Distinguish Between a Business Idea and a Business Opportunity for Financial Success

In order to create a successful, profitable, lucrative commercial establishment of some sort, it will be necessary to identify a real business opportunity. This is something that most new businesspeople do not pay enough attention to and in some cases it is ignored completely. One may think this is crazy, how can you start a business if you do not even have a business idea. Well the truth of the matter is that just having an idea about an idea for a business may be one of the primary reasons for new startup businesses failing.

It is a statistical fact that most businesses fail within the first two years of existence. Some analysts ascribe the high failure rate to the fact that these new businesses are built on an idea rather than on an opportunity.

Generating Ideas

In developing a sound business idea the newcomer should follow a structured approach to evaluate the idea, even if it is felt that the perfect business idea is obvious.

In this part of the article a number of practical methods and frameworks will be listed that you can use to generate potentially successful business ideas.

The ability to be able to quickly distinguish between a business ideas and a business opportunity is the main difference between successful and unsuccessful business people.

All business opportunities are based on ideas, but most business ideas do not represent authentic business opportunities. The difference between opportunities and ideas are that opportunities are ideas that will result in a successful business. It is true that the first step to identifying business ideas will be to generate suitable ideas.

These are literally hundreds of methods for the structured generation of ideas. Some of the methods that one can use to generate ideas through creative methods include:

Manipulating existing concepts, conducting an attribute analysis, redefining problems, making forced connections, embarking on a Mind Map exercise, conducting a brainstorming exercise or performing a Brain writing exercise to mention but a few.

It is also possible to generate ideas from generic needs by listing the basic needs that most people have. This is then analyzed and evaluated by trying to find as many ways as possible to satisfy the needs.

Another way to generate ideas is to use everyday activities. These can include:

Shopping excursions, watching TV, going to work, asking family or friends about ideas, conducting general household chores, playing sport, walking in the park and other similar activities.

Selecting Opportunities from a List of Ideas

The next step will be to determine whether any of the ideas are actually workable business opportunities. Just because one think that an idea is a good idea and nobody else is doing it does not make it a good idea.

The story about the two salesmen that went to Africa comes to mind. The one sent a mail to his factory stating that they should increase capacity as there are millions op potential customers while the other sent a message stating that he is retuning to base as nobody is wearing shoes. The question inevitably is who was correct. The answer may be neither or both. It will depend on the situation.

Feasibility

To correctly answer the question one need to first evaluate the feasibility of the idea. Even if the idea is a sound commercial concept there may be some very good reasons for not proceeding. Some of the questions that must be answered before a reasonable conclusion can be reached may include the following:

Is the available startup or expansion capital available?, Is the market understood?, Are enough skills available to produce and deliver the product?, Does the business require a formal qualification of professional registration?, Are there any legislative requirements that limit or prohibits the business?, Are there a sufficient number of suitably qualified and experience employees available?, Is any specialized equipment necessary?, Is the available infrastructure sufficient to run the business successfully?, Can suitable distribution channels be established for the product?

Are suitable and sufficient raw materials available?

Does the management team have experience in running this kind of business?

Viability

Once these and other feasibility questions have been answered accurately the next step is to establish the viability of the business idea. To determine the viability one needs to assess the cash flow needs to generate a sustainable profit. The profit should be evaluated for different volume, expense and margin variables.

At the conclusion of this phase of the process, a full business plan should be developed to capture the information in a standardized structured and logical manner.

In the run up to this point most of the issued associated with drafting a business plan would have been considered and hopefully answered.

Conclusion

Some people may say that the best plans may come to nothing. I once met a farmer who told me that he could not plan as he did not know how to plan for no rain. Needless to say, if you don't plan you would also not know how to deal with that kind of disaster.

It is also true that, "if you don't know where you are going, any road will take you there" in the famous words of the Mad Hatter to Alice in Wonderland.

In the diving fraternity the saying goes, "plan you dive and dive your plan to say alive". If you want to have a chance for financial success it is no different in business.