CHAPTER TWO: BUSINESS OPPORTUNITIES

What is a Business Opportunity?

A business opportunity is a viable business potential to create something new by engaging new
technologies in the industry. Entrepreneurship is a thought process. Once the entrepreneur has
established in his mind what direction he wants to take for his venture, he will necessarily need to
identify a specific gap that has not previously been tapped in the industry he has chosen. This
requires that the entrepreneur brainstorms on the areas he is best suited. This does not disregard
the fact that what he may be good at is not available for him to capitalize on at that particular
moment. In this case, he will therefore consider also what is out there and can be used. Remember
we mentioned earlier that entrepreneurship entails coming up with a new process that has not
previously been devised, that will enable the production of goods and services in a manner that
adds value to all concerned, and not just the entrepreneur himself.

A business opportunity thus requires that the entrepreneur follows the following process;

1. Identify his strength

2. Assess his surrounding
3. Identify gaps that may be tapped
4. Select one of he gaps identified based on his strengths.
5. Identify the risks and constraints involved.
6. Lay out an execution plan

Identification of strengths
The entrepreneur needs to assess himself first before embarking on a business venture. This is
important as it will enable him project how far he can carry on an idea that has been in his
thought.
One major disappointment that befalls many entrepreneurs is the realization that an idea that once
promised so much reward and fulfillment doesn’t bear the results that were expected. This
happens because the entrepreneur did not look deep into his abilities before going forth with his
plan.
Strength can be a talent that has been in a person since earlier days and has always manifested
itself over time even in very subtle ways. One needs to identify these traits and look at their
business aspects.

Assess his Surrounding

Once the entrepreneur has assessed his abilities, he needs to look back at what is surrounding
him. This entails learning the economic trends of his surrounding and trying to project the
outcome of certain events.
The entrepreneur needs to study the economy very well. This is important since the result of his
study will act as a personal bench mark for him to know how far he can go in an attempt to bring
in some thing new. The study of the economy can be achieved by reading journals and articles
written by experts, studying current economic events both in his country and the world at large.
For a comprehensive analysis, the entrepreneur will need to go far back, may be five years. This
of course, will depend on the nature of the economy and the growth rate. Certain events may have
short term implications and some may have long term implications, so the entrepreneur needs to
look at all these in perspective.
The entrepreneur will need to relate the various economic events to each other and identify a
connection, if any. The world economic climate has an effect on the local economy and this will
need to be studied in detail by the entrepreneur

Identification of Gaps
The result of the study above will give the entrepreneur sufficient material to identify loopholes
that need to be filled. This will happen as a result of serious study and analysis. What the
entrepreneur needs to ask himself is ‘What role can I play to fill these loopholes?’
Once he has a solution to this basic question, the entrepreneur is well on his way to coming up
with a brilliant idea. Many renowned entrepreneurs such as Steve Wozniak of Apple Inc. who
made computers suited for ordinary people, identified the need for the ordinary man to be
computer literate. This of course among other outcomes made many people become more
efficient and productive in their work places.
Selection of Gaps to be filled
The loopholes may be very many but the entrepreneur needs to identify only those that bear a
correlation with his strengths as identified earlier on. He will be able to relate what he is good at
with what problems lie out there that needs to be rectified. This will ensure that the entrepreneur
does not engage in a venture that may take all his resources and be a disappointment as a result of
poor correlation between his strengths and the gaps identified.
A mistake would be the entrepreneur taking his chances and trying to solve many problems at the
same time. This will overwhelm him and will be a sign that the first stage of this process was not
done thoroughly enough. The entrepreneur needs to take his time and select only those problems
he finds himself capable of contributing towards finding a viable solution.

BUSINESS INCUBATORS

Business incubators are programs designed to accelerate the successful development of

entrepreneurial companies through an array of business support resources and services,
developed and orchestrated by incubator management and offered both in the incubator and
through its network of contacts. Incubators vary in the way they deliver their services, in
their organizational structure, and in the types of clients they serve. Successful completion of
a business incubation program increases the likelihood that a start-up company will stay in
business for the long term: Historically, 87% of incubator graduates stay in business.

