Let’s first define what a business is. In my view, a business, no matter how small it is initially, is one that eventually can be sold. Furthermore, while you may regard yourself as being “in business”, if it is not saleable it is not a business – you are self-employed. (Please note that this is not meant to denigrate people who are self-employed. I have been self-employed since 2006, but I don’t have a business I can sell.)
Let’s look at some examples:
If you are an electrician who has been operating on your own for 20 years and are doing rather well, it is unlikely that you have a saleable business. On the other hand, if over the 20 years the business has grown and you have 10 or more electricians working for you and a substantial customer base, then you have a saleable business.
If you are running a retail business and have done so successfully for 20 years, a problem you may encounter in selling the business is the ability to transfer a lease. Much of the success of a retail outlet lies in its location and if this aspect of the business cannot be included in the deal, the business may not be saleable. There are many reasons that a property owner may not be willing to enter into a lease agreement with a potential buyer. This does happen.
The same applies to agencies. Your business may have been an agent of a number of manufacturers, both locally and abroad, and you have done very well. However, the manufacturers may not necessarily renew agreements with any potential buyers you may attract.
So what is a true business opportunity?
A business opportunity is an unfilled need that has the potential to create a saleable business while fulfilling that need.
Please note that there is a difference between a need and a “want”. For example, people may want to eat out, but they don’t need to. It is not surprising, then, that restaurants often fail: when the economy is not doing well, neither do restaurants.
The “unfilled need” aspect is very important. Starting a “me-too” business means that there is already existing competition and the best way to beat existing competition is by meeting the need in a completely different way. Take, for example, Uber which provides the same services as taxis – short term personal transport – but uses a completely different business model. Alternatively, you could provide a substitute product at a lower cost to the buyer. This does not necessarily mean that your selling price needs to be lower. It means that your product or service may provide may provide a more efficient solution.
Potential business owners should examine Porter’s Five Forces (http://www.quickmba.com/strategy/porter.shtml) which provides an excellent framework for determining the viability and desirability of an industry you may be thinking of entering.
And then look for an unfilled need where you can satisfy through building a saleable business.
Let’s look at some examples:
If you are an electrician who has been operating on your own for 20 years and are doing rather well, it is unlikely that you have a saleable business. On the other hand, if over the 20 years the business has grown and you have 10 or more electricians working for you and a substantial customer base, then you have a saleable business.
If you are running a retail business and have done so successfully for 20 years, a problem you may encounter in selling the business is the ability to transfer a lease. Much of the success of a retail outlet lies in its location and if this aspect of the business cannot be included in the deal, the business may not be saleable. There are many reasons that a property owner may not be willing to enter into a lease agreement with a potential buyer. This does happen.
The same applies to agencies. Your business may have been an agent of a number of manufacturers, both locally and abroad, and you have done very well. However, the manufacturers may not necessarily renew agreements with any potential buyers you may attract.
So what is a true business opportunity?
A business opportunity is an unfilled need that has the potential to create a saleable business while fulfilling that need.
Please note that there is a difference between a need and a “want”. For example, people may want to eat out, but they don’t need to. It is not surprising, then, that restaurants often fail: when the economy is not doing well, neither do restaurants.
The “unfilled need” aspect is very important. Starting a “me-too” business means that there is already existing competition and the best way to beat existing competition is by meeting the need in a completely different way. Take, for example, Uber which provides the same services as taxis – short term personal transport – but uses a completely different business model. Alternatively, you could provide a substitute product at a lower cost to the buyer. This does not necessarily mean that your selling price needs to be lower. It means that your product or service may provide may provide a more efficient solution.
Potential business owners should examine Porter’s Five Forces (http://www.quickmba.com/strategy/porter.shtml) which provides an excellent framework for determining the viability and desirability of an industry you may be thinking of entering.
And then look for an unfilled need where you can satisfy through building a saleable business.
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