unethical practices.

8) Convertible to Product: 
An entrepreneurial opportunity must be able to be shaped in a product. It may be convertible into goods or services. An entrepreneurial opportunity is meaningless until and unless it results in a product which satisfies the needs and desires of the customers.

Environmental Scanning for Entrepreneurial Opportunity Identification 


Environmental scanning is essential to recognize a business opportunity. Environment offers twofold advantages: firstly, it acts as a great source of information to the entrepreneur and secondly, it also acts as a source of material resources for the business of that entrepreneur. An entrepreneur must utilize the resources and information provided by the environment so as to deliver goods and services required by the environment or the general public. Without this, it is not possible to maintain an alignment between the entrepreneurial venture and the environment.

Environmental scanning is the sequential process of observing, assessing and distributing the information concerning the external environment within the internal environment of the firm. In this way, it helps in identifying the available business opportunities in the external environment. External societal environment, external Immediate or task environment, and internal environment are the three layers of environment which are scanned in a particular scanning process. But only the external societal and external task environments provide the entrepreneurial opportunities.

Alterations in industry cycles, dynamics and trends are displayed by the concerned environment at the stage of environment scanning. In a particular environment, the success/failure variables keep changing giving rise to new opportunities or threats. A business performance is widely influenced by the changes in macro-environmental factors like political, economic, social, technological and physical factors. There is a constant need to pay attention to ongoing modifications in government policies, demand and supply trends, innovations and creations in the markets and demographic profiles, along with the dynamic changes occurring in the global weather. Consumer preferences and their market impacts are necessarily analysed to identify the entrepreneurial opportunities.

Environment Changes in Entrepreneurial Opportunity Identification


In order to identify the entrepreneurial opportunities, entrepreneurs should focus on external societal and external task environments. By scanning these two environments, the opportunities are selected and threats are avoided. The following factors are crucial to be scrutinized in the external environment: 

1) Economic Factors: 
These factors comprise of changes in competition, national income, demand and supply, lifestyle, prices, consumer spending. etc.

2) Social Factors: 
Social factors involve knowledge and talents, tradition and beliefs, culture, value system, public viewpoints, changes in social attitudes, influence of educational institutions, etc.

3) Political and Legal Factors: 
These factors comprise of world monetary order, war, natural calamities, election and changes in legislation and government, etc.

4) Technological Factors: 
New processing techniques, new materials, inventions, discovering technology and Innovations in machinery equipment and tools constitute the technological factors.

5) Demographic Factors: 
Rural and urban migration, changes in population, etc., form the part of demographic factors.

6) Ecological Factors: 
These factors involve ozone layer depletion, pollution, erosion, noise, etc.

Steps in Opportunity Identification 


Entrepreneurial opportunities act as an economic idea. These ideas can be executed to establish a business venture and obtain profits. There are many sources which provide information regarding different business opportunities such as internet, magazines, commercial organisations, government, financial institutions, relatives, friends, etc., to an entrepreneur. A thorough and in-depth analysis is required to select the best business opportunity from the available information. Following are the three steps an entrepreneur follows for identifying new business opportunities:
  1. Opportunity Search
  2. Opportunity Analysis
  3. Opportunity Selection

1) Opportunity Search :


Each and every entrepreneurial activity begins with the opportunity search stage. In this stage, a variety of new product ideas are generated and the unfeasible ones are neglected. Ideas which are selected for further assessment are those which optimally utilize the available resources.

A good opportunity should be in accordance with customer need and its time schedule, purchasing power, size and potential of the market, etc. The criteria used to evaluate the effectiveness of the opportunities include price versus performance, competitiveness, perceived benefits and risks, etc.

Creative ideas are developed with the help of divergent thinking. Divergent thinking refers to the thought process or technique employed to produce innovative concepts by reviewing several probable solutions. In divergent thinking, different logical ideas are developed spontaneously in a free-flow style. This thought process is usually employed jointly with convergent thinking, which includes a specific set of logical steps to reach at one solution. This one solution is in certain instances a "correct" solution.

Relatively, in a very short period of time, a number of opportunities and their relativeness are explored via divergent thinking. On completion of the divergent thinking process, the convergent thinking is used to organize and structure the available opportunities. Opportunity search involves the idea generation for new business or for the future growth of the existing business.

