Recognizing Opportunities

Not all ideas make great opportunities for entrepreneurs. The key is to know when an idea can be transformed and monetized into a business. I have always had the great idea of turning my nightstand into a mini-refrigerator. It would be similar in design to one of those kitchen refrigerators that have the cabinet panel insert to match with the kitchen cabinets. With my nightstand refrigerator, when I’m thirsty at night I don’t even have to get out of bed (I’m kind of lazy like that). While I think this is a great idea…and perhaps a few others might also, it doesn’t necessarily serve as a great business idea. Additionally, I don’t have the resources, skills, or patience to explore the concept. So when does an idea become an true opportunity?

An opportunity arises when an idea is based on what customers want and when the customer is willing to pay enough, often enough, to make the idea a viable business. So my refrigerated-nightstand might be a cool idea, there simply isn’t enough of a market for it at the price it would cost. Additionally, once every lazy guy had one the market would be satisfied. Therefore, it isn’t a sustainable idea.

Entrepreneurs need to be great, or at least good, at determining if an idea has merit as an opportunity. Ideas are often generated simply by listening…, observing…, and then developing solutions. So where many casual observers simply see problems an entrepreneur may see an opportunity. Where there are problems, or dissatisfied customers, there are opportunities.

Many entrepreneurs are simply good at finding opportunities. The well-known management guru Peter Drucker said that an entrepreneur is simply someone who “always searches for change, responds to it, and exploits it as an opportunity”.

So how do we search for change?

• Observe changes in laws, demographics, trends, etc. Many times these changes present opportunities for the vigilant entrepreneur that can identify changing needs that are not being met by larger, less-nimble, businesses.

• Stay abreast of technology and/or new inventions. Being active with local universities is a key tool when prospecting for opportunities. Universities are home to a lot of research. However, universities are not typically home to people that can commercialize the research. If universities want to disseminate that research for economic development reasons often time they host programs to connect researchers with investors. The Missouri Technology Expo is just one example of a university creating “a bridge uniting innovators with those whose resources can advance research as well as develop and commercialize technologies”.

• Watch what the competition is doing. But not for the sake of emulating them. Beat them. Beat them on price, quality, reputation, service, convenience, reliability, etc. This is how many small businesses compete against larger ones. This is how handy mechanics compete against large auto dealers in nearly any town.

How do you transform an opportunity into entrepreneurial wealth? Recognize the opportunities, not just the ideas. Evaluate the opportunities to ensure it can be monetized and it is sustainable. If you don’t have the full range of skills the opportunity calls for then build a team that does. Write a business plan. Gather the necessary resources; family, friends, partners, investors, local banks, etc. Determine ownership. Determine legal protection for your opportunity as necessary. Finally, as Thomas Edison said, “the value of an idea lies in the using of it”. So if the idea is actually an opportunity, get started.