Opportunity analysis is very important to both the prospective entrepreneur and the existing business owner. Every innovative idea and opportunity should be carefully research into.
This can be done by developing an opportunity analysis plan. An opportunity analysis plan is not the same as a business plan. It main focus is on the idea and the opportunity for the idea (i.e market). In layout and presentation, opportunity analysis plan is much shorter than the business plan.
The primary objective of an opportunity analysis plan is to serve as a basis for the decision to either act on the opportunity or wait until another better opportunity comes. Generally an opportunity analysis plan consists of four sections as describe below:
The Idea and its competition
In this section, the product or service needs to be described in as much detail as possible. There is also the need to have a prototype or schematic of the product so that a full understanding of all aspect and features of the product is attained.
There is also the need to identify and list all competitive product and competitive companies in the market. Finally the new product/service idea should be compared with at least three competitive products/services that are most similar in filling the market needs.
In summary this analysis will result in a description of how the product/service is different and unique and will indicate its unique selling proposition (USP). A unique selling proposition (USP) is your business marketing language that sells your product/services in a statement or sentence.
If the idea does not have at least three to five unique selling propositions (USP) versus competitive products/services on the market, the entrepreneur will need to more carefully examine whether or not the idea is really unique enough to compete and be successful in the market.
The Market and the Opportunity
The next section of an opportunity analysis plan addresses the size and the nature of the market. There will be need to collate market data (i.e. secondary data – published) for at least the past three years so that a trend is identified for the overall industry, overall market, the market segment and the target market.
For example if you had an idea for a mathematics software tutor for secondary school students, you would get market statistics on the education industry (overall industry), computers (overall market), computer software application (market segment) and secondary school students (target market)
The size for these markets should not only be determined, but their characteristics should be clearly understood and stated. The following questions need to be given careful attention: Is the market made up of a few large companies or many small ones? Does the market respond quickly or slowly to any new entrants? How many (if any) new products are introduced each year in the market? How geographically dispersed is the market? What market need is being filled? What social conditions underlie this market? What other products might the company also introduce into this market? What is the nature and size of the international market?
With the above in mind the entrepreneur should be able to determine both the size and the characteristics of the market and whether it is large enough and suitable enough to warrant the time and effort required to further develop a business plan and actually enter the market.
Entrepreneur and Team Assessment
The entrepreneur together with a team should be involved in the opportunity analysis process. It is advisable that at least one person on the team must have enough experience in the industry area of the new idea. This is one factor that correlates with the probability of success of the business.
In this section, the following questions need to be answered: Why does this idea and opportunity excite you? Will this idea and opportunity sustain you once the initial excitement has worn off? How does the idea and opportunity fit your personal background and experience? How does it fit your entrepreneurial team?
This section of the opportunity analysis plan is usually short and assist the entrepreneur to determine if indeed he is really suited to successfully move his idea into the market.
The Next steps (How to achieve and implement)
The last section of an opportunity analysis plan delineates the crucial steps that must be taken to make the idea a reality in the marketplace. The steps must be clearly identify and stated in sequential order, together with the time frame and money needed for each