Ideas for new businesses are easy to identify, but difficult to evaluate. Entrepreneurship is the identification and exploitation of opportunities that have not been exploited. A good opportunity has the potential to create added value for the customer. Another way of seeing it is describing the problem or pain of the client, which represents how much need is that client a solution to his pain, need or problem. Biggest problem, need or pain, greater value has the opportunity to provide a solution to that client. Obviously, a greater number of customers who share the same problem, greater value has the solution.
The first role of the entrepreneur is to identify and select the appropriate opportunity. The entrepreneur is usually a dreamer, visionary, person who engages in a creative process of identifying opportunities and evaluate them. Select the opportunity that has the greatest chance of success in the market. The key question is, how to evaluate and select the right opportunity? The goal should be to find an opportunity in an industry that knows the entrepreneur and have a long-term growth potential. Tom Stemberg, founder of Staples, conceived the idea of a supermarket in effects of Office in the mid-1980s. Not the politics of large companies liked him and wanted independence. He started his business with a store in Brighton, Massachusetts.
He made a comprehensive analysis of the market and determined that it was $100 billion with an annual growth of 15%, with large profit margins. The analysis of opportunities includes the evaluation of alternatives. This means that other opportunities will be discarded in the process. Consider the following situation: A 28 year old woman receives a bonus of $20,000. What should you do with the money? Should you invest it in a mutual fund, use it as soon for the purchase of a property, use it to start graduate studies, quit their jobs and start their own businesses? You could analyze based on the expected gain from the mutual fund of 10%; the gain of graduate studies in a 12%; the growth of their own businesses by 11%; a property in a 9% gain.
