Connect with us

Business Model

Finding the Right Opportunity

Finding the right entrepreneurial opportunity depends on two important questions to ask yourself: Is there a gap in the market? And am I the right person to fill the gap?

Greg Fisher

Published

on

FindingRightOpportunity

Market Demand

The starting point for sourcing an opportunity is to look for a gap in a market. You need to find a set of customers who are under-served and looking for a particular product or service to fill a need. By becoming aware of people’s under-served needs, you can develop an opportunity-oriented mindset.

In order to foster this mindset, it is useful to engage in these practices:

  • Observe. Whether you’re driving in your car, walking down the street or sitting in a café, look for people who are under-served.
  • Write. Keep an “ideas” notebook. Write down business thoughts and ideas as they come to you throughout the day. Then every once in a while, take some time out reflect on what you have jotted down. Eliminate bad ideas, link ideas with potential and build on good ideas.
  • Discuss. Engage in exploratory chats with other people. Talk to your grandparents, the cleaning lady or whoever else will open up to share with you about where they are frustrated and have an under-served need.
  • Explore. Explore trends and concepts in overseas markets and take time to examine what’s happening in industries with which you’re unfamiliar. Raymond Ackerman gleaned his ideas for Pick ’n Pay from the retail trends abroad, while the Kulula.com concept was based on the model of Southwest Airlines (USA) and Easy Jet (Europe).

Effectively combining these practices will provide you with a diverse set of ideas. These ideas must be refined and researched. In your initial research you should attempt to gauge:

  • The size of the market. How big is the market and is there room for another competitor?
  • The likely competitors in the market.Who are the competitors and how are my ideas different from what they do?
  • Is it possible to reach the customer. Can I get to the customer to sell and distribute the product or service?

This quick market research will give you abase off which to make more informed judgments about where there is and isn’t a gap in the market.

Passion

Building a business around an activity or a product about which you are passionate can give you a huge advantage. Firstly,being passionate about your product or service increases your ability and confidence to sell it to others. Secondly, passion for the product or service makes it easier to endure the tough times of building a business.

If you’re doing something that has meaning and purpose, you are far more likely to persevere when others would give up. Thirdly, being passionate about your product or service means you’ll be more inclined to build your skills, expertise and understanding of the particular product or service you’re selling. It is easier to build and sustain the energy required to grow a business if you have a passion for what you’re doing. Link the potential business ideas to your personal passions for the most positive results.

Skills

Most people have a unique skill or skills they’ve developed during their lifetime. Using it can give you a competitive advantage in setting up your business. Write down the things you are good at and consider how you could use any of those skills to develop any of the business ideas you’ve generated. After all, Bill Gates used his skill in programming in the early days of Microsoft and Paul Simon used his training in clothing design when creating YDE.

Resources

As you review ideas, think about what resources you have at your disposal that will give you a head start when implementing that idea. Effective entrepreneurs leverage the opportunities that arise from the resources they have access to. They use their network of connections to source appropriate resources and always think of alternatives, asking “what else can we do?” when they encounter obstacles due to lack of resources.

Finding an entrepreneurial opportunity can be exciting. It is inspiring and motivating to imagine what could be as you consider the possibilities of turning the right opportunity into a sustainable business. Central to finding the right opportunity is the market demand – and the market demand should be exploited by an entrepreneur with the right passion, skills and resources.

Key questions to sourcing the right opportunity:

What do people need?

Who will buy it?

Why do they want it?

How can I reach them?

What am I deeply passionate about?

How can I leverage my unique skills?

Where can I get the resources to make it happen?

Greg Fisher, PhD, is an Assistant Professor in the Management & Entrepreneurship Department at the Kelley School of Business, Indiana University. He teaches courses on Strategy, Entrepreneurship, and Turnaround Management. He has a PhD in Strategy and Entrepreneurship from the Foster School of Business at the University of Washington in Seattle and an MBA from the Gordon Institute of Business Science (GIBS). He is also a visiting lecturer at GIBS.

Business Model

Developing A Business Model That Works

Use these six tips to create the financial section of a business plan that will get your company off the ground.

Scott Duffy

Published

on

business-model

The following excerpt is from Scott Duffy’s book Breakthrough.

What’s the first step in figuring out how to execute your big idea? Creating a working model for your business.

