When entrepreneurs take the decision to launch their own startup, most usually go through several important phases, the first and most important of which is coming up with a feasible idea. Some entrepreneurs have ideas running through their heads for years before actually implementing them, while others might find themselves searching for an idea when an opportunity presents itself. Both groups, however, must be able to recognize not only opportunities for new ideas but also the best ways to implement them. To be successful entrepreneurs, we need to be continually innovating and looking for opportunities to grow our startups.
What distinguishes an ordinary idea from an extraordinary one is the possibility of transforming it into a salable product or service. Consequently, not all ideas are opportunities. B. Barringer and R. Ireland write in their book, Entrepreneurship, that most startup ideas emerge in one of the two following ways:
- Internal Reasons: When the entrepreneur decides to establish a company, he starts looking in the market for opportunities and needs that he can meet by offering a certain product or service.
- External Reasons: When the entrepreneur notes a gap or a need in the market, he establishes a company that offers solutions and products for people with this need.
An opportunity should have several specific qualities, such as the right timing, the right product, or an added value that the service offers to consumers to encourage them to purchase it.
Here are three key approaches to identify the best investment opportunities:
1. Observing Trends
The first approach is to observe trends and study how they created opportunities for entrepreneurs to pursue. The most important trends to follow are economic trends, social trends, technological advances, and political action and regulatory changes. It is important to remain aware of changes in these areas.
Observing such trends can be done through statistical reports published free of charge based on research done by specialized companies and institutions. Some reports may not be free; these usually contain more valuable and detailed information.
2. Solving a Problem
One word comes to mind here, Solutionism. In my opinion, the major challenge most entrepreneurs face today is their inability to identify problems before creating amazing solutions. Some entrepreneurs are quick to create products before they begin to look for problems such products can solve. If this tact cannot work in scrabble, there is no way it can work in the business. Recognize problems and develop innovative ways to solve them. Anti-virus software companies are entirely built on this approach. It is also worth mentioning that there are a lot of problems that are waiting to be solved.
3. Gaps in the Marketplace
There are many examples of products that consumers need or want that aren’t available in a particular location or aren’t available at all. A common way that gaps in the marketplace are recognized is when people become frustrated because they can’t find a product or service that they need and recognize that other people feel the same way. Look for products or services that are lacking in the marketplace.
A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers.
These approaches might be helpful for entrepreneurs still in the planning phase, but they can also be useful for entrepreneurs with existing projects looking for opportunities to develop and expand their businesses.