Beating the opportunity odds

Knowing which business opportunities are good or bad have for ages been questioned by eager entrepreneurs. If statistics are anything to go by, most opportunities are either bad or poorly implemented. We need to do something about this as a means to get rid of business proposals, ideas and ventures that have ‘no chance’ of starting, let alone being successful. With the odds so heavily stacked against entrepreneurs, why are so many attracted to the daily challenges and the mountains that need to be climbed? Is it the freedom, being your own boss, the potential income, the creativity or being in charge of our own destiny? Millions of entrepreneurs in the UK compete each year for scarce capital and customers. Many ventures don’t even start and those that do – most fail. Many of the business plans that are submitted to investors, only 1% are estimated to get the money they originally requested. Either the risk / cost was too high or the return on investment too low. Let’s face the facts: Most businesses fail. To be successful, we need to be different. We need to do different. Research shows that the three biggest reasons why business fails are because:

• customers won’t buy
• competition is too strong
• entrepreneurs aren’t good enough

We need to do our homework first to give ourselves the best chance of avoiding these pitfalls. Other than working harder and smarter, before we start writing a new business plan or developing a strategy to grow a business – entrepreneurs need to examine some important questions about their opportunity:

1. What do your investors want?
2. What is the market willing and able to pay for?
3. Have you a cash budget to begin and build your business?
4. Is the competition easily defeated in a few areas?
5. Are you able to deliver relentlessly, better than most?
6. Is your business model competitive and low risk? You will save time and money by answering these questions before you start a lengthy, expensive and resource intensive planning process.

Most importantly, you are able to veto good looking, yet flawed ideas.

How best should entrepreneurs go about answering these questions?

1. Put all answers to the six questions above in writing. As detailed and as factual as possible. Solid evidence helps.
2. Have at least a few hours in front of a whiteboard with peers and / professionals to clarify scenarios and options.
3. If you need significant resources to make your business work, commission a professional to complete a feasibility to test the business case.
4. Be critical about the numbers, forecasting is not an exact science.
5. Stay as unemotional as possible about the prospects the opportunity may deliver.
6. Surround yourself with good people, preferably with relevant experience.
7. Think slowly, act quickly. By doing a little essential homework first, entrepreneurs give themselves a better chance of starting on a solid foundation with lower risks, also of saving time and money. This way the odds can be tilted more positively in our favour.

What do you think? Your comments posted below are encouraged and appreciated.