Business Incubators are defined as a location in which entrepreneurs can

receive pro-active, value-added support, and access to critical tools,
information, education, contacts, resources and capital that may otherwise be
unaffordable, inaccessible or unknown. Well structured incubators provide
links to industry; business support services to enhance and develop business;
upgrade skills and techniques; technological advice and assistance with
intellectual property protection; financial resources for R&D; initial
marketing expenses; and access to potential private investors and strategic
partners. The benchmarked SME support entities in more competitive
countries were encouraged by their governments to foster the process of
incubation. They successfully hosted several pilot projects at relevant
companies and universities to allow entrepreneurs to develop their ideas and
talents, and to commercialize them. The respective governments financed
those pilot projects through an additional financial contribution to the budget
of SME support agencies in the benchmarked countries. Those institutions
involved recognized the value added by these initiatives, formed incubators,
and financed them through public/private investment. One of these efforts is
included as a possible financing facility model for the proposed
Many entrepreneurs don't have the space or desire to start a business out of
their home, yet find renting space and setting up essential support functions
is overwhelming financially and energy draining just at a time when their
financial resources and energy are most needed for development of the
business itself. A business incubator can be the perfect solution for such a
person.

Business incubators are designed specifically to help start-up firms. They

usually provide:

• flexible space and leases, many times at very low rates

• fee-based business support services, such as telephone answering,
bookkeeping, secretarial, fax and copy machine access, libraries and
meeting rooms
• group rates for health, life and other insurance plans
• business and technical assistance either on site or through a
community referral system
• assistance in obtaining funding
• networking with other entrepreneurs

The primary goal of a business incubator is to produce successful businesses

that are able to operate independently and financially viable.

Business incubation is on the rise on a global scale. The United Nations

Industrial Development Organization (UNIDO) actively monitors and
promotes the development of business incubators worldwide. They estimate
that there are at 500 incubators in developing and transition countries with
an annual growth rate for new incubators being about 20 percent annually.

There are a wide variety of reasons for operating an incubator. There may be
a need for job creation in the community, promotion of economic self-
sufficiency for a selected population group, diversification of the local
economy, transfer of technology from universities and corporations, or
sharing venture experiences with new companies by successful entrepreneurs
and investors. There is no question that whatever the motivation behind the
incubator, it is an economic boon for the community, providing jobs and an
expanded business base.

Business incubators have a wide variety of structures and supportive

mechanisms. Some of the most common are:

Globally there is less private sector involvement in the incubation process,

but that is expected to change as private enterprise realizes the reduction in
risk of early-stage failure for incubator initiated businesses.
The most common types of firms using business incubators are light
manufacturing, technology and service firms and those developing new
products or engaged in research and development. There are a limited
number of construction-related, sales and marketing, or wholesale and
distribution firms using incubators. A retail operation is considered a poor fit
for incubation.

4. Types of Business Incubators

Incubators come in many formats, mostly fitting the following four types:
• Public or not-for-profit incubators: government and non-profit organisation,
whose primary objective is to promote economic development, sponsor these.
• Private incubators: these are run by venture and seed capital investment
groups, or by corporations and real estate development partnerships. These
incubators generally seek a return on their investment.
• Academic-related incubators: there are started where which have academic
objectives also focus on faculty development, and on creating business-spin-
offs from faculty research
• Public/private incubators: these are joint efforts between government and
non-profit agencies. This type of incubation offers the advantage that
government funding can often be secured to support private sector expertise
and financing.

Choosing the Right Incubator

In deciding to use a business incubator, the NBIA suggests exploring the

following items before making a commitment:

A. Space and Service-related Issues:

1. What are the charges for space and services at the incubator?
2. How do those rates compare to market rates locally?
3. What services does the incubator provide?
4. What are the lease requirements?
5. Is there room for your business to grow?

B. Quality:

1. What information does the incubator provide about the extent and
quality of the services the incubator provides?
2. Does the incubator management seem to understand your business
needs and can they offer on-site assistance and access to valuable
contacts and community business services needed by your firm?
C. Success Rates

1. If the incubator has been open long enough to have a track record,
what is the experience of firms who made use of the incubator for a few
years and have now moved to other space?
2. How do the current tenants feel about the incubator?
3. Ask for references and check them.

