The business eco-system
Whether you possess the characteristics of an entrepreneurial mindset, or work for someone who does, you can still be instrumental in starting a new venture by understanding the business eco-system. What is a business eco-system? A business eco-system is a set of business components that form the foundation of a new venture’s creation. Figuratively, the business eco-system is like a wheel that rolls your new venture forward which is why we represent the business eco-system in a wheel-shaped model .
The sun rise of your new business Accessing market opportunity: the initial rim of the wheel
Market Opportunity is positioned at the top of the Business Eco-system Wheel for a reason. Every new venture starts with a single seed or kernel of an idea to do something in business that will result in money being exchanged. Since there is always some risk associated with starting a new business, you will have to take special care to plant the idea seeds of your new venture in a way that allows these seeds to some day bloom into a successful venture.
When to plant your market opportunity seeds
Without a doubt it’s challenging to know when to move forward and plant your new venture ideas in the “business garden” where you want to grow your career.
Entrepreneurs who are considering moving forward with a new venture idea can utilize the following questions and the “Stop and Go Signs for Accessing Market Opportunity Matrix.”
“Is there a customer for this product or service? Is there someone who will buy the product or service you’re considering selling? You can’t effectively answer this question until you have personally spoken to the potential customer and ascertained that this person will buy your product. You need to know as much about this customer as the customer knows about himself: What are the demographics of this customer? What influences his buying behavior? What factors could lead to this customer changing his mind about buying the product or services? What will be the impact of a crisis during an emerging trend?
What will it cost to make a sale to this customer? If there is a common pitfall for entrepreneur, it’s greatly underestimating the cost to acquire and repeatedly sell to a customer. The entrepreneurial marketer must account for every last expense it will take to make the sale. Commonly missed expenses include: staff time, travel and related expenses, overhead for office, payroll taxes, social security employer matching expenses (which occurs in the United States so your countries’ equivalent,) unemployment payroll related expenses, marketing expenses, and the overall amount of time it takes to make a sale.
Is my timing right for this market opportunity? You will have a brief window of opportunity to launch your new venture or expansion of an existing enterprise. Misjudging your timing is often the difference between success and failure with assessing market opportunity. If you are too early, you have the right product or service but your market is not ready for it yet. If you are too late, giant competitors may have acquired a loyal following, blocking new entries to the market.
Can I sell this product or service for a profit? Even if you have an existing customer, and have accurately estimated what it will cost you to acquire that customer; you might not have a sustainable business model until revenues outweigh the expenses…You need to find the incremental steps you can take to get to profitability. This is not easy. Again, there is no road map, but remember that patience is needed to reach profitability.” (One solution that is becoming a common practice throughout many parts of the world is micro-financing. Micro-financing is where a small loan is made available to an entrepreneur in a developing country. While micro-financing is arguably one form of financing micro-financing has been documented to be a more sustainable form of financing because the amount of the loan is made in such a small (micro) amount that the recipient of the loan does not have to leverage the startup’s best interests and assets in order to pay the loan back. The small amount of money loaned to the entrepreneur can usually be paid back from the revenues that the new venture is generating. Check out this micro financing website: http://www.acion.org.)
“Be open and flexible and recognize that along the way to profitability you might stumble on to a product or service that is in higher demand than the original concept.
When do I give up on my product or service? When should I pull up the roots of my new venture?
In the characteristics of an entrepreneur…perseverance was listed. There is a point, however, where you need to “pull the plug” and refocus your energies. You know you have reached this point when:
You have run out of resources and can’t further leverage any of the methods suggested in this book.
The customers who said they would buy your product during your research phase are no longer interested.
You can’t effectively market to your customer.
It costs you more than you make to sell your product or service.
During market opportunity assessment, there are times when the entrepreneur needs to “hit the brakes” and stop. Not stopping fast enough can lead to a failed business and/or bankruptcy. There are also times when an entrepreneur should “step on the accelerator” and drive on to new market opportunity territories. Knowing when to stop and go in your new venture market opportunity assessment isn’t easy.
To help you decide when to move forward with and when to forego an opportunity, please see the “Stop and Go Signs for Assessing Market Opportunity Matrix.” It’s common for an entrepreneurial marketer to get caught up in what seems like a great idea or business concept. This matrix is a concise, easy to reference and somewhat simplistic way to make decisions on judging market opportunity. This matrix suggests four major causes for a new venture to not find a profitable market opportunity.
Recognizing when you are on the verge of going through a Stop Sign without braking is critical. You can refer back to these stop signs in this matrix as constant reminders of when to turn your market opportunity strategy in another direction.”
If you encounter any of the four Go Signs when you are assessing market opportunity, don’t take time out to pat yourself on the back. This is because if you look over your shoulder you may see someone else realizing what you have discovered. Keep “driving on” if you are encountering all Go Signs.”
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