BUSINESS OPPORTUNITIES

• A business opportunity is an attractive investment idea or proposition that provides the possibility of a monetary return to the person taking the risk.
• It’s an attractive project idea which an entrepreneur accepts for investment on the basis of what is known about the possible success of the business.

Identifying good business opportunities

• Identifying and acting on opportunities is one of the characteristics of a successful entrepreneurship, it is the basis of starting and maintaining successful ventures.
• Business opportunities are determined by customer requirements and lead to the provision of a product resource which creates or adds volume for its buyers and end users.
• A good idea is not necessarily a good business opportunity e.g an idea is looked at from the technical point of view, the market aspect. Its level of competition the required resources , the return on investment etc, all these aspects are looked at when / as the best indicators of a feasible and viable idea.

Indicators of a good business opportunity

• Availability of Real demand/ market. In this case, market means people or institutions willing and able to buy goods and services of a business.
• Reasonable level of Return on investment. The rewards / profits realized from the business should be acceptable depending on the level of investment by the entrepreneur in terms of risk and effort.
• Availability of required resources. These refer to the means required for production of goods and services for instance capital, raw materials, labour, land etc.
• Availability of required technical skills. This refers to the machines and skilled manpower needed for production of goods and services. These should be available and affordable for a business idea to be feasible and viable.
• Acceptability in community. For a business to be viable and feasible, it should be conform to the social norms and be liked by society for instance a bar business would not be viable in a Moslem dominated community.
• Favourable government policy. There should be a conducive government policy. Favorable for investment for instance low tax rates, tax holidays etc for a business to be viable.
• Availability of good infrastructure (support services). This takes the form of good transport, communication, power, banks, insurance companies, warehouses etc.

Qualities of attractive business opportunities

• Be competitive ; ie be equal to or better from the customers point of view, than the other products /services
• Good income potential. A good business opportunity is one which is capable of giving a sufficient income to support oneself in a reasonable life style, i.e. it should have the ability to place a good, steady, fulltime income.
• Reasonable case of entry, into the market. It is advisable that one should enter into a business in which he / she have got the general background of it. This enables the entrepreneur to get started easily. For example, he can be able to use contracts already has and his reputation in the field could be valuable in running the business successfully.
• Low or, modest startup costs. A good business opportunity is one which requires low capital investment.
• Good growth potential. An attractive business opportunity is the one which has the chance to survive for a long time while generating sufficient income for the owner.
• The business opportunity should be related to your skill and experience. Some business requires certain skills and experience. This means that for one to succeed in such businesses, he /she should possess the required skills and experience needed to run the business successfully.
• It should be properly timed. A good business opportunity is one that is timely and responds to the unsatisfied needs or requirements of customers who have the ability to purchase and who are willing to buy.
• There should be a sizeable market gap. In terms of people or institutions willing and able to buy goods and services of a business.
• Meeting objectives. A good business opportunity should have the ability to meet the goals and aspirations of those taking with risk.

Types of business opportunities

1. Retail and wholesale types of Business. Retail businesses sell goods directly to consumers, usually in small quantities. Wholesalers on the other hand buy goods often in large quantities from manufacturers or importers and then sell them to retailers or other distributors. ii. Franchise and independent types of business. Franchise it is a special right given by a manufacturer or sole distributor to an entrepreneur or a business to sell the manufacturer’s goods or services in a given area or place. An entrepreneur or business that buys a franchise by paying a franchise fee buys the right to sell the manufacturers or parent company’s goods or services.

An independent business is one that you create and nurture on your own.

This allow as you control and freedom which you will not get from a franchisee operation.

iii. Product and service (or mix both) type of business. If you are a trained professional, such as dentist, accountant, teacher, etc your business is going to resolve around the professional services you can provide. But there are many professionals that also have the opportunity to offer related products, if they choose to do so. If you a photographer for example, you may decide to sell cameras, picture frames and photo paper or if you are a teacher, you can decide to write text books for sale, operate a stationery etc iv. Store front or non-store front type of business operations. If you have decided to start a business selling products you need a store front of some kind e.g a retail store or virtual store front like e-commerce site. If you have decided to start a service selling business, you may or you may not want a store front. Since most of the resources are performed at a customer’s home e.g cleaning. Some resources can be offered over the phone or the internet these businesses often depend on virtual store fronts (Business web sites) to attract clients. Alternatively one may use a home as a store front e.g a hair dressing business, travel agents business etc.).

1. Industry type of business. An industry is a collection of firms producing related goods or services. It is important for an entrepreneur to choose an industry that he is only interested in but have some expertise or experience in order to avoid making costly mistakes where he does not have the necessary knowledge.