Types of Opportunities

As per Peter Drucker, there are three types of opportunities, which are described below:

1) Additive Opportunities: 
Such opportunities cause the decision-makers to use the existing resources in more productive and useful manner. These also cause the alterations in the prevailing strategies of production as well as marketing.

2) Complementary Opportunities: 
Such opportunities include incorporating new ideas in the existing products or businesses so as to satisfy the market demands. With such opportunity, risk is also associated. Ultimately the business attributes are likely to change.

3) Breakthrough Opportunities: 
Such opportunities result in new products, new locations or new technologies. Through following such opportunities the overall business structure, business value and business strategies are changed. These opportunities are able to provide highest gains and risks are also higher with such opportunities.

Sources of Idea for Opportunity

Following are the most frequently used sources: 

1) Consumers: 
One of the most common sources of generating a business idea can be consumers. An entrepreneur should carefully observe and study the preferences and buying patterns of target consumers. This helps the entrepreneurs to identify a number of practical business ideas that can be converted into business opportunities. Along with the business ideas, these researches and analysis also provide various suggestions for making a product or service more meaningful for the customers. Other than this, formal or informal surveys can also be conducted for generating business ideas. These surveys can be done by using questionnaires or conducting face-to-face interviews.

2) Existing Products and Services: 
An entrepreneur can find a new business idea by reviewing, monitoring and evaluating its existing products, services or markets. In addition, ideas can also be sourced from the current marketing strategies and distribution networks, which are used for delivering products or services to the customers. A combination of existing products or services and markets can generate the most simple. business ideas, while a combination of new products or services and new markets may generate the most difficult ones. An entrepreneur faces high level of market risks and competition when chooses to work on the simplest business ideas. On the contrary, an entrepreneur is provided with high security and first mover advantage when he chooses to implement the most difficult business ideas. However, an entrepreneur can have a safe side when he decides to choose an existing market with new products and services, or chooses new markets for existing products and services.

3) Distribution Channels: 
For gaining new business ideas, distribution channel is also considered as one of the important sources. The persons involved in the distribution network can provide various meaningful business ideas as they directly interact with the persons involved in the entire supply chain. It is necessary for an entrepreneur to know the response of the product when it comes out from the manufacturing system. The individuals involved in supply chain management and distribution channels know the exact position of the product in the market, and thus, provide a good source of business ideas. To take out correct information from the persons involved in the supply chain process, an individual must be well-trained and attentive enough to carry forward the responses of the customers. They should also extract out various information related with the competitors, tastes and preferences of customers from wholesalers and retailers, etc.

4) Trends: 
Trend acts as an indicator of changes held in the marketplace. These changes provide various business ideas to entrepreneurs. These trends can involve several changes such as economic, societal, technological, governmental, etc. Usually, there are four types of trends that need to be observed:
  • Economic Trends: These trends generally include changes that take place in the economy as a whole. For example, upper disposable incomes, performance pressures and dual income families.
  • Government Trends: The changes made in the government policies and regulations act as a trend like hike in petroleum prices, additional policies, terrorism, etc.
  • Societal Trends: These trends are related with the people of the society, eg healthiness, aging demographics, number of senior citizens, etc.
  • Technological Trends: These trends involve the latest changes that occur in the field of technology, eg, mobile technology, e commerce, internet advancements, etc.

5) Research and Development: 
The research and development activities of entrepreneurs can generate numerous ideas for starting a business venture. The R&D efforts can be both formal well as informal. When these efforts are taken within the company, they are formal efforts. And when these efforts are taken by the entrepreneur himself, or with the team, then they are termed as informal efforts. Moreover, the research studies conducted by competitors also have the capability of providing practical business ideas. One should also know that the R&D activities are suitable for large organisations only. Small and medium businesses cannot afford to invest huge amount of money in R&D.

6) Government: 
Government also plays an important role in providing business ideas to the entrepreneurs. The changes held in government policies, procedures, rules and regulations create business opportunities for entrepreneurs. This helps them in deciding the type of business and funds required for establishing an enterprise. For example, an entrepreneur can launch a new automobile with high mileage when the government announces high petroleum prices.

7) Strategic Changes:
Entrepreneurs are the individuals who possess the capability of identifying strategic changes and create opportunities. They receive rewards such as wealth and personal satisfaction by implementing the strategic changes in their new ventures. Hence, these strategies motivate an entrepreneur to make changes in the business enterprise.

