How to Choosing a Business Opportunity For Your Business

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By: Site Engineer, Staff

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Several business opportunities could be identified by a potential small business owner and each of which is attractive for one reason or the other. If the entrepreneur were to evaluate the feasibility or viability of each opportunity before making a choice of one of them, substantial time and resources would have been expended.

Entrepreneurs, therefore, screen the available opportunities with the aim of narrowing down the number of business opportunities to be evaluated further and also to identify those which he/she can successfully execute.

The factors to be considered in choosing a business opportunity are:

1. Risk Tolerance

This is the level of risk that the entrepreneur is willing to accept. Different business enterprises have different degrees of risk. The entrepreneur must choose that business which matches his/her risk, that is, tolerant limit.

2. The Skills Needed

For any business undertaking, certain core skills are needed for the successful operation of the business. It may be technical skills, such as the ability to use certain equipment, tools, or the ability to execute a procedure. It may be financial skills, selling skills, legal skills, administrative skills etc.

To succeed in the undertaking, the entrepreneur must possess the appropriate skills or be in a position to acquire them before embarking on the venture. Some entrepreneurs find it worthwhile and instructive to work in someone else’s business in order to acquire the skills that he/she may need in operating his own business.

3. The Entrepreneur Ability to Raise the Amount of Investment Required

This is the amount required for fixed assets, working capital and reserve. The ability of the entrepreneur to raise the amount of investment required is an important consideration in choosing a business opportunity.

4. Experience Related to the Field of the Venture

This is different from operating skills. It is knowledge of the fundamentals of the business. Work experience that is relevant to the field of the undertaking is essentials. Such experience provides the individual a background on business practices in the industry, purchasing and credit practices, ethics and norms of the industry, appropriate behavior when dealing with customers and other stakeholders, the peculiar things associated with the line of business etc. These are invaluable in overcoming problems at different stages of the firm’s development.

5. The Entrepreneur’s Personal Interests and Life-Style

The demands of the business in terms of physical and mental effort, hours of work, conditions of work, travel requirements, meeting people and solving problems, etc must be in harmony with the entrepreneur’s life goals and preferred lifestyle. Most businesses fail because the owners are unable to accommodate themselves to the demands of the business. For example, an entrepreneur who has high moral standards might be unable to succeed in a line of business which demands to compromise his/her moral values. Whether or not a business is compatible with ones preferred lifestyle may be tested by working part-time in the line of business or seeking the advice of people already in the business.

6. Legal or Regulatory Constraints

In some cases, the law specifies the minimum professional training and/or experience that are required to operate certain types of businesses. Persons desiring to operate such businesses are required to obtain a license from the appropriate authorities. Examples are pharmacy shops, hospitals, and clinics, stock-broking firms etc.

 7. Support from the Close Friends, Family, and Relations

The opinion of people how to have a close relationship with the entrepreneur is an important consideration. Their acceptance of the business or lack of it may ultimately affect the entrepreneur’s commitment and drive, especially in times of crises.

8. The Desired Level of Income

The income expected from the business venture must be adequate to meet the entrepreneurs need for housing, clothing, food, recreation, entertainment etc. While the business owner may accept a reduced standard of living at the initial stages, on the long-run, the business must have the potential of providing the desired level of income for the owners.

 

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