Small business opportunities

Before you can organize and operate a small business, you need to find a business opportunity . A business opportunity is more than just a good idea ; it also needs to score well in a number of important ways :

The initial idea

There are several myths about the initial idea for a small business. The first is that there exists some procedure by which you can reliably search for and discover good business ideas . It simply does not happen that way. Good ideas tend to emerge unexpectedly or you stumble upon them inadvertently. What is important is that you are able to recognize a good idea when you see it.

The second myth is that you must discover a unique idea, a new invention or some enormous leap of the imagination. There is simply no correlation between commercial success and the creative or technological brilliance on which it is based . In fact, the vast majority of small business ideas are no more than excellent copies or adaptations of other successful operations .

The third myth is that a good idea will ensure success. There are thousands of good ideas that have gone broke . New ventures take a great deal of time and much effort to succeed. A good idea needs to be supported by a carefully developed business strategy before it stands a chance of becoming a successful business operation .

The fourth myth is that any competent mall business manager can operate and type of small business successfully . Doing something that you understand and enjoy makes it far more likely that you will be successful . If you follow your instincts and concentrate on ideas that you find exciting, you will have more energy and enthusiasm for the task .

A business opportunity can take many forms. It could be a manufactured product in which you buy materials or parts, make up the product yourself and sell it to a distributor or directly to the end users . It could be a distributed product that you buy from a manufacturer or wholesaler and sell to the end users . Or it could be a service that you provide to your customers. New idea represents four ways of thinking about new ideas for your business. It distinguishes between ideas based on existing customers versus new customers and existing products or services versus new products or services .

IDEAS EVALUATION

Ideas are an evaluation system designed to help you decide if you want to go ahead with a proposed business opportunity. The value you get from using the ideas evaluation system depends entirely on how objectively you use it . It is easy to get excited by the prospect of a new business, so you need to be aware of the danger that your judgment might be distorted by your enthusiasm .

Potential demand

You are probably optimistic about how your business is going to be received in the marketplace . However, it is important that the responses to questions accurately reflect the extent to which the market will share your enthusiasm.

The term market potential is not a sales forecast . Forecasting sales requires more information than is likely to be available at this early stage . In order to make a reasonable approximation of market potential, you need to consider the characteristics is going to be . The larger the market potential the more value you can attach to your business opportunity . Limited market potential involves greater risk because the business may not be to sustain the promotion, distribution and service costs that are required to stay in operation .

Whereas market potential refers to the relative size of the market, trend of demand refers to the rate of growth. The trend of demand can be increasing, constant or decreasing. An increasing trend holds the promise of greater market opportunities and greater financial returns . Decreasing demand implies a greater degree of risk, and recovery of the initial investment must occur in a relatively short period of time . In order to reach its full potential, however, a business opportunity with very large market potential in which the trend of demand is rapidly increasing, needs to be in the hands of someone who has the expertise and the resources to fully exploit such an opportunity .

Whereas market potential refers to the relative size of the market, and trend refers to the likely growth in demand, stability of demand refers to the pattern of expected sales . Sales of some products and services highly unstable and fluctuate unpredictably. Others fluctuate on a more predictable basis. Obviously, the best situation is one in which demand is highly stable and increasing over time . Unfortunately, this is the exception rather than the rule. Even business opportunities with reasonable demand predictability can be uncertain ground unless you have the experience and skills to forecast it . Unstable demand that is subject to severely unpredictable fluctuations is a risky proposition, especially for a new business or a business without counter cyclical products or services .

Some products and services have a short commercial life, whereas others may enjoy an extended one. It does not make sense to make a long term financial commitment or a heavy investment in specialized plant and equipment for products with a short life cycle . A longer life cycle tends to be a better proposition on which to launch a new business it permits more time in which to build a viable business . A life cycle of three years or less is considered short lived with a high degree of uncertainty . Many successful and profitable products and services have been short lived, but they require special marketing, operations and financial strategies to be commercially successful .

Related potential is important because additional products or services have a direct bearing on commercial feasibility . Greater value should be placed on opportunities that have multiple market and product potential . Those with limited related potential have the greatest risk if the market prospects are limited and the life cycle is short.