As the popular saying goes, all that glitter is not gold. If it glitters and it is gold, it just might not be your own gold. Yes, there are thousands of opportunities everywhere for every good thing you’re looking to achieve: To increase capacity. To learn. To start something new. To make money. To connect…and the list go on. Most of these opportunities however, often have people bang their heads on brick walls, not because the thing that glittered wasn’t gold. But as it turned out, it wasn’t their gold.
The places where folks have had their fingers burn the most, are in marital relationships and business. Well, as you probably know, I am not a married woman so I won’t go there. I’ll just talk business instead. To make the best use of any business opportunity, you’ve got to be certain that it is right for you.
Seeing isn’t always believing. Every good writer – or photographer – knows that all too well. Don’t believe everything you see or hear until you have tested it. Carefully weigh and examine every opportunity that comes your way.
Does the opportunity match your experience, skills, and interest?
Ask yourself, “Am I the right person for this…?” Don’t be quick to say ‘yes,’ but state your reasons in clear terms. Many people have deep knowledge, skills and experiences that have not been translated into monetary value yet. Innovation is the order of the day. What strategy do you intend to put in place? You most likely won’t score 100% in areas of skill, interest, and experience. So, you must be willing to upgrade your knowledge; get some education. And get enough people with skill and experience, who share your taste and preferences.
Can you recruit and lead the team needed to exploit the opportunity you have identified?
You might want to outsource the recruitment process but if you’re just starting out, you will need to choose your team carefully. The ideal members of your team should have –
- Proven, relevant experience in the industry, market, or technology.
- A track record of achieving results.
- Diversity of personal qualities, style and views: make sure everyone is not like you.
- Mutual trust, commitment, and ability to manage conflict.
What resources do you have that others don’t?
The key resources to count on as far as successful businesses are concerned: intellectual property (the know-how that is patent-protected), physical property (building/prime location), capital equipment (machinery), facilities, materials, and customer-supplier relationships. Usually, intellectual property and innovation for cash is enough, so start thinking of how you can adopt a positive cash flow model to increase the chances of survival and success of your business.
Is the timing right?
There are 3 kinds of timing: market timing, personal timing, and investor timing. Is the timing right for your market? Imagine that you tried producing – or selling – an android phone in the ‘70s, when there wasn’t public access to the worldwide web. It would have been a wrong timing for the market. Almost the applications on it will be useless. You need to ask yourself, “Is the world ready for what I’m about to offer?” “Is the industry ready too?” “Am I ready for the full time commitment that the business will involve (Personal timing. Business requires that much)? How confident are you that sources of capital will be available to you when you’re likely to need it?
Is This Scalable?
The question here is, can you increase sales without increasing costs in direct proportion? Don’t just consider how big your business can become. Find out what the barriers to growth are, and take care of them. Most entrepreneurs spend too much time dealing with day-to-day running of their business instead of planning from a longer-term perspective. You really don’t have to handle everything yourself. To stay effective, outsource the tasks you don’t have to do.
Does it offer good margin potential?
What is your break-even point? Understanding the break-even point of the business will put you in control. Are you familiar with the difference between gross margins and net margins? Gross margins represent the gross profit as a percentage of sales. Net profit identifies what is available for re-investing into the business after all expenses have been taken out and tax has been paid.
Your break-even point is the point when the value of sales after the production costs is exactly equal to the overheads of the business so that there’s no net profit or net loss.
So, What Have You Got? An opportunity or a Good Idea?
Ideas are always flying in the air, but not every idea is a great opportunity. You’ve got a brilliant opportunity when you have passed the 6 previous tests. Great ideas always shine through in the end. However, if what you have cannot survive the 6 previous tests of opportunity – my friend – what you’ve got is a good idea. It won’t take you anywhere.