for how to differentiate your product or service from other like products or services. (Sometimes that mantra is modified to “better, faster, cheaper.”) The concept applies to all types of business opportunities. The beauty of this mantra is its simplicity: people are indeed always looking for a better, cheaper product. And Faster can apply to either a way of getting a product out there more quickly and easily or the fact that the product is more current or actually performs faster. Either way, this phrase captures what you should be trying to do as you assess the viability of a business opportunity. In other words, ask yourself: Is your product better, faster, or cheaper than the competition?
business Buzz
words
“innovate”
Innovation is the act of producing something truly new. According to basic economic theory, to innovate is to produce something significantly different, not just make a minor change in an existing idea, product, or service. And that thing you produce must provide value to someone. In an economic context—which is what business is mostly concerned about—creating something new that no one values does not qualify as true innovation. You might design a cool, new household gadget, but if no one needs it, it’s not a true business innovation.
Are You an Industry Insider?
Precisely because they are so immersed in a particular product or service industry, some people see opportunities that others less familiar with the territory would miss. For example, no one would be in a better position to know what types of kitchen utensils are missing from restaurants and high-end cooking shops than a working chef. Likewise, a manager of rock bands might see the need for better software to track bookings and billing and have a better understanding of how to go about building this kind of Web application tool than would a software engineer likely to be recognized only by industry insiders. No matter what your industry or area of expertise, you should be constantly looking to spot these kinds of opportunities.
■ Something completely different. You can also strive for true innovation—creating a new type or category of product or service. This approach has the most risk: It’s difficult to be truly different; research and development costs are high; the market may not be ready; and you may even fail. And even if you succeed, competitors may eventually appear. But this approach also promises huge payoffs. In the early days of the Web, for example, you had to know and type in the exact name of a website. Then online directories came along, and one of them—Yahoo—became a huge company. Others kept continue to innovate with ways of finding information, and many search engines were launched. Google came up with innovative, effective mechanisms based on algorithms—and it became a multi-billion-dollar company.
Identifying Opportunities
The best way to think about opportunities is in terms of people’s needs and wants. If you know what they are—and have a plan to satisfy them—your business will have a much better chance of succeeding. Knowing what you want and need is not enough. You’ll need to step outside yourself and see what potential customers are looking for.
Here are some questions you can ask to identify opportunities:
■ What is missing from the current field you’re interested in?
■ What sorts of things do you (as someone passionate about this area) need or want?
■ What sorts of things are people always asking you (as someone in the field) to help with?
Degrees of Innovation
worksheet: Identifying Opportunities
Filling out this worksheet will help you identify areas of opportunities in the business you’d like to explore.
What industry/market/area are you passionate about serving?
What are some of the biggest trends in this industry/market/area?
What sorts of products/services do you wish were available?
What are people always asking you about/for?
What products/services could improve your field?
Researching Opportunities
Knowledge is power. With accurate information at your fingertips, you can better judge whether the opportunity you’ve identified is a viable one. And the only way to get this information is through research. Research can be as simple as interviewing people who are already doing what you hope to do. Or it can involve looking up some basic facts about your particular industry on the Internet. Think of research as a reality check that will align your vision with what’s really happening in the world. You will do more, and more in-depth, research after you come up with your specific business concept (see Chapter 4) and begin formulating an actual business plan (see Chapter 16).
At this preliminary stage of research, you may want to view historical trends in your chosen field or industry: for example, how many vegetarian restaurants have opened in your area over the past year few years—and how many are still in business? If only a few such restaurants opened, and they’re all thriving, that niche might represent a good opportunity. You can also look for data to help forecast future trends. For example, if you’d like to go into the business of decorating and staging houses for sale, you’d want to both see how many houses had been sold in recent months—and at what prices—and what future house sales projections are. And if the housing market is in a slump, you’ll probably want to find another opportunity. Your research can help you learn from mistakes others have made—and avoid them in your own entrepreneurial efforts.
Don’t try to be exhaustive in your preliminary research efforts; it’s not necessary or possible. You are merely looking for information that will answer key questions about the particular opportunity you have identified. At the same time, your research must be thorough enough to give you insight into whether you should proceed along the path you have chosen or investigate other options.
For example, if you’re thinking about manufacturing dolls, one of the questions you might ask yourself is, “How large is the market for my product?” For this, you may only have to consult one source, the U.S. Census Bureau, which can provide free-of-charge information about the size and location of a demographic group (such as young girls) to get a reliable answer. However, answering other questions, such as “What are the current trends in doll-buying habits,” may require consulting three or four industry sources, paying a professional researcher, or conducting your own market research to compile information you trust.
Questions to consider in preliminary research:
■ Historical trends
■ Future economic projections
■ Demographics
■ Market size
■ Competitors