We’ve all been brainwashed into thinking that the best way to do this is to sit behind our desks and write a long, detailed business plan. You know the kind: It starts with a fancy cover and your mission statement, then describes your team, market, product, competition, and so on.

Most entrepreneurs spend a lot of time and resources writing their plan. Too often, they get feedback from all the wrong people. Their friends and family want to support them, but they’re telling the entrepreneurs only what they want to hear — that they have come up with the next Google or Apple or Tesla (keep in mind, none of this feedback is coming from customers).

By the time the entrepreneur gets to the last section in the business plan — the financials — he’s totally sold on the idea. Sometimes the financial section is left unfinished or dropped entirely as the business is launched.

And why not? We’re passionate. We’re committed. We know we can’t fail. So what are we waiting for? Let’s go!

Here’s the problem: Most entrepreneurs change their business model six times when working through the financial section of their plans. While running the numbers, they identify key distinctions with regard to income and expenses. They gain a deeper understanding of what it will take to break even and how to achieve free cash flow. As a result, they come up with better-informed strategies for attaining their desired financial outcomes.

The most important part of the initial business planning process, and the one people most often neglect, is getting your numbers to tell a story that makes sense for you and your investors. If you start at the beginning of the plan only to learn that your assumptions about the business don’t add up once you reach the end, you’ve lost valuable time and money.

Related: The Top Business Models For Your New Start-Up Business

Regardless of whether you’re in startup or growth mode or moving to the next stage of your business, mistakes can be costly, so here’s what I recommend:

1. Start with the last page first

Once I have a basic understanding of what I’d like to build, the market, my target customers, the busi­ness opportunity, and the product, I dig right into the numbers and create a simple one-page spreadsheet that clearly identifies how the money flows. Basically, I write business plans backward. I’ve learned that once the numbers tell the story you want, the rest of the plan will write itself.

2. Don’t wait

Don’t make this process more difficult than it needs to be. Limit your model to one page. Create the simplest, most basic spreadsheet you can that identifies income, expenses, breakeven, cash flow, and the capital required to achieve your outcome. Use conservative assumptions, and don’t rely on best-case scenarios.

3. Get out of the office

You’ll learn more about your business by getting into the market than you ever will sitting behind a desk. At least 50 percent of your time should be outside the office gathering information that can be applied to your plan. That means contacting industry insiders to learn more about the market, talking to prospective customers about their needs, and testing your competition’s products and services.

4. Be careful who you listen to

When we have an idea we passion­ately believe in, we’re convincing. It’s easy for our family and friends to tell us we have a winner on our hands because they want to be supportive.

But when you’re modeling your busi­ness, the people whose feedback matters most are current and potential customers. Listen to what they have to say and apply what you learn to your model. Let their feedback, and not your enthusiasm, sway your projections.

5. Don’t throw out negative feedback

Sometimes it can be difficult to absorb negative feedback in a constructive frame of mind because we’re so close to our projects and have so much on the line. We start rejecting and deflecting feedback that isn’t in line with what we believe.

But honest, educated feedback is like gold — use it to open your mind and ask tough questions about your assumptions. You must be obsessively committed to asking what you can learn from this feedback and how you can apply it.

This is especially important for people entering new markets where they don’t have prior experience. Getting feedback from others who’ve lived in the space will add to your perspective. Sometimes you’ll learn that there are things you don’t know as a newcomer that would significantly impact your financial results.

In fact, this holds true throughout your business’s lifetime. The entrepreneurs I know who’ve built the most successful and thriving businesses are obsessed with getting constant feedback from the marketplace and adapting their businesses based on evolving market needs.

Related: Developing a Stable Business Model

6. Be open to what the numbers tell you

The worst thing you can do is try to manipulate a model to match your assumptions. You need to approach your financial model with a completely open mind.

Recognise that it will probably take longer than you ini­tially thought to get to market, generate revenue, create profits, and accumulate the cash flow you need to operate and further invest in the business. By being open, you’ll be able to make distinctions, apply them to your business, and set yourself on a path to success.

You need to be clear on where you want to go and put a simple and adaptable plan in place to help you get there. The clearer your vision is upfront, the easier it will be to back a plan to help you get there. Being obsessed with customer feedback will enable you to tweak strategy in a way that evolves with the market and helps keep you on top of the competition.

This article was originally posted here on Entrepreneur.com.

Continue Reading

Business Model

4 Types Of Business Models To Suit Your Business Concept

There are four main types of business models, see which one suits your business concept.

