IDENTIFICATION, EVALUATION

AND SELECTION OF BUSINESS

OPPORTUNITY
 SESSION OBJECTIVES

At the end of the session, the students should

be able to:

l identify, evaluate and select a viable

business idea and opportunity
l undertake a preliminary study before
preparing a business plan
 BUSINESS IDEA AND
OPPORTUNITY

A business idea starts with an opportunity. A

business opportunity exists when there is
demand for goods and services to meet the
needs and wants of community
 THE 4 STEPS

Step 1
Identification of needs and wants of consumers

The term “needs” refers to basic needs

that the consumers must have in order to live,
suc as food, clothing, shelter, education etc. The
term “wants” refers to a personal desire for
something that more than the basic needs.
 Step 2
Environmental Assessment, Self Analysis and
Community Values

Environmental Assessment:
Population structure, income, trends and preferences,
Import and export data,
Local resources and technology,
Industrial linkages,
Development plans by government and private sectors,
Analysis of social problems,
Study of government’s regulations.
 Step 2 (cont.)

Self Assessment:
Experience -
Knowledge and Skills
Capital
Interest
Networking

Community:
Values, Norms, Perceptions
 Step 3
Evaluation of business opportunities

Preliminary screening – finding the right

opportunities, in the right place, at the right time. This
step involves an evaluation of the business
opportunities in terms of:

Legal aspects
Degree of competition
Capital requirements
Risks involved
 TYPES OF RISKS

BUSINESS RISKS
Risks that can be controlled – productivity & quality
Risks that cannot be controlled – natural disasters
Risks that can be transferred – through insurance
FINANCIAL RISKS
Liquidity level – ability to pay short term debts
Loans- commit to liabilities
Credit – non-collectable debts
 Step 4
Selection of business opportunities and
preparation of business plan

Organization plan
Marketing plan
Production/operations plan
Financial plan