The typical success story of the big time entrepreneur goes thus: man stumbles upon business opportunity, the man throws himself at a business opportunity, man gets rich off business opportunity turned corporate empire. It all sounds pretty straightforward, and honestly, a bit too embellished to gulp. The more detailed accounts have the toil and sleepless nights, maybe even a few falls and recoveries in the mix. But many of us wonder at the immense achievements of these entrepreneurs, and ask ourselves the simple question: how did they know that it was something worth doing? Yes, they certainly couldn’t tell at the onset that it was going to turn out as brilliantly as it has; but still, we ask, what made them embrace the billion naira opportunity when it struck them?
Thankfully, good businesses can be told apart from non-viable ones. You don’t have to go the trial-and-error route to discover what works. If you are hunting for a business idea that will survive the pummeling waves of the uncertain business climate and emerge prosperous and profitable, you should look out for the following things.
- An available market
This should be the first thing you ask about a business idea that pops up in your head or one you are introduced to by another person. Is there a market for the product or service you’ll be offering? Is there a need gap that this idea fills? Does it add value to people’s lives in ways that they will appreciate enough to want to pay for?
No matter how fancy or innovative a proposition might appear, if it doesn’t satisfy demand, it won’t exist for long in the real world. In the end, business isn’t just about making your dreams come true. It’s about supplying people with the things they want and getting paid for doing so.
Your product could be something truly unique, or an improvement upon an already existing one. Whatever it is, be sure that it’s solving people’s problems.
- Good prospect for a significant return on investment
Are you going to get more out of the business than you put into it?
If you don’t know the answer to this question, you should do what you can to find it. Gather information about inputs, cost and pricing. Do your calculations, and compare your likely expenses with projected revenue. If the gains you’re going to make from the business look set to outweigh the costs, you may very well be looking at a viable enterprise idea. If the costs exceed the gains you’ll be making over a long stretch of time- longer than you think is appropriate for your pocket -you should back off from the whole thing, or modify the idea so that it becomes potentially profitable.
- Tolerable timeline for profitability
How long will it take for you to begin making a profit? Will you be able to hang in there until you break even?
These questions follow from point two, discussed just before this one. It’s one thing to know that your business will generate revenue, and quite another to understand that it’ll take time to cross into profitable territory.
How long should you wait? There’s probably no deadline for this; it depends on what you’re willing to take, given the resources at your disposal. But the good thing is that you can decide for yourself beforehand. Factor the length of time it’ll take to recoup your investment into your profit projections. If it turns out that the waiting time is something you can endure, you could go along with it.
- You have what it takes to get it done
This encompasses a wide range of considerations: finance, skill set, a team (if this is required at the start) and temperament. Don’t jump at an apparent opportunity if you don’t know how to make it work for you. Get all the information you can about the market you’re going into. Acquire the skills required- whether it’s through personal training or by enrolling in some sort of training institution.
The availability of the sort of talent you’ll need to build your own team is also a point that you should take seriously. Can you find the right people to work with? Will you go it alone at the beginning, or will you be partnering with other persons?
Remember that personality traits play a role in this as well. It’s true that we can adapt to situations and environments that are significantly different from what we’re used to. But there’s evidence that suggests the existence of limits to this. While you might slide into any role, your concern should be your ability to thrive in the role you have to play. Is it something that suits your personality well enough? A man who has a natural sense of artistic creativity might do ‘just fine’ as an accountant, but a woman who takes number crunching as a hobby will very likely out-perform him in that role.
- You have the right location for the business
Another point about not having ideas that are divorced from reality. Selling Rolls Royce cars might be a potentially lucrative business, but it’s not going to do well in Dakingari or Isu-Aniocha, for obvious reasons- the inhabitants of these locations aren’t that rich. A glossy lifestyle magazine might attract good demand in the more affluent parts of Lagos or Abuja, but don’t be surprised if it doesn’t sell a single copy in Shaki.
This is one area that many Nigerian entrepreneurs overlook. And it’s a major reason why many small businesses fail.
Sometimes, the location factor is really about the market being saturated in the area you intend to set up your business. A bespoke fashion designing/tailor shop might look like a fantastic idea to you, but if you’re thinking about running it in an area that already has more tailors and designers than it really needs, your business idea might not do as well as you hope.
Other location-related points to take cognisance of include security, taxation, basic infrastructure, transportation costs and accessibility.
- The timing is right
The fact that a business opportunity promises great rewards doesn’t mean you should run after it with all the enthusiasm you can muster. It might meet the first five criteria but fall short for the simple reason that it’s not the time to make it happen.
A lot of entrepreneurial inhibitions fall into this category. It could be that there’s an economic downturn; putting your money into the venture could be too risky to be reasonable (some businesses do thrive during recessions).
Even when you think that your idea is uber brilliant, be disciplined enough to stand back and assess the state of things at the moment. But if you have examined the terrain you wish to work on and think that you can do well in it right now, you may take the plunge.