8) Exhibitions: 
By participating in different trade fairs, exhibitions, etc., an entrepreneur can find out new ideas for setting up a new venture. Not only these exhibitions contain new products and services, many important salesmen, distributors, franchisers and other entrepreneurs are also present there. All these participants act as a source of idea in some way or the other for an entrepreneur.

Tools and Techniques of Opportunity Search 

There are different methods to search for new opportunity. Some are as follows:

1) Focus Group: 
When a group of persons provide information in an organised manner, they are termed as a focus group. Generally, these groups consist of 8 to 14 members that are led by a moderator in a directive or a non- directive manner depending upon the type of discussion. These discussions are in-depth and open, where every member can put his or her views in an organised manner. These groups generate feasible business ideas by conducting in-depth discussions on various topics. Here, the members stimulate each other to involve their views in the discussion. This gives a proper direction to the discussion thus leading towards a feasible business idea. In this process, irrelevant ideas are dropped out and only relevant ideas are taken.

2) Brainstorming: 
One of the most common methods of business idea generation is brainstorming. It is a method in which a group of persons interact and stimulate each other into a creative and deep-rooted group discussion. The ideas generated under brainstorming sessions usually do not have further scope of development, but sometimes great ideas can be generated from them. These sessions are more effective when directed towards a particular market or product, Brainstorming sessions invites large number of ideas, whether feasible or impractical, from the group members. It opposes criticism or negative comments and encourages combinations or improvements in them for successful generation of ideas. This technique is used by many large organisations and commercial banks for developing a particular product for a specific customer segment.

3) Reverse Brainstorming: 
It is similar to brainstorming technique but in this, criticism of the ideas is permitted so as to reach the best idea. Identifying the shortcomings or negative points about the given ideas is the main activity in this technique. Thus, through thoughtful discussions and criticism, a useful idea is generated.

4) Check List: 
Discussions conducted on list of associated problems form the basis of generating new ideas for business. The entrepreneur enumerates a particular area of discussions and subsequently a checklist of queries, statements and recommendations is established for comprehensive talks. In this check list, following type of questions are discussed:
  1. The very reason, as to why the product is used. Who uses the product? The method followed while using the product.
  2. New possible ways of using the product.
  3. Any type of changes possible to increase the utility level of the product.
  4. Which substitutes are available in the market? Their level of competitiveness with our product. Is it possible to incorporate those attributes to develop a new improved product?
  5. Check if modifications are possible. 
  6. Is it viable to modify the shape, color or packing of the product? Can we increase or decrease the size of the product, or increase frequency or add new ingredients in the existing list of ingredients? 
  7. Is it possible to introduce a substitute product in the market?
  8. Can we alter processes, make it lighter or make it smaller?
  9. Change appeal, modify the intention with which the product is being offered, make use of different materials of construction and introduce additional positive features that can appeal and attract customers.
  10. Find out which all products are being used in foreign countries and why? 
  11. Identify new emerging products in a certain product range.

5) Problem Inventory Analysis: 
In this method, new ideas and solutions are developed in terms of the existing problems. These ideas are generated by the consumers of a particular product. A list of problems related to general product category is given to every customer or consumer and then they are asked to recognize the exact problem. Further, this process is followed by discussions in regard with the problems of a product, which finally leads to the generation of a new business idea. Since these ideas create a business opportunity, the results of this analysis should be evaluated carefully. Also, it is recommended that this analysis should be mainly used for generating ideas of new products from existing ones. By adopting this method, maximum results can be obtained.

6) Synectics: 
William J.J. Gordon coined the method of synectics used to upgrade the process of creative problem-solving. "Synectics" means combining distinct and seemingly disconnected and unrelated elements. Under synectics, the ideology of "making the strange familiar" is followed to define problems and "making the familiar strange" concept is followed to seek new ideas. The second concept aims at making the known strange, i.e., unknown by deliberately inverting, reversing or manipulating the problem to something unknown. General ways of perceiving and general expectations about the behavior of others both are rearranged in this technique. In this process, synectics makes use of four types of metaphors which are as follows: 

i) Personal Analogy: 
In using a personal analogy, decision maker actually imagine themselves as the object or problem. For example, if the purpose is to reduce the incidence of panhandling on city streets, then they might want to imagine themselves as a panhandler. This might sound unbelievable, but much an exercise probably will increase the number of ways that they think about the problem. As Gordon pointed-out that, even Einstein used visual and muscular analogies in understanding mathematical constructs.

