Starting a business is usually a stage with so much tension and numerous uncertainties. Fear of failure. There are a number of variables that culminate in the success of a business. However, it is important to look at the person of the entrepreneur before examining the deciding factors of success in business. Who is an entrepreneur? What makes an entrepreneur?
Who is an Entrepreneur?
There is an age long debate- are entrepreneurs born or made? Of course, the answer is both. They are born with definite attributes, have a family background, and through their life journey they gain experiences, accumulate knowledge and build networks, all of which contribute to who they are; ENTREPRENEURS. It is clear that entrepreneurs share certain characteristics, including the ability to spot opportunities. They have a need to achieve, tend to be overly optimistic, and are risk takers. The entrepreneurial thinking is how all these things come together to impact on the entrepreneurial process, from idea generation to opportunity recognition and exploitation in enterprises. And like all things, the more times you do it, the better you get.
Now the big question is this: how do we identify real business opportunities? This is a very difficult question to answer. Perhaps the only way to really do this is to take the risk of starting your own business. Many times, entrepreneurs rely solely on assurance and inner conviction when faced with the question of the viability of their ideas. This approach to recognizing opportunity is an internal judgement born out of years of experience and instinct. This might not always be a perfect approach, especially when there is a need for external fundraising. There is a need for a structured and reliable predictor of success. This is where business plans come in. However, a business plan gives little room for flexibility and creativity.
Discovering or creating opportunities is a foundational concept of entrepreneurship. There are two ways to opportunities – creating or discovering. In reality, the boundary between discovery or causation and creation can be blurred. Irrespective of how these opportunities come, there must be a structured analysis of the viability of such ideas. The business plan is composed of several elements that must be put in view before such business can be judged smart or not. These elements help us to do analysis, make comparisons, and identify the uniqueness of a business idea. These elements are categorized into the following five groups.
Proposition: What is the primary aim of this business? What is the core value proposition from your customers’ perspective? This is the clearest and shortest way a customer will describe your business. For example, Nigerian Brewery is a food and drink processing company. Mobil is an oil and gas exploration and trading company. Getting this right and early helps to keep your focus on the vision. It also convinces your potential investor that you know what you are saying while pitching.
People: This is a list of all the stakeholders in your proposed business. It includes a careful selection of the company leaders/board, management team, staff, network of advisers/consultants, suppliers and customers. Also, your research should cover the influence of social networking on your business opportunity.
Place: This is your market. Your market consists of location, customers, and competitors. It is necessary to analyze the market to identify loopholes, potential challenges and advantages your business can latch on to.
Process: Process described the ‘how’ of a business. What is the structure of the enterprise? What are the key processes and relationships that make this business work? What are the production processes and structures to be implemented? How will they be enabled and sustained over time? Answering all these questions help break down the ambiguity of a business idea.
Profit: What’s in it for your enterprise? What are the real returns of this opportunity? Are they financial? You might want to consider the gross profit, net profit, and financial forecast. What are the key performance indicators and what capital is required? Is there any social value in this opportunity?
Having these pieces of questions answered and compiled gives you a detailed business plan. With this, you have an x-ray view of what your proposed business should be like and you can more convincingly conclude the viability of the business. You can tell if you really have an opportunity or an impending investment blunder.
While a business plan is built on the above elements, there are other factors that affect these elements. I call them the drivers of a business or entrepreneurial drivers. They do not necessarily appear in the business plan but they have a tangible effect on the course of a business per time, either positively or negatively. The unique thing, however, is that these drivers are beyond the entrepreneur’s control. Their influence is dictated by a number of national or global factors.
Societal drivers: These are the wider global, social, political, and environmental factors which impact on an opportunity. Some of these drivers are climatic condition/change, population and demography. For example, a drastic reduction in the population of men in a country will have a negative effect on a business that creates products only for men.
Commercial drivers: The global market is shaped by elements beyond an individual business. Change in global and local economic factors such as taxation, the stock market, inflation or deflation and price of oil among others have the potential of having a big influence on a business.
Legal drivers: Legislation, rules and regulatory requirements, typically set by, such as data protection laws, importation or exportation bans, trade association membership rules etc. will have a toll on any business under such laws.
Technological drivers: Advancement in technology may demand that you phase out some structures and processes in your organization. Holding on to the old ways will be to the detriment of your business because your customers have moved with technological advancement and probably found a product that matches this advancement.
If after having analyzed all these elements and drivers of your proposed business, your business passes all the tests and questions they pose, it is safe to say you have identified an opportunity.