The Fundamentals of a Business Opportunity

If you are thinking of setting up a new business, or at looking at joining or investing in a start up then assessing that opportunity is critical. How should you assess a potential idea or opportunity? What are the key criteria to consider? This article should help define a suitable methodology to follow. Grassroots Digital have a wealth of experience in assisting small businesses and entrepreneurs in assessing opportunities and developing detailed business plans and financial forecasts, so if after reading this article you need further help or advice then get in touch. justin@grassrootsdigital.co.uk or +44 (0)7980 578 401.

The assessment of business ideas can be summed up very concisely, in a way that fully encapsulates the essential problem in looking at business fundamentals; When does a good idea become a business opportunity? Good ideas occur relatively frequently, but good business opportunities are a much rarer breed. Perhaps the answer to this is that it becomes a good opportunity when it has been fully evaluated with respect to the relevant fundamentals.

Timmons & Spinelli (p119) outline the four main anchors of a business opportunity as being; the creation or addition of value, the solving of a significant customer problem or need for which the customer will pay a premium, the presence of a robust market, margin, growth or IIR and finally a good fit between the business founders, the management team, the marketplace and the risk-reward balance. If an idea is to satisfy any, or all, of these four anchoring principles then it will need thorough investigation and rigorous benchmarking.

This paper will examine how an entrepreneur can extract a good business opportunity from a seedling idea, and will attempt to summarize the fundamental tenets of a viable business opportunity. It will do this by answering the following questions. Firstly, how does one evaluate an idea and in what areas should one gather data? Secondly, how does this information fit into Timmons and Spinelli’s Main Anchors? Thirdly, which of these standards are fundamental and which are less business critical?

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