Developing Ideas and

Business Opportunities

 Prepare an Opportunity Analysis

and Learn Five Steps to Success

Prepare an Opportunity Analysis

Identifying which business ideas have

real commercial potential is one of the
most difficult challenges that an
entrepreneur will face.
Five steps model that help an
entrepreneur to know a winning
opportunity

Step 1 : Seize the Opportunity

a) Know what factors create opportunity.

How much value an opportunity can add to a
business
Access the risks and rewards.
copyright 2003 Jack M. Kaplan

What Factors Create Opportunity?

Opportunity Factors
Technology
Replace present technology?
Niche Market Applications
Infrastructure Replacement

Industry
Standards

Economic
Cost decreasing
Productivity gains
Better service

Government &
Privacy Issues

Will these factors continue?

For how long?
What is the market size, growth and outlook?
Will this
lead to
another
copyright
2003
Jack M.opportunity?
Kaplan

Demographic
Technology
generation

Market
Shift

Questions to Evaluate the Business

Opportunity
What are the indicators that lead to this
idea and opportunity?
What are the conditions that permit the
opportunity to occur?
How will the future of this new product
or service change the idea?
How great (in terms of time) is the
window of opportunity?

copyright 2003 Jack M. Kaplan

Evaluating the Opportunity

Does the Opportunity:
Fill a need?
Show evidence of product
acceptance?
Show that a market
exists now?
Reflect that yours is better
than the competitions?
Show an upside gain potential?
Describe the cost to achieve
this potential?
copyright 2003 Jack M. Kaplan

B. Understand the Time Horizon

A window of opportunity is a time horizon
during which opportunities exist before
something else happens to eliminate them.
A unique opportunity, once shown to produce
wealth will attract competitors, and if the
business is easy to enter, the industry will
quickly become saturated.
In this situation, entrepreneurs must quickly
get in quickly and get out before revenues
become dispersed in an overloaded market

C. Calculate the Opportunity Costs

Opportunity costs are the value of
benefits lost when one decision
alternative is selected over another.
For example, a software company
refuses to deliver a software
program,
because
writing
the
software code will require the
company to miss a major deadline
for another company.

 The order for the software program

would generate revenue of $25,000
and $14,000 of additional costs.
Then the opportunity cost and the
net benefit lost associated with the
software deadline is $11,000 (i.e.
$25,000 - $14,000).

 Step 2. Investigate the needs

through Market Research
-

Ask preliminary questions

Prepare data collection.
Execute a study to get answers.
Analyze the data.

a. Ask Preliminary Questions

Solidify the purpose and objective of the
research
Entrepreneurs should consider their
goals now
Areas and question that are meant to
guide the direction of research are :
Need, Niche/competition, proprietary
questions, cost and Manufacturing,
advertisement and Packaging, Sales,
Transport, Employees.

Ask Preliminary Questions

Need.
Will this product be serving
customers real needs?
Niche/Competition. What is different about
the product or service that will cause the
customer to choose it over the competitions
product or service?
Proprietary Questions. Can the product be
patented or copyrighted?
Is it unique
enough to get a significant head start on the
competition?
Can the process be easily
copied?
copyright 2003 Jack M. Kaplan

Ask Preliminary Questions

Costs- How much will materials and
labor time cost? How much will be
needed in the future? Now?
Advertisement and Packaging. What
type of advertising and promotional
plans will be used to market the
product?
Sales. What distributions and sales
methods will be used? ?
copyright 2003 Jack M. Kaplan

b. Prepare Data Collection Method

Where to Find Information

Contact well known entrepreneurs to get

advice.
Visit web sites on companies and new
products or technologies
Library Research
Use college libraries to access
references and specialized
bibliographies
Use mail, phones, Internet, or
Questionnaire Surveys
professional interviews. Write and
prepare questions to give you the right
data.
Existing Research
Use investment banking firms, advisory
services, or consulting firms to gather
data and ask to receive findings.
Visit trade shows, read trade
Trade Associations
publications.
Hire a firm to prepare a report on market
survey
for
the proposed idea.
2003 Jack
M. Kaplan
Market Research Firms copyright

Visit Experts in Field

Internet Searches

c. Execute a Study to Get Answers.

Consult directly with existing business owners and

experts in the field and ask relevant key
questions.
Identify companies with similar products and
services then inquires as to who may be willing to
give advice.
To eliminate receiving questionable data certain
pitfalls must be avoided.
Ensure all participants are asked same question and in
same manner
Be sure that the answers are accurate by maintaining
a precise and objective method of questioning.
Any survey recorder and telephone interviewers the
entrepreneur employs should be trained and monitored

d. Analyze the data

Data collected needs to be analyzed

What do the data reveal?
How can they be interpreted?
Examine the secondary resources?

Step 3 Develop the Plan

A. Ask the right questions
Once the opportunity has been
identified, decisions must be made
regarding performance and staffing.
Who is going to do what?
How will decisions be made?
Business plan should be flexible
Should be broad enough to incorporate
unexpected changes.

 B. prepare the business plan

A good plan will do the following
Determine the viability of the business
and application in selected markets.
Provide guidance in planning and
organizing the activities and goals
Serve as a vehicle to obtain financing
and personnel for the business

 Business plan guides the

entrepreneurs in three junctures
(moment)
It simplifies decision making in the
time of crisis.
It is the roadmap at the point of
indecisions.
It is motivational guide during
setbacks or downturns.

Step 4 determine the resource

needed
All businesses must address resource
capabilities to foster venture development
Three aspects of assessing resource
capabilities:
a. Start Making Personal Contacts and
Networking
Resources are needed to identify, contact and establish
a network with appropriate clients and vendors.
Who will meet people personally?
Who will do telephone work ?
Who will be in charge of email correspondence

 b. Perform Financial Requirements

How much initial capital is needed? What resources are
available for financial support?
How long can the new business be self financed?
How long will it take to make business profitable?
What kind profit margin will eventually result from the
product or service?
How can the revenue and financial model be presented
to investors for their involvement in business?

 c. Gather Sources of Technical

Skills
the entrepreneur may have an idea but not
posses the creative process and innovative
technical skills necessary to implement it.
In this case external skilled labor is needed
Training costs need to be calculated into
startup costs.

Step 5. Manage the distinguishing features of the business

Step 5 entails running the business,

applying a specific management structure
and style to any questions, difficulties and
roadblocks to success that may arise
Emphasis here is on investing
Entrepreneurs now must break off from the
path blazed out by the most successful
businesses and invest in people, operating
procedures, and information technology.
This involves the following events.

1. Deliver a total solution

Small companies have traditionally
assumed unchallenged territory and
special distribution channels for their
products
Today however all companies play in
the same markets and provide the
entire range of service for their
customers.
Investors and customers want to buy
a total solution product or service

2. Cultivate advanced Resources

Layoffs of highly skilled workers from
major corporations create an
important opportunity
These trained personnel are looking
to apply their business skills and
experience to startups