ii) Direct Analogy: 
The metaphor of direct analogy is identical to the problem with reference to the facts, technology or knowledge. Organisational theory can be an appropriate example here. Usually. organisational theory describes about organisation functioning as organic systems, employing a biological metaphor where there are inputs, a conversion process outputs, and a feedback loop.

iii) Symbolic Analogy: 
In this type of metaphor, a symbol or image is used to describe a problem. For instance, the role of a supervisor can be considered equivalent to the role of a coach, a conductor, a teacher, a gardener or a tug-boat, or creating a work team can be regarded similar to developing a collage with a usual theme.

iv) Fantasy Analogy: 
Under the fantasy analogy. the decision-maker can ask himself the question as to "What is the wildest imagination about how to resolve a problem?" The intention of the decision-maker behind asking such a question is to presume the best features of all possible outcomes. It prompts free- thinking about the issues and avoids becoming confined by current restrictions.

7) Information from Publications: 
Abundant information about various products and services are available in several publications of different organisations. Some of these sources of publication include sales brochures, advertisements, catalogues, publicity posters, etc. These sources are readily available for anyone and may sometimes, trigger new ideas and business concepts.

8) Seminars and Conferences: 
The emerging opportunities and challenges of business are discussed in various seminars and conferences held on a regular basis. An inexperienced entrepreneur will be able to acquire a lot of Information and useful tips from such seminars and conferences dedicated to business.

9) Discussion with People: 
It is quite possible that if an entrepreneur is inattentive or careless, he may lose out important opportunities. A skilled entrepreneur is one who is an attentive listener with an analytical mind. Such an entrepreneur will be in a position to learn regarding the tastes, needs and preferences of people surrounding them by being a good listener. The information acquired from people will aid the entrepreneur to create products and services that indeed have the level of fulfilling consumer requirements.

10) Day Dreaming and Fantasizing: 
Daydreaming is another useful method of generating business ideas as many inventions are born out of imagination. It is a thought process which allows a person to creatively and resourcefully think about a particular problem or issue. It enables a person to establish an emotional connect with the problem, which is beneficial in terms of coming up with great ideas. Business opportunities are developed automatically when someone dreams productively focusing upon a specific goal. In the past, several inventors have undergone daydreaming, thereby coming up with ideas that led to their life-changing invention. For example, an airplane invited by the Wright Brothers was just a daydream.

11) Combination of Above Methods: 
Methods of generating ideas do not necessarily involve choosing one method at a time. An entrepreneur can combine the above methods in order to generate innovative and feasible ideas. An idea can be generated from any source and does not have any boundaries or time frame.

2) Opportunity Analysis :


Entrepreneurial opportunities refer to the economic ideas which can be implemented to form a business enterprise. The entrepreneur selects the business idea which is the most possible of all the opportunities and yields greatest rewards. This can only be done if the entrepreneur analyses all the opportunities and understands the demand-supply gap.

The essential characteristic of an entrepreneur is that he is forever looking out for the opportunities. An entrepreneur, in the first instance, must identify a business opportunity, analyse its pros and cons and then select it on the basis of the identified attributes. Moreover, an opportunity must be understood as any business idea which is viable and feasible for a business venture. One of the pre-requisites of a viable project idea is that it should be capable of being translated into feasible and practical business application. As such, a favorable business opportunity has the following essential characteristics: 
  • It has guaranteed scope in terms of market share.
  • It has a remunerative and attractive rate of return for the entrepreneur.
  • It is practical enough for application.
  • It is capable of being used by the entrepreneur as a business project.
  • It has potential growth prospects.

Ways to Assess Opportunities

There are several ways of assessing a business opportunity, some of which are discussed below: 

1) Needs and Wants: 
The basis for recognition of opportunities in the market is analysis of the unsatisfied needs and wants of the market. However, an opportunity derived solely from the wants of the market cannot be regarded as a true business opportunity. The applicability and viability of the opportunity, in essence depend upon the determination of the fact that the idea or the product will serve customers' needs and will be acceptable to them, when it is finally launched. The product therefore, has less chances of survival when it is launched solely on the basis of perceived wants of the market. In such cases, the sales of the product will be adversely affected as product serves no need of the customers or may be unacceptable to them.

