All of us have ideas each and every day; probably hundreds of them. We bet that you could come up with at least 10 business ideas right now. Go ahead – we’ll wait!
The catch is: not all of these business ideas will be business opportunities. Unsuccessful entrepreneurs usually think that a business idea and a business opportunity are the same. Successful entrepreneurs know the difference. An small business idea becomes a small business opportunity when the idea passes some level of screening, like this:
- How many people will buy?
- Will the business be profitable?
- Do you have the money to get this business up and running?
In other words, an idea is a business opportunity only if it can actually make a profit for you.
Did you know that only 2 to 4% of business ideas presented to angel or venture capital investors actually get funded? So, for every 100 great new business ideas we might come up with, less than four of those ideas are likely to be business opportunities. Tough odds! And all the more reason for you to really make sure you can tell a good business idea from a good business opportunity.
To us, a good business opportunity is represented by four pillars:
- The product or service must add significant value to a customer or end user
- The product or service must solve a significant problem or satisfy a significant want or need
- The product or service must have money-making characteristics
- The business idea should be a good fit with your four capital factors: human capital (skills, knowledge and abilities you’ve developed through your career); sociological capital (your networks and support groups); psychological capital (your attitudes, values, opinions and beliefs); and financial capital.