Before venturing into the field of entrepreneurship, one must have come up with a business idea in which they will deal with. Deciding on the kind of business is never an easy task because of the many other businesses that tend to exist, some of which may be the same as the one at hand.
A lot of thinking and research has to be done before settling on one business opportunity that may feel or seem as the best by an individual. In the process of looking around in search of a business idea, a number of questions must be asked by the entrepreneur to be; Should the new startup focus on introducing a new product or service based on an unmet need? Should the venture select an existing product or service from one market and offer it in another where it may not be available?
Spotting market opportunities is essential for business growth and survival. Here are some of the ways that can be used when identifying a business opportunity:
Identify Market Inefficiencies
When looking at a market, consider what inefficiencies are present in the market. Do you have an idea on how to correct these inefficiencies?
Remove Key Hassles
Take a look at some of the key challenges that customers face when buying or using a given product or a service. It does not necessarily have to be a new product or service in the market, but a gap on an existing one.
As an entrepreneur, one should try to be innovative and improve a product, a service or a business process. Purchasing processes in some products categories are still a major source of irritation for customers. Think how you can improve and provide a superior alternative.
Customers Desire to Experience Something New
You may or may not have a new business idea or business process to serve a market. And perhaps there are no market inefficiencies for you to exploit. But sometimes, gaging the customers’ desire to experience something new can be a successful strategy.
Can you innovate on customers’ experience in existing business models? This is a way of establishing a business idea and working on it to make it appear as something new in the market.
Pick a Growing Sector/Industry
When considering a new business, it is important to look at whether or not your idea is in a growing sector or industry. Investing in a stagnant sector/industry may not best serve your interests, unless you identify a market inefficiency that you can exploit.
Creating superior products or services vs. alternatives is important for winning in the market place.
What factors will set your product apart from the existing ones? If there is no such differentiating factor, your potential customers may just stick to the existing product rather than adopt your new concept. You must have something that seems to be plus from the existing one.
Cash Flow Considerations
At the start-up stage, cash flow considerations are just as important as any other business function. If you run out of cash, despite holding inventory or other assets, your business will risk failure.
There are some types of businesses in which cash is typically held up for a long time. If you are in manufacturing for example, your cash flow can be held up for long periods of time, or money may be stuck in receivables.
When picking the right business, you should consider one that provides fairly regular cash inflows and with slower outflows. It is imperative that you understand the need for constant cash flow in your business. Without cash flows, no matter how good your idea or business process is, you might be destined for failure.
Is it a Seasonal Business?
When picking a new business – consider whether it is seasonal or the year round.
If you do decide on a seasonal business, you will need to consider how to operate during off-season months. Managing the cash you make during the season will help you get through off-season. Financial planning will be of utmost importance.