Entrepreneur opportunities analyzing

we are to make full use of our opportunities in life, we must know ourselves—in particular, our strengths and our weaknesses. We must look at our capabilities and see how they compare with those who might be directed to the same goal. We must, if we wish to be successful and make a difference in the world, choose an area where we have a comparative advantage and where our best can be significant no matter how limited the area.


Harvard business publishing, core curriculum, entrepreneurship, Recognizing and shaping opportunities.  Lynda m. Applegate Carole Carlson

Opportunity Analysis Process and Criteria for Entrepreneurs

Idea (Business Analysis)

 •“Realness” of Opportunity
•Durability of Opportunity
 •Marshalling the Resources
 •Managing the Venture
 •Harvesting the Venture

Possibility (Personal Analysis)

 •My Goals
 •My Capabilities
 •My Lifestyle
 •My Relationships

See if it can be an Opportunity

Answer the questions yes, no, need more information(don't get a consulting study but consult few people with expertise in your field of interest and who will offer an objective opinion.) unknowable.(you may believe there is a significant market, but where the product could be manufactured and who else might be trying to develop it are only guesses.)


Even in the face of the “unknowable,” an entrepreneur must still ask the right questions. And if the entrepreneur chooses to move forward, he or she must do so in a disciplined way by setting milestones and benchmarks for periodically reassessing his or her investment. Can the entrepreneur demonstrate clear competitive advantage in six months? How many customers must the entrepreneur have by the end of the first year? It makes no sense to redouble efforts without evidence that one has a winning proposition.

 An understanding of one’s potential customers and their wants and needs is critical.

Business Analysis

“Realness” of the opportunity 

Sometimes an entrepreneurial idea is really a project or a product, not robust enough to form the basis of a company. Take, for example, the biotechnology start-up with a product specifically addressing the molecular structure of anthrax. With no idea what the start-up’s second product might be, its founders would be better off selling out to a larger corporation. Or consider the local family restaurant or celebrity vineyard, which may fulfill a personal passion but not be a commercial success.

Durability of the opportunity 

Your idea may have fulfilled all the requirements for a “real” opportunity. You may have articulated a sound business plan. But if you make the investment, will you be the one to profit, or is it so easily replicable that someone with more resources could copy it? Netscape, for example, came up with a great product. Then Microsoft realized that it could embed it within its operating system.

There are a number of potential threats to the durability of an entrepreneurial venture. Fortunately, there are ways to address them: (1) pay attention to stakeholders (including regulators); (2) build entry barriers; (3) develop distinctive competencies; (4) continually scan the horizon for changes; and (5) be quick to address both threats and opportunities.

Marshalling resources

 Realizing entrepreneurial opportunities requires a variety of resources: money, talent, time, distribution channels, production facilities, and so on. It is essential, therefore, to be clear on resource requirements—e.g., “drop dead,” clearly adequate, and margin of safety. And the type and level of those resource requirements will change through the venture’s life cycle. So what will you need when? No one has all the resources required for a business of significance, so the next task is to take a realistic look at what you can provide yourself and who can fill the gaps. Then the challenge becomes how to attract those potential partners on favorable terms. Why would they choose to play in your game, to commit resources they could use elsewhere?

Managing the venture

 Given that you cannot run a business entirely on your own, you need to know what the people providing the other resources are doing. Minimally, you want to be able to ensure that they “do no harm.” Optimally, you want to encourage standards of excellence and proactive efforts to advance the interests of the enterprise as a whole.

A compelling vision and strong leadership presence can be powerful “soft” management tools. From the onset, an entrepreneur should consciously work to define and establish an organizational culture that is suited to the business and is enjoyable both to himself and the people he wants to attract to it. As the enterprise grows and management becomes less personal, more formalized systems for planning, performance management, incentives, communication, and so on, will become necessary.

 Management also requires intelligence, an early warning system or a sense of both inside and outside changes. That intelligence, however, is of little value without the willingness and ability to make mid-course corrections. Perhaps you see a new competitive threat or product opportunity. Perhaps you find that one of your partners is not carrying his load but claiming one-third of company shares. What should you do? Do you have the legal and financial resources to carry out that course of action?

