2.3 Characteristics of an opportunity
Attractive and profitable
The market should be large enough and growing in order to generate profitable sales. There must be scope for revenues to exceed costs. There should not only be a gap in the market but a market in the gap.
The market should be ready to accept the products on offer. An opportunity should be accompanied by a product or service that is introduced at a time when it will be considered much better value for money than current products or services.
Timely
Compatible with goals and talents
An opportunity should complement the entrepreneur’s lifestyle, goals and aspirations. Otherwise, the entrepreneur may lose the necessary enthusiasm and drive. Secondly, it should be possible to find the skills for the venture, otherwise it will fail. Often enough, entrepreneurs waste time chasing interesting but ultimately futile or trivial concepts.
- The market must be large, easy to enter (with low entry barriers) and growing rapidly.
- Profit margins should be large and break-even point low so that comparatively few units need to be sold to realise a profit. Alternatively, the projected volume of sales must be sufficient to ensure profitability.
- The project should generate large cash flow.