Alison Job

Published

on

Prev1 of 5

business-model

Different types of business models suit different types of businesses. A business model is the way that a company sells products to its customers. It describes how a business creates, delivers, and captures value.

What type of business model should you adopt?

A business model defines how the enterprise delivers value to customers, gets them to pay for that value, and converts those payments to profit.

There are four basic types of business model that any for-profit business will fall into:

  1. Manufacturer
  2. Distributor
  3. Retailer
  4. Franchise.
Prev1 of 5

Continue Reading

Business Model

How To Pick The Business Model That Works For You

So, you’ve picked your lane.  You’ve decided what you want to do and why you want to do it.  You’ve picked something you’re good at.  You’re convinced the world needs and values it.  You now need to decide how to make money.  That’s where business model design comes in. 

Anthony Miller

Published

on

business-model-2c

There are plenty of business model options for the same idea.  For example, let’s say your idea is to offer historic tours of Cape Town.  You could either do it yourself or hire professional guides to do it.  Or you could use mobile technology to provide DIY walking tours.  You could charge per tour or you could charge a membership fee.  There are so many options.  How do you pick the model that works for you?

The Lean Canvas is a great tool for entrepreneurs who are faced with this question. Adapted from The Business Model Canvas, it provides a simple, one page framework for brainstorming possible business models, prioritising where to start, and tracking ongoing learning.  It walks the entrepreneur through the business model process logically and ensures the key elements of a successful business are considered.

Related: Business Model Design – Picking The Business Model That Works For You

My co-founders and I have used the Canvas extensively at Simply – for designing our business model, and for communicating it to partners and investors. The only thing you know with certainty when you start a business is that it’s not going to turn out as you expect it to.  The Canvas evolves as you go – it was, and continues to be, a very useful guide in our journey.

Recognising an opportunity for disruption

We figured there was an opportunity to do something disruptive in the SA life insurance space.  It was clear to us that lots of people were either not covered or getting a rough deal.  Guided by the Canvas, we defined our first Customer Segment as adult South Africans, aged between 25 and 45 and earning between R5k and R30k monthly.

We then identified the 3 big Problems – specific to that segment – that needed solving:

  1. Most of the people in our segment have some form of funeral cover, but very few have life or disability cover.
  2. The cover they do have is often expensive relative to the benefits provided (i.e. a very small % of the premium goes towards the risk costs).
  3. There is no simple, intuitive way to buy good value life, disability and funeral cover online.

Developing a value proposition

Next came the Value Proposition.  We believed we could use technology, digital marketing and human-centred product design to deliver simple, online life, disability and funeral insurance at a great price.  We felt we could be for life insurance in South Africa what Takealot has been for retail.

We thought the world was moving far faster than incumbents realised; that millennials were ready to buy life insurance online; that we could build for the digital world and be in the right place at the right time.

And the rest flowed from there.  I don’t have the time or the space to walk you through the other elements of the Canvas here, but you can probably fill in the blanks.  Suffice to say, the process was invaluable and enabled us to build our business around a clearly considered business model.  It’s early days, but the signs are good – we’re making a positive impact, having fun and keeping our investors happy.

Creating a Lean Canvas

So, how should you go about sketching your own Lean Canvas?  The team at www.leanstack.com suggest the following approach:

  1. Sketch a canvas in one sitting. While a business plan can take weeks or months to write, your initial canvas should be sketched quickly.
  2. It’s okay to leave sections blank. Rather than trying to research or debate the “right” answers, put something down quickly or leave it blank and come back to it later.
  3. Think in the present. Business plans try too hard to predict the future which is impossible. Instead, write your canvas with a ‘getting things done’ attitude.
  4. Use a customer-centric approach.  You may need to sketch one Canvas per customer segment.  Start with the Customer Segment and go in sequence.

The Canvas has brought clarity and a common language to our business model design process.  It’s enabled us to agree upon and communicate our business model effectively – both internally and externally.  It’s also allowed us to tune and adjust our model as our story has unfolded – an inevitability for entrepreneurs.  I highly recommend the Lean Canvas as a tool for designing your business model.  Give it a try – I think you’ll like it.

Continue Reading
Advertisement

SPOTLIGHT

Advertisement

Recent Posts

Follow Us

Entrepreneur-Newsletters
*
We respect your privacy. 
* indicates required.
Advertisement

Trending