Feasibility of business idea

Refers to the extent to which a business idea can be done or implemented using the available resources on the other hand a viable of a business idea refers to the degree to which a given business idea is profitable.

The feasibility study is broken down into three;

1. Market feasibility study, this study considers the market study which focuses on the overall demand, product description which involves understanding the details of the product to be produced the users and standards it will fulfill
2. Technical feasibility study; which determines the adequacy of the manufacturing process plants and machinery to be used in production of a given product with a predetermined framework in terms of quality, raw materials, without expensive break down problems.
3. Financial viability study; this part reveals how attractive or hopeless the business idea is from the financial point of view. This is divided into six components i.e
   • Project cost
   • Means of finance
   • Capacity utilization (income estimation)
   • Expenditure estimate
     • Profitability estimates
     • Risk analysis.

Evaluating business opportunities

This involves discussing the steps to determine if the business will be profitable to start up your business i.e investigating thoroughly a market opportunity before going into business or else you may discover that there is no market which may result into business failure.

The purpose of market investigation is to obtain information that will help increase your chances of success in a particular business.

Therefore, your aim should be to start the right kind of business in the right location.

• Deciding on the type of business. There are three major types of business you can choose from ie
  • Merchandising business. This type of business buys finished products from wholesalers or manufacturers and retailers or wholesalers then to others for consumption or resale.
  • Service business. This type of business offers services to consumers, merchandisers, or even to manufacturers. It offers this service in exchange for a fee.
  • Manufacturing or processing business. Manufacturing businesses are those which transform or process raw materials and make products that are significantly different from the inputs.
• Choosing a location. Choice of a location for your business is an important factor in its success for failure. A poorly run business can often survive in good location, but even the finest business will fail in a poor location.
• Forecasting sales. Sales forecasting means estimating the size of your market, that is, how much of your product or service you can expect to sell in the future. Before starting a business, you must estimate what share of the market you can except to get in order to determine whether or not the business will be profitable. Also, you must be sure that a market exists before applying for a loan or grant. Many loan applications ask for a sales forecast and a profit forecast.
• Estimating your cost. Once you have determined a sales forecast for a certain period of time in the future, you will have to estimate the costs of running the business. You will have to consider the cost of the goods in terms of purchase and freight, wages, advertising, taxes, power, rent, loan payments etc.
• Estimating profits. Once you have estimated your sales and costs, you will have to calculate what your profits are likely to be.

Areas that Provide a Base for Business Opportunities  

An entrepreneur can generate business ideas for different types of businesses like agri-businesses which he/ she can develop into profitable business. This can be done through; 

• Observing the available raw materials and finding out what products can be made out of them, to be sold for profits.
• Identifying the available human resources i.e. whether there are skilled enough to carry out the desirable businesses or what can be done basing on the available human resources.
• Finding out peoples’ needs and problems and determining how best they could be met through provision of the required goods and services at profitable prices.
• Identifying those items that the community or institutions consider useless and finding out what businesses could be generated out of them, like farm wastes that can be used to make biogas and manure.
• Examining the existing businesses and finding out those that do not satisfy peoples’ needs and determine how he/ she can come up with a business that would satisfy these needs of the customers.
• Carrying out research to identify those opportunities that people would wish to have but are unavailable and try to generate ideas on to how to come up with one of those businesses.
• Through creativity and innovative skills, one may identify a new opportunity that can be introduced in the market.

Sample questions

• Give the ways through which an idea can be researched
• What are the steps followed when turning a business idea into a business opportunity.
• What is meant by the term business opportunity?
• Explain the characteristics of a good business opportunity

Business start-up process 

An entrepreneur’s work mainly starts with selecting an opportunity from the numerous business ideas he/ she may be having as we saw in the previous topic. After selecting a business to do, an entrepreneur proceeds to start and operate it in order for him/ her to realize his/ her business goals. 

Steps Followed in Starting A Business 

An entrepreneur may take the following steps when preparing or organizing to start a selected business.

