How To Identify A Business Opportunity
Yesterday I saw a “Permit Driver” sign in the back window of a brand new Range Rover.
Now, that seems like a risk- spending a lot of money on a car, only to let an inexperienced driver run over a curb. Seems like you need to do a lot more driving before taking the Range Rover for a spin.
The same is true in business.
It’s one thing to identify a business opportunity, but quite another to think the idea through carefully and launch your product or service. Consider these ideas when you want to identify a business opportunity:
Get free sample chapters for my book: Not Another Personal Finance Book.
Observation
I’m a huge fan of the How I Built This podcast, and I recommend it to everyone in business, because the host interviews successful entrepreneurs. All of the business founders notice what’s going on around them, and identify a problem that needs to be solved. Here are some other examples of founders using observation:
- Bliss Spa and Skincare Products: Maria Kilgore started her business career by learning the proper way to give people facials. She was inspired to start her business after a terrible experience getting a facial at an expensive spa in New York.
- LinkedIn: Reid Hoffman noticed that people segmented their online preferences between personal and professional. He started LinkedIn to fill the consumer’s desire for a professional online platform.
- Patagonia: Yvan Clouinard started Patagonia, because he couldn’t find camping gear that was durable enough to stand up to the intense hiking and climbing trips he was taking.
What is it in your own life that’s a problem you might solve?
If you’re recovering from a financial setback, this article may help.
Where the rubber meets the road
So, I’m sure you can jot down some realistic business ideas. Once you do, you need to take a hard look at three factors:
- How urgent is the problem or need?
- What’s the size of the market?
- Can I scale to meet the market’s size?
If you don’t have specific answers to these questions, you’ll struggle to get your business venture off the ground.
My example
I started an online tutoring business for accounting and finance topics, and I focused on MBA candidates and other graduate-level students. I certainly found an urgent need- many people who viewed my You Tube channel of 400+ videos on those topics contacted me for help.
But there was a problem. I was only one person, and scaling the business required me to fund and hire other qualified instructors. While I’ve seen other online tutoring companies scale with great success, I decided that I didn’t want to manage a large staff.
I went on to other things.
Perform intensive research
Arthur Blank started Home Depot with a partner, but the pair did not open their first business until they performed research on the concept for several years. Blank and his partner had extensive experience managing a successful chain of big box hardware stores, but they did more research to increase their chances of success.
There’s an endless ocean of information on the web, and finding useful research may be difficult. However, it’s worth the time investment to find the right information source for your startup idea.
Find the thought leaders in your particular industry, and find how what they’re saying about the industry. Many thought leaders put out white papers, free webinars and other useful information to attract an audience- and potential future clients. The information must be useful, in order to keep the reader engaged, and it can be a great reference for you.
Here’s an example: I pay attention to content marketing, and I recently came across an infographic from LookBookHQ. I thought the infographic was useful, so I went to the website. I downloaded this 15-page content marketing research document, and now I feel far more educated on the subject.
Find thought leaders- and read, watch, listen to everything they put out. It’s a form of free education.
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
Co-Founder: accountinged.com
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/
(you tube channel) kenboydstl
This post was originally posted on my Quora page. This post is for educational purposes only.
Image: Bullseye, Jeff Turner CC by 2.0