Entrepreneurship: Mapping the environment for opportunities (I)

The first practical step into entrepreneurship is coming up with a business idea. Searching for entrepreneurial opportunities is fundamentally about identifying either a deficiency or inefficiency in a market.

The object is to come up with an idea that can eliminate the deficiency or reduce the inefficiency by creating value that the target customers are willing to pay for at a profit to the entrepreneur.

There are two crucial rules about coming up with business ideas:

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Rule number one, understand the dynamics of demand and supply: At the end of everything, businesses are about selling some product (good or service). Consequently, all great business ideas are, somehow, about either meeting up with supply shortfalls or creating new demands. Hence, to come up with an idea that will meet commercial viability tests, you need to understand the dynamics or projections of supply and demand of any existing or new product in any existing or to-be-developed market. The box below typifies the opportunity windows in any business.

In the mid-1980s, some entrepreneurs detected a decline in the purchasing power of the Nigerian middle-class. With a weakening purchasing power, the middle-class couldn’t afford to purchase new motor vehicles as they easily used to. Those entrepreneurs seized the ‘opportunity’ and went into the importation of ‘tokunbo’ vehicles that became affordable alternatives to the middle-class.

Rule number two, be alert: In the search for business ideas, nothing beats being alert. Ideas could come while discussing with a first-met passenger seated next to you on a short-haul flight. It could come during a supply chain meeting with senior corporate executives in your industry. Sometimes other people just deliberately or unwittingly tell us about business opportunities. Whichever way they come, we have to be alert to detect opportunities. One of the best businesses I had was the importation of computer parts. It was in the early 1990s and laptops were still uncommon in Nigeria. I went to an IT shop to buy a memory card to upgrade my laptop and the shop attendant innocently and casually mentioned to me that the product was selling very well but that their boss wasn’t importing enough of them. I asked more questions, made some contacts and within two weeks I was on a flight to Singapore with borrowed cash from a benefactor to import the components.

After the rules, then some of the ways of coming up with business ideas:

What new thing can you do or what old can you do better? An entrepreneur can come up with a new product that is ‘out of this world’. Sony’s Walkman is an example of products that were conceptualised and developed reasonably from the ground up. It became one of Sony’s most successful products and it paved the way for later developments into mini-disc, MP3 and streaming music.

But more often than novel innovations, successful businesses just take an existing proposition and improve upon it. The improvement might be about providing some unmet needs of customers such as convenience or safety in an already existing market. Examples are Amazon and Uber that introduced more convenient ways of serving existing markets by leveraging on existing technologies. Network, listen and ask questions: Business ideas are discussed by people every day. Being with the right people will expose you to great business opportunities being freely discussed. Similarly, attending trade fairs, conferences, industrial shows, etc. can uncover possible business ideas for you. For those already employed, they get the opportunity to hear about business opportunities every day. It could be at discussions with colleagues, customers, or suppliers. Whatever opportunity you may pursue in this line though, ensure that you do not do anything unethical or in violation of any contractual obligation you are bound to.

What do you and others spend money on? Looking at what you and others spend your money on can give you ideas on possible business opportunities. For example, individuals and corporations in Nigeria have been spending billions of Naira annually on mobile phones and related services over the last two decades.

Similarly, where governments channel their funding could lead you to business opportunities. For instance, over the last several years, successive administrations have pumped substantial funds into information technology and agriculture. IT shops, rice milling, etc, have grown rapidly over those years. What part of some chain can you add value to?

Create market niches: Sometimes markets can get too large or wieldy. When markets are large or wieldy, some deserving customers might not receive the value they expect or are entitled to. As an entrepreneur, you can carve out a segment of such markets and work to serve it better. The ‘no-frills’ airlines are a good example of market segmentation. The no-frills provide what other discerning passengers may call cheap air travel services, but their loyal passengers accept what they pay for and get. Ryanair, a leading no-frills airline, has been, overall, more profitable than many conventional airlines. You too can carve out a market segment and make it ‘yours’!

To be concluded next week…