Five Reasons Why All Business Opportunities Aren’t Created Equal

Not all business opportunities offer equal returns on investments. It is important to evaluate and analyze the new venture before committing to invest your resources, like your time and money. Reflecting upon the following five reasons can help you discern which business opportunities are truly good prospects, and which ones are better to avoid:

Potential Earning Power: Will this be good for the pocketbook?

Every person who analyzes a new business opportunity wants to know whether the prospect will be financially lucrative. Earning power is often the driving force for participation in a new venture, and it is important to understand if the potential for increased profits will remain stable. Aside from evaluating the income for a business prospect, you should also consider operation costs and your ability to secure financing. If you can justify the risk, the earning power may be strong.

Network Effect: Are More Customers Good for Business?

When researching a new business opportunity, one of the first questions that should be answered is whether an acquisition of a larger customer base will be increase profits. In other words: will more customers ensure continued success for a business? Oftentimes, a business venture caters to a specific market. If the demand increases, the business suffers, as it cannot provide the proper supply or support to its growing target. On the other hand, a bigger customer base can provide better opportunities for the right company.

Support: Will you have the right resources to support the business venture?

If you are looking to enter a certain area of the business market, you must ensure you will have the proper support and training to maintain a successful business. Suppliers can often have negative attitudes toward purchasers or new suppliers in the area. All too often, companies will franchise to intermediaries while adopting a hands-off policy. Other businesses encourage acquisition and will supply the new owner with training and support staff. Identifying a company who will offer onsite assistance and operational discounts can make all the difference to someone new to the business.

Market: Is the Demand there for the Supply?

Economics 101 recognizes the founding principle of a successful business venture. There must be a demand for the product you are supplying. The economic environment does matter, but it need not be the deciding factor. Rather, you should look toward the creativity of the business opportunity and whether the new area you are entering allows you to maintain a unique position to supply the demand.

Opportunity to Expand

Similar to analyzing the supply and demand opportunities is the evaluation of industry trends. It is important to gauge whether the opportunity will present itself to expand not only monetarily but also territorially. If you have assessed a market need with little supply, then there is a strong potential to grow your business geographically and financially. The key is to always be on the lookout for an expansive business model.

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