Getting involved in a bad business opportunity can be incredibly costly and discouraging, but the truth is it happens all the time. Entrepreneurs are always looking for the next big thing, but salespeople and numbers can be tricky no matter how educated you are on a topic. It's incredibly tough to find good business opportunities, and any successful CEO will tell you it took a while to get it right.
The best tactic is to read examples and understand what to look for and where to go to find a successful opportunity. It's never guaranteed, but it's a good (and necessary) place to start.
What Makes a Good Business Opportunity?
Finding good business opportunities isn't going to mean anything if you can't recognize it. Recognizing good opportunities takes talent, whether you are looking for something to sink your teeth into or you already had success once and want to find it again. You really have to know what to look for, what to ask yourself, and be able to envision the future.
There are also many different types of business opportunities including distributor deals, supply deals, franchise ownership, website acquisitions, and more, which you can learn about here. Understanding which type of opportunity you're looking for and having a few goals in mind is crucial and will help determine which factors make it good opportunity.
However, there are a few general things that should always be present with a good opportunity (no matter what type):
1. The product or service will meet a need.
This can be a tough characteristic to find when looking for new opportunities, but it's probably one of the most important. Whenever you evaluate an opportunity, ask yourself if there is really a need for the product or service. Does the product or service solve a problem for consumers? You may want to consider using Google Consumer Surveys or a similar survey service to talk directly to the target audience. After all, the best way to see if people are going to be interested in your business is to talk ask them.
If the need is already being met, you need to determine if the company you are looking at can do a better job.
2. The opportunity will work in your location.
If the opportunity meets a need that's great, but it isn't going to mean much if that need isn't specific to your location or the company won't work in your location. There has to be a demand, and unfortunately that is very location-dependent.
You also have to think of the economic environment. There might be a need in your geographical location, but are people in that location going to take the time and money needed to get started with your company? More on this in points below.
3. You have the resources you need to help the business succeed.
While it's true that you can start to compile resources once you have acquired or started a business, you should still be considering this at the start. This is more of a personal requirement for an opportunity as opposed to finding one in general. Do you have what it takes to run that type of business right now? Are you going to be able to afford the resources needed to help the business succeed?
I talked with Scott Langdon, Managing Partner of SEOAgency.com, who has started three successful businesses, and he said, "You have to be honest with yourself, and unfortunately this is where many entrepreneurs make their mistakes the first time around. You will want to do everything yourself, but in the end you need to trust others so that you can focus on the bigger picture of setting the strategy."
4. You can provide the product or service at the right price according to the market.
We've been dancing around this point, but here it is: You have to consider the market and consider price. Ask yourself whether or not you can provide the product or service at a price the market can handle. Will your price attract customers while still earning you a profit? It's a tough question to answer, but one of the most crucial.
5. The timing is right in terms of the market and your resources.
Timing is everything when evaluating business opportunities. This encompasses all of the points on this list--your timing personally, timing in the market, and timing for your current location. Everything has to line up in order for the opportunity to really work. You need to find that window before making a commitment. If the timing isn't right, you are better off passing or revisiting that opportunity later. Keep watching the market and doing your research so you're ready to jump when the timing lines up.
It's also worth noting that even in a down economy there could be a window of opportunity. It's all about considering the above points to decide if the timing is right for your idea.
Your next steps: If you find an opportunity that seems to posses all of these qualities, it's helpful to talk with someone who has owned a similar company before if possible. If you're thinking about buying an existing company, ask for access to their data regarding revenue and business so you have all of the information you need to make the right decision.
Do you have any tips for finding good business opportunities? Let us know what has worked for you in the comment section below.