Entrepreneurship, Second Edition

3.5. CONCLUSION

All opportunities start with an idea. We find the ideas that most often lead to successful businesses have two key characteristics. First, they are something that the entrepreneur is truly passionate about. Second, the idea is a strong opportunity as measured on the opportunity checklist. To be sure of having a strong opportunity, entrepreneurs need a deep understanding of their customers, preferably knowing the customers by name. Better opportunities will have lots of customers currently (market size) with the potential for even more customers in the future (market is growing). Furthermore, these customers will buy the product frequently and pay a premium price for it (strong margins). Thus, entrepreneurs need to be students of the marketplace. What trends are converging, and how do these shape customer demand today and into the future?

Savvy entrepreneurs also recognize that competitors, both direct and indirect, are vying for the customers' attention. Understanding competitive dynamics helps entrepreneurs shape their opportunities to reach the customer better than the competition can. As this chapter points out, the entrepreneurial environment is holistic and fluid. In addition to their customers and competitors, entrepreneurs need to understand how they source their raw materials (suppliers) and what government regulation means to their business. If all these elements—customers, competitors, suppliers and government—are favorable, the entrepreneur has identified ...