Many entrepreneurs that start businesses, especially the first time, run out of cash at a quicker rate than they bring in customers and profitable sales. While there could be many reasons for this, it is more than often because they have not focused on the opportunities. Unsuccessful entrepreneurs usually equate an idea with an opportunity; successful entrepreneurs know the difference.
It is therefore absolutely essential to select and screen an opportunity with great care before taking the plunge. It is common that venture capital investors on average invest in only 1% of all ventures they review, emphasising the fact that a good idea is not necessarily an opportunity.
According to researchers Hisrich & Peters (2002) the evaluation of the opportunity is perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed compared to the resources required. This evaluation process involves looking at the length of the opportunity, its real and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or differential advantage in its competitive environment.
Opportunity analysis is one way of evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be shorter; focus on the opportunity, not the entire venture; and provide the basis for making the decision of whether or not to act on the opportunity.
It is therefore absolutely essential to select and screen an opportunity with great care before taking the plunge. It is common that venture capital investors on average invest in only 1% of all ventures they review, emphasising the fact that a good idea is not necessarily an opportunity.
According to researchers Hisrich & Peters (2002) the evaluation of the opportunity is perhaps the most critical element of the entrepreneurial process, as it allows the entrepreneur to assess whether the specific product or service has the returns needed compared to the resources required. This evaluation process involves looking at the length of the opportunity, its real and perceived value, its risks and returns, its fit with the personal skills and goals of the entrepreneur, and its uniqueness or differential advantage in its competitive environment.
Opportunity analysis is one way of evaluating an opportunity. It is not a business plan. Compared to a business plan, it should be shorter; focus on the opportunity, not the entire venture; and provide the basis for making the decision of whether or not to act on the opportunity.
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