How to Recognise a Business Opportunity

Entrepreneurs by nature tend to see opportunities in the market or environment. They are constantly on the lookout for gaps in the market they can fill. Possible market gaps are where certain goods or services are over-priced or even under-priced. Another common gap is in information where the entrepreneur has some knowledge that is not readily available on the market.

Whether an individual acts upon market presented opportunities to engage in business depends on entrepreneurial decisions they make regarding the market and economy. These decisions are based on their individual ability, personality characteristics and preferences.

However, a sure way of evaluating if an opportunity is worth venturing into, is to carry out a needs assessment on the market.

Needs assessments

The best venture is one that answers a need. Similarly your business must solve a problem faced by your potential customers. What's the easiest way to find out what is needed? The answer is simple, you just ask!

It's best that your venture arises out of needs expressed by people, and not from your assumptions about what they need. Speak to as many people as you possibly can in order to assess what they require. Make sure that the people we talk to include all demographics: women, men, girls, boys, the elderly, people with disabilities etc. When asking questions avoid asking closed questions where people can answer only yes or no. Good question opening words include: What? When? Where? Who? Why? How?

Needs assessment should be a continuous process as needs also change, and new people may enter your community with different needs.Remember to always be on the look out for new products and services that people need, want and are willing to pay for.

Its also easier to convince your bank manager to finance your venture when you can confidently tell him or her how many people require what your business intends to supply. After all, the idea is that they should in fact become your customers! You can find a list of questions to ask before entering a market here.

The needs assessment can be followed by a capacity assessment to see what strengths your business concept has to address the identified problems. Your aim should be to seek to strengthen any weaknesses. The assessment involves considering the following assets:

• Human: these include your skills, knowledge, work ethic etc


• Social: these are based on your social and business network and include other entrepreneurs, and groups within your community. Informal networks are also important, these include friends etc


• Natural: this is based on what you have at your disposal in your environment.


• Physical: these are man-made, such as building, transport, water supply, electricity and telecommunications.


• Economic: these include money and savings

Analyzing Risk

Risk can be defined as the potential for unwanted things to happen. Every activity involves risks and some risks will affect your business more than others. Risk assessment helps to identify business threats and considers the likelihood of them happening, as well as their likely impact. The risks can then be managed by adjusting your business plan to ensure the risks are minimised.

Although entrepreneurs are known to be risk-takers, they actually take calculated risks. When considering whether a venture will be too risky, ask the following questions:

• Is there sufficient demand for the product/service I intend to offer?


• What are the likely risks that can hamper my business success?


• What is the likelihood of each risk happening?


• What will be the impact of each risk on my business?


• What measures in my venture can I enforce in order to minimize the risk happening?


• If I can't minimise the risk from happening, what measures can I take in order to minimize the effect on my business?

Remember that it is important to take every possible measure to ensure that your business risk is minimised. Another not so scientific risk mechanism is trusting your gut instinct. Don't invest or spend to points where you feel uncomfortable. Read up and research the market as thoroughly as you possibly can. That's what taking calculated risks is all about. Your research will give you an edge over competitors who start a venture without assessing the risks.

Overcoming Fear

All entrepreneurs face fear of failure, especially those who have ventured into business before without success. Different individuals have diverse ways of handling such fear. Some just immerse themselves in the tasks at hand so as to keep their minds off any doubts that may creep into their imaginations. However, if you feel doubt and fear creeping up, remind yourself that you have the following factors in your favour:

• that your venture answers a need of which you have first-hand understanding. Yes, necessity is the mother of invention... and enterprise!


• that you have the necessary skills and experience, or alternatively know people who have the necessary skills and experience.


• that your market research and risk analysis have shown that the market potential far outweighs the negative factors.