2) Current or New Market: 
Opportunities for new business are also analysed in terms of their relations with market being targeted, i.e., whether opportunities exist in the present market or in a new market. Also, the enterprise may already been conducting its business operations in a marketplace, known as present or current market. Whereas, a marketplace where the company wishes to carry out its business activities for possible returns is referred to as a new market for the company. The firm may choose to enhance its performance in its present market itself. This can be achieved either through increasing the sales of the current product offering or by introducing a completely new product in the market. Such a strategy where the firm aims at increasing its revenue from its current market by increasing the sales of its existing product is referred to as market penetration. 

On the other hand, where the firm aims at increasing its revenue from the current market by introducing a new product is said to follow a strategy of product development. Thus, product development, in essence, involves introduction of a new product or offering a differentiated product from the one already in the market. For example, an old product may be launched in a new packaging or be incorporated with more features. When the enterprise tries to sell its existing basket of products in an entirely new market segment, then it is called market development. Whereas, it is referred to as diversification when the firm tries to launch a new product in a new market.

3) Target Market: 
Another way of finding out the opportunities in a market is to research the trends in the growth of consumers. A new entrant will find it very difficult to enter a new market which is declining. Also, a mature market characterized by intense competitive rivalry will put up strong entry barriers for a new firm. While, it is almost impossible for a small-sized or medium-sized firm to enter a market segment which has a significant presence of big business houses or MNCs.

However, chances of survival are relatively greater when the competitors in the new market are weak in capacity and small in number. A small-sized firm has greater chances of survival in the new market if the product is one which the government has reserved for the small-scale sector and may even corner a significant portion of the market share, if the product is experiencing a rise in demand. A small firm cannot possibly choose a product category which is highly sensitive to price-wars. Such situations necessitates choosing a product which can profitably compete on parameters like quality, innovative design, packaging, delivery time, after sales services, replacement options, etc. It is easier for a firm to enter a new market which is witnessing demand surge and it is possible to introduce somewhat differentiated product which meets customers' needs.

4) SWOT Analysis: 
SWOT analysis is a unique technique used for evaluating the likely chances of success for a particular business opportunity. This aims to identify the four aspects of a venture in terms of its Strengths, Weakness, Opportunities and Threats (SWOT). The strengths and weaknesses relate to the internal dimensions of an organisation, whereas the opportunities and threats relate with the external environment of the organisation.

Tools and Techniques of Opportunity Analysis 

Opportunity analysis can be done with the help of the following techniques:

1) Trend Analysis:
Analyzing a trend, especially a new one, offers a great business opportunity to the entrepreneur for creating a new venture. Also, if the entrepreneur analyses the trend at an early stage, it gives him plenty of time to make use of it. Trend analysis enables the entrepreneur to start a new business by making use of the idea behind the trend and successfully creating, developing and marketing it.

2) Demographic Analysis: 
Business opportunities can also be identified by looking at demographic variables and identifying any noteworthy shift. Demographic changes which are considered noteworthy for analysis include variables like households with dual incomes, increasing aged population, greater penetration of mobile and social tools, nature of jobs, etc. Increase in families with dual incomes has led to the increase in demand for products which economies on labour or for specific services which can be availed by them. Some of the services that have seen growth in their demand include laundry services, babysitting, day-care services, etc.

3) Gap Analysis:
 Another technique for evaluating business opportunity is gap analysis which is based upon identifying gaps in the market. These gaps or opportunities can be shown in the form of various ways which are enlisted below:

i) Product Line Gaps:
  • Related to size
  • Related to alternatives
  • Related to style, color, flavor, fragrance, etc.
  • Related to form
  • Principle or method of operation
  • Operation range 
  • Format of the product
  • Composition of the product
  • Type of container
  • With reference to quality, and price
  • Related to the distributor brand

ii) Distribution Gaps:
  • Gap in coverage or distribution
  • Intensity gap
  • Exposure gap

iii) Usage Gaps:
  • Light user gap
  • Non-user gap

iv) Competitive Gaps: 
The most commonly used method is identifying the product line gaps. In this method, the existing product in the market are analysed on the basis of a variety of parameters like size, available alternatives, style, flavor, fragrance, quality, price, distributor brand, etc. By inspecting these variables, a gap can be identified in terms of a product feature which is not meeting the needs of the customers. This creates the opportunity for a new and better product or service. Analyzing the gaps in distribution, usage and competition can also be used to identify now business opportunities.

