All of us have ideas each and every day; probably hundreds of them. Most of us can come up with several business ideas in a single day. However, 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.
What’s the difference between a business idea and a business opportunity?
An idea becomes a business opportunity when the idea passes some level of screening — 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, a business idea is an opportunity only if it has a way to make a desirable profit for the owners, investors and shareholders.
Research on the number of business proposals pitched to angel or venture capital investors shows that only 2 to 4% of business ideas presented actually get funded by them. 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 – at least the type of high growth opportunity most angel and venture capitalist investors are looking for.
At GoForth Institute, we believe that one of the main reasons for the high rate of small business failure is directly due to the entrepreneur’s inability to tell a good idea from a good business opportunity. Even though an idea is the starting point for a new business, not every idea is an opportunity to start a business that will actually make you some money.
How can you tell if a business idea is worth pursuing?
To us, a good business opportunity must pass our VPMF Test — value, problem-solving, money-making and fit test.
Does your business idea pass the VPMF test? Ask yourself these four questions to see if you’re on the right track:
- Does the product or service must add significant value to a customer or end user?
- Does the product or service must solve a significant problem or pain or satisfy a significant want or need?
- Does the product or service must have money-making characteristics?
- Does the business idea should be a good fit with your necessary entrepreneurial resources: personal, network and financial?
If you answered yes to these questions, your business idea might be worth exploring! Investing in small business training will help you further refine your idea to give yourself the best chance of success. Good luck!
Remember the Pokemon Go craze? It seemed like the whole world was obsessed with it, downloading the app and “catching” Pokemon that were overlaid over real-world views. While it may seem like a great idea for a game, augmented reality like this can have applications in business, too.