Harvesting the venture 

Every business has a cash-to-cash cycle. Individuals put money in with the expectation of getting it—and hopefully more—out. It is important to consider early on whether you really can expect a positive cash flow, because a business will always require investment, whether an electronics company or a restaurant or a bank. The need for periodic renewal is often left out of the initial calculations.


The legal structure of the entity should also be considered early on. For example, two real estate investors purchased a beautiful $23 million piece of Vermont woodland but were unable to reap the tax and land conservancy benefits or divide the property for resale as they had expected. What they should have done, in retrospect, was to set it up as an LLC or limited partnership.

 There are a number of ways to harvest your investment in part or all of your business. You can sell part or all of it to a strategic or financial buyer. But who will that be? You can pass it on to the next generation. But how do you set up the ownership and management structure without causing family strife? In either case, when is the right time? And how would you feel about seeing your life’s work in someone else’s hands?

Personal Analysis 

Goals

 Entrepreneurship is one vehicle for attaining your future vision. As a career choice, you must consider it relative to your goals and values. What would be more personally satisfying: making money as a broker or as a business builder? The former encompasses a wide range of transaction-based occupations. The latter involves institution building and, typically, a passion for the product or service at its core and/or the act of creation itself. Or perhaps the answer is “it depends.” If so, on what?

Whatever path you take in the short run, it is important to consider the longer-term impact of your choice. It may close some doors, but it will also open some new ones. Especially before making a dramatic career change, you should ask yourself if it will allow you to maintain and/or expand your business network. And you should consider whether you will be able to continue to acquire skills and gain experience that will serve you well in the future as you work toward your goals.

 Capabilities

The image of the entrepreneur as engaged in every aspect of business operations is a pervasive and (for many) appealing one. In the start-up phase this is often the case and requires flexibility and strong generalist skills. But as the venture grows and matures, entrepreneurs typically find it necessary to differentiate work and develop more specialized roles. A question for the entrepreneur is whether a narrower role will be satisfying, or whether “doing it all” will be more rewarding. 

For you as an entrepreneur, defining your role requires a rigorous assessment of your strengths and weaknesses as well as your personal preferences. You need to be able to see where you can add value to the business. And because the capabilities required of entrepreneurs will change as the company grows and evolves, you also need to be willing to acquire new skills or assume a new role, or even step aside if and when the time comes.

 Lifestyle 

Most entrepreneurs would agree that building a business is more than a job; it is a passion. Stories of entrepreneurs sleeping at their offices may be exaggerated but are not unfounded. I It will definitely require a huge time commitment and cut into your leisure time. You may not be able to know what to expect a year, even a month from now. It may dictate where you live and how much and where you travel. Are you comfortable with that? Do you have the flexibility in your life to deal with that?

Relationships 

Your relationships can be envisioned as a successive ring of circles beginning with those closest to you and extending to society in general. Within families they can include parents, siblings, more distant relatives, partners or spouses, children. More broadly, there are work colleagues, school friends, and religious affiliations, athletic or social groups. Entrepreneurship requires commitment. Are you willing to make tradeoffs in the time you spend with the people important to you? 

 

1-Entrepreneurs have educational, personal, and professional experience and networks that help them spot a good idea in emerging trends.

2-Need to shape idea into a viable business opportunity by engaging with potential customers, advisers and experts and by searching for information 

Figuring out which traits (heart, smarts, guts, and luck) drive you and your decisions is the most important thing you can do to enhance your business leadership.  Greater awareness of what you're best at, and how and when you might need to turn up or turn down the volume of the other traits, is what separates the best business-builders from those who are very good.  From an organizational perspective, knowing your own qualities allows you to better understand what kind of people best complement you during specific points of the business building growth cycle-and equally important what type of person you might need to supplement (almost everyone needs a kindred spirit) or even succeed you.  

heart-passion and motivation
smarts-analytic, creative thinking skills
Guts-intuition based on education and experience as well as the courage to take action
Luck- being in the right place at the right time.