3) Opportunity Selection :


The entrepreneur has to consider all the factors which have an impact on the selection of a business opportunity as the decisions regarding the selection of business opportunity is taken at the very beginning which is not so easy to change later. An entrepreneur needs to be careful regarding factors which may interfere the smooth functioning of the business in the future. As such, the entrepreneur needs to have all the relevant data for selecting the right kind of business line as a wrong decision taken at the beginning will affect subsequent decisions as well. Hence, it is necessary for the entrepreneur to study all the opportunities carefully before any one of them is selected. One should remember that all the businesses are built upon the solid foundations of carefully analysed business opportunities and entrepreneurial behavior.

Right market conditions are required by the entrepreneurs to transform their business idea into a profitable venture. Further, it necessitates creation of beneficial situations wherein opportunities, can be availed. Before the business opportunity is selected, the entrepreneur has to confirm that the product or commodity, which is going to be produced, has a ready market that will provide sufficient profit in return. Also an entrepreneur needs to collect all the important information regarding the chosen business opportunity before analyzing it.

Finalization of Opportunity or Product 

The finalization of a product or an opportunity needs to be done after keeping in mind the following factors: 
  1. Total investment
  2. Return on investment
  3. Returns on equity
  4. Expected sales volume
  5. Gains and Profitability

After going through the analysis, the selected product/service will be the most viable one to be used as a business idea. Besides, the whole volume of data collected above, an entrepreneur need to work out following additional data that enable him to take ground-level decisions. These data correspond to:
  • Total investment required in plant and machinery
  • Possible sources of raw materials 
  • Facilities for infrastructure
  • Project size
  • Availability of requirement of manpower
  • Amount of finances required
  • Government policies and procedures regarding starting of a new venture
  • Government incentives, subsidies, exemptions, etc.

These factors play determinative role in selecting a project which is not only feasible but also financially viable. For a long term growth, it is necessary that the opportunity is capable of giving consistent and continuous returns over a fairly long period of time and can be diversified into other businesses if required.

Objectives of Opportunity Selection 

Selection of any business opportunity should be guided by the following objectives:
  1. To resolve the business problem by developing a conventional solution, agreed-upon consensually. 
  2. To achieve the external goals which are beyond the control of an entrepreneur and thus are dependent on his personal thinking.
  3. To remove probable chances of vagueness in the selection of business opportunity.

Tools and Techniques of Opportunity Selection

Experts have, over the years, developed several tools and techniques for guiding the decision of opportunity, selection. Some of them are as follows: 

1) Hits: 
This is a very fast way of identifying best opportunity among alternatives. The idea is to hit (mark) the most attractive, interesting, feasible, creative alternative as dots or a hit mark by using a pen.

2) Clustering: 
In this method, similar alternatives are grouped together so that repetition can be avoided. After the hits are marked, clustering is done in a manner that not more than three opportunities occur in one group.

3) Restating Clusters: 
It is a tool which tries to capture the central theme of a cluster so that it can be expressed as a single statement. While doing this, it should be kept in mind that the original and interesting facets of the ideas are not lost.

4) Point: 
POINT is a four-stage approach used for the evaluation of an alternative, POINT stands for Pluses, Opportunities, Issues and New Thinking. Under this technique, a list of all pluses, followed by opportunities (business potentials), then issues (various problems, concerns, etc.) and finally new innovative thoughts for resolving such issues is prepared in that order.

5) Card Sort: 
This is one way of ranking or assigning priorities when faced with many attractive options. In a given set of opportunities, mark a 1 on the most attractive alternative and a 6 on the least attractive and put them aside from remaining alternatives. Next, mark 2 on the most attractive and an alternative 5 on the least attractive. Continue the same for the numbers 3 and 4. Although, this does not help in selecting an alternative but helps in ranking them on the basis of some criteria.

6) Evaluation Matrix: 
In this technique, the criteria for selection are listed column-wise and the options are listed row-wise in a grid matrix. After that, a rating scale (such as A-B-C or 1-5) is selected. At last, every alternative is rated against the selected criteria.

7) Paired Comparison Analysis: 
In this technique, every alternative is compared with other alternatives. All the options are listed row-wise and column-wise on a grid. Now, each option is rated against other options using a rating scale (e.g., 3 is preferred little 2 is preferred more and 1 is preferred the most). The final rating of the option is the total score that it gets.