Some people believe they could be great entrepreneurs if only they could find the right opportunity. But the most successful entrepreneurs see so many beckoning business niches that they have to separate the winning opportunities from the merely promising.
When two friends told me about an opportunity they were looking at, I offered them the following tool for evaluating whether this potential business would be the best fit for their time, their skills, and their expectations.
If you’re considering investing your money or energy in any new opportunities, ask yourself questions like these:
What is the size of the opportunity? Estimate the potential market for the product or service you want to bring into the world. Know who your target market is, and identify significant secondary markets. What share of the market do you think your business can reasonably capture by the end of the first year, the second year, and after five years? Is this market big enough, and sufficiently open to new entries, that the reward is worth your effort?
Do customers just want this product, or do they need it? A few products — well, the Pet Rock — may succeed even though no one ever wanted one. But exceptions can’t be planned for. The best opportunities lie in markets where potential customers are actually looking for new solutions. And while it’s nice to sell into a market where buyers want your product, success will come faster if they ache for it. The more pain your customer is in, the more likely they are to buy into your solution.
What is the pain point this product addresses? Be able to articulate how your product solves a searing market need. This is your elevator pitch. Even if you don’t need to justify your business plan to investors or partners, getting this right will be a huge help in planning your butt-kicking marketing campaign.
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