1. Spotting a business opportunity: This involves developing goals, scan the environment so as to generate different business ideas, thereafter, one analyses and analyses and ranks them in order of their ability to meet one’s set goals.
2. Market survey: This can be done through determining whether the business ideas can be developed into a profitable business and whether it will have a competitive advantage over the competitors. The market survey will help an entrepreneur to;
   • Determine the target market, it needs and the capacity of the business that it will meet.
   • Analyze the competitive advantage of his business over other businesses that are already in operation, or those that are likely to start.
   • Select the specific or part of the market the business can best serve like targeting students through starting a kiosk
   • Determine how to satisfy the customer’s needs i.e. what, where, how and when they would wish to have the product.
3. Preparing a business plan: this is a written summary of the proposed business venture including its operational and financial details. It helps an entrepreneur to think through the business before starting it. When preparing a business plan, an entrepreneur does the following;
   • Examines the goals and objectives to be satisfied by the business.
   • Assesses his/ her strengths and weaknesses in the market in comparison with the competitors.
   • Reflects on the conditions in the market, decides on what to do in order to market his products, selects a market to be served, etc i.e. develops a marketing plan.
   • Decides on how the business will produce the products to be sold i.e. develops a production plan.
   • Establish the required funds to start and operate the business, sources of funds, forecast the profit margin, etc, i.e. develops a financial plan.
   • Develops an action-plan that shows him/ her when/ how the various activities in the actual starting up of the business will be done, i.e. a sequency of steps to be followed when carrying on with the business.

It is very vital for an entrepreneur to prepare a business plan because;

• It helps him to select the most feasible business opportunity from the many alternatives.
• It guides him in forecasting the challenges before they happen or destruct the operations of the business.
• It helps him to acquire the necessary finances, as they will use this drafted business plan to determine whether to inject funds or not.
• Partners and investors use the business plan for carrying out decisions regarding investment in any given business.]

1. Assessing the technology and machinery required by the business, here, an entrepreneur assesses the production systems required to produce the desired output, checks on the required machinery to carryout production, etc, this is an important part of the business part of the business start-up process because;
   • It determines the type, quality and quantity of raw materials that will be needed by the business for the planned marketing and production designs made.
   • It establishes the nature and skills of labour required to successfully produce the intended output, their availability and cost.
   • Helps to know the availability of the required machinery; its sources and costs; other associated costs, etc.
   • Helps to know the machinery running and maintenance requirement and their implications on the successful operations of the business.
2. Selecting a legal form of business ownership; here, an entrepreneur determines the type of business he would wish to operate, this will be based on a form that suits his enterprise because different legal forms of business ownership have different implications. There are different types of legal forms of business ownership and some of them are
   • Sole proprietorship business
   • Partnership business
   • Joint stock companies ü Co-operative societies, etc.  Goals in Business  Introduction: 

A goal is an aim of achieving something and what is to be achieved should be achievable, measureable, and definable within a definite time and within a given amount of resources. A business is what an entrepreneur expects to achieve over a given period of time through setting up a business. 

Types of Business Goals There are categorized into two; 

1. Specific goals: These are tangible targets that are to be realized in a short period of time, say about 1 year. They are almost the same as objectives and they include:
   • Increase the business market sales by 25% ü Increase the business market by 5% ü Opening a new store, etc.
2. Long term goals: These are targets that are to be realized over large period of time, like 3-5 years. They include;
   • Increasing the business product lines.
   • Becoming a market leader
   • Realizing profits on an annual basis.

Characteristics of a goal 

The goals that will lead to the success of a business should have the following characteristics. They are summarized in an abbreviation (S.M.A.R.T) i.e. Specific, Measurable, Achievable, Realistic, and Time bound.

They are discussed below;

1. Specific: A good goal should be clear in terms of what is to be achieved, when and how it will be achieved, an example of a clear goal is to become a market leader or raising customer satisfaction.
2. Measurable: A good goal should have indicators to prove or show whether it is being achieved or not and if achieved, how much of it is being realized. E.g. a clear goal of becoming a market leader can be measured by customers’ statements on how satisfied they are with the business.
3. Attainable: A good goal should be feasible within the area where it is being pursued, e.g. whether it is feasible to set up a pork joint near the mosque or Muslim community.
4. Realistic: A good goal should be achievable given the available resources, workers and legal regulations, thus one should avoid setting goals that are realistically not attainable like expending a business when other related businesses are failing or down-sizing due to the existing economic conditions.
5. Time Bound: A good goal should have target time with in which it should be achieved, e.g. a market in 2-3 years’ time.

Importance of Goal Setting in Business 

An entrepreneur is driven by his/ her goals while managing business. So setting goals is so important in business, this is due to the following reasons; 

• It provides targets that are to be achieved, thereby helping an entrepreneur to work towards achieving the set targets, this is because goals are well known, measurable and time bound.
• Maximum utilization of resources, as goals are set with a view that resources are scarce, an entrepreneur is compelled to optimize the use of the scarce resources so as to achieve the set goals.
• Helps in effective decision making, this is because in decision making, one has to identify the problem to be solved, and this is identified in terms of the business goals that are being blocked.
• Evaluation of business performance: when business goals are well set, an entrepreneur will be able to find out the extent to which he/ she has been successful in achieving his/ her goals. This is because what is to be achieved is known, and the target dates are specified.