Be it an amateur business-dreamer thinking about opening his own venture or a seasoned entrepreneur looking to invest in a new business, thorough research is needed.
Well, as they say, prevention is the best form of cure. So, when it comes to business – Planning is the best form of prevention.
Opportunity screening is the process of evaluating a business opportunity by carefully studying important factors such as market size , market structure, capital required, existing competitors, legal regulations, trend forecasting and most importantly, the scale of disrupting the market through innovative ideas and strategies.
Let’s take a look at four essential factors to consider when evaluating a business opportunity:
1) Identify the Market Need
A lot of good ideas go to waste and a huge chunk of small-businesses close prematurely because they didn’t look at the bigger picture.
Does your potential product or service have the viability to survive the ever-changing market and the brutal economy?
Conduct surveys, initiate pilot runs and conduct focus groups to thoroughly test out your product before you dream about the home-run.
2) Product Differentiation
Do similar products already exist in the market? How well are they doing?
If your product is the first one to be out there, you are very fortunate indeed. It’s very rare to create something completely new these days.
On the other hand, on the most likely scenario that your product is similar to existing ones in the market, there’s a lot to be taken into account beforehand.
How does your product differ from the ones that are already out there?
Why would customers choose your new product over established ones?
What’s your unique selling point(USP)?
The answer lies in innovation or offering something unique. It could be your efficient manufacturing techniques that help you sell your product at a lower price point. It could be the way your brand and promote your product or the additional features you offer at competitive prices.
Quality products at fair prices are the best way to woo customers to your side of the border.
3) Market Size and Analysis
Does your product aim to appeal to a nice market or large scale market?
Large scale market means more competitors and lower price points while niche markets make it harder to sustain long term profitability in addition to higher advertising costs.
Are your products catered to certain genders, races, nationalities, age groups or geographical areas?
How fast is your target market expanding or contracting?
4) Capital Requirement
Cost Analysis is a fundamental part of weighing a business opportunity. Poor financial planning is an operational nightmare.
How much does it cost to manufacture your products? What is the total capital needed to kickstart your business?
Do you rely on your personal funds? Do you borrow from the market and end up paying high interest-rates?
Having definitive and feasible answers to all these factors and problems is the only way to capitalise on an exciting idea.
Planning and market research is what transforms exciting ideas into successful business ventures.
Written by Gagan Dhawan