D. Policies and Procedures

1. What are the policies and procedures of the incubator?

2. Are some services provided free of charge?
3. How long can you remain a tenant?
4. Is there a graduated rent structure as your firm matures or does the
incubator want to take royalties or an ownership right in its tenants'
businesses in return for reduced charges?
5. Can you leave easily if your business turns bust?
6. Does the incubator provide seminar or training programs in addition to
other business assistance services?

E. Management

1. Does the incubator appear to be managed well?

2. Does the management appear to have good ties with and knowledge of
the business community?
3. Does the incubator have the continuing support and commitment of
sponsoring organizations? Who are these sponsors and what are their
goals and reasons for supporting the incubator?

One other area to consider carefully is whether your business is really ready
for this step. The business must be entrepreneurially sound, able to function
on its own, if needed. The incubator cannot replace business initiative,
personal effort and resourcefulness. There is a term used called "incubator
syndrome" in which the entrepreneur allows their initiative and judgment to
be replaced by those of the consultants in the center. While the consultants
may give superb advice, it is the entrepreneur's responsibility to make the
business succeed.

In a rapidly changing global economy, small and medium scale enterprises

are increasingly a force for enhancing national economic growth and
employment. Many government programmes contain policy instruments
addressing SMEs. New structures and strategies are being explored that will
help small enterprises to grow and provide a promising future in the global
market. In a number of more competitive economies, business incubation is
one of the tools that have helped to create new entrepreneurial skills and new
businesses. The incubation process that was developed has included services
for on the spot diagnosis and treatment of business problems, dramatically
lowering the usual early stage failure rate.

Business incubator programs, often called “new entrepreneur creation

projects” helps develop new entrepreneurs and supports them to start up
business and be better able to survive on a longer-term sustainable basis. The
business incubator target group includes small entrepreneurs that want to
grow, new graduates and those who would like to develop their talent and
ideas and commercialize them.

The need for business incubation is one of the outcomes of USAID sponsored
benchmarking exercise of the small and medium enterprise support structure
in Pakistan. This exercise was aimed at the identification of gaps in SME
support activities that need to be addressed for the SMEs to increase their
contribution to the Pakistani economy. These gaps included: a need for
increased innovative approaches to SME finance, better linkages between the
academic community and industry, better and quicker commercialization of
innovation including the process for business incubation.

5. How Incubators Are Set-up

Quite often Governments initiate incubators. The Government creates a
funding program for business incubation. The funding program issues
general requests for proposals from relevant applicants to set up incubators.
Anyone can respond with a proposal. It can be private consortia, universities,
communities or mixed consortia. Incubator initiatives are then selected.
The incubators in the network receive:
• A yearly grant, just about enough to pay for the manager, one secretary and
low-cost facilities for the incubator management and incubator projects (they
are situated in the same location.)
• The right to apply for incubator project grants for which the turn-around
time is fast, approximately a few weeks. Incubators included in the network
must follow set requirements for the overall program and grants.
GOP (Min. of Ind.)
Incuba Characteristics of Good Business Opportunities

• Demand: There is good market scope for the product or service.

• Return on Investment: The business is sufficiently profitable (we

shall compute ROI & IRR later)

Availability of raw materials: Availability of sufficient raw

materials at competitive pricing.
 • Skill requirements: Availability of skilled people

10 SIGNS OF A GOOD BUSINESS OPPORTUNITY

With the plethora of business opportunities available in countries such as the United States,
Australia, and New Zealand, you might have a hard time deciding which one would best suit
you. Many of us know that we want to get involved in something but feel overwhelmed at
times by the vast amount of options. There are some people who believe that starting up a
new business is far too risky. Whilst there is a certain amount of risk involved, this is often
outweighed by the potential for huge personal and financial rewards.
So how can you tell if a business opportunity offers an acceptable level of risk versus benefits?
The following checklist can help you to determine if a business opportunity is right for you.
1. Does this business offer a product or service which is useful and of high quality, or
just something which has been put together simply to make money?
2. Is there a genuine demand for the product or service? Can you anticipate that people
will want to buy it? If you can’t see anyone, including yourself buying it, then you may want to
pass on this particular opportunity.
3. Is this business one which occupies a growing sector of the market? One such segment
is the green industry. You should stay away from companies which are in a shrinking market
sector.
4. Does this company do business in an ethical manner? Are they a company with a good
reputation, or have they just come out of nowhere suddenly? You don’t want to invest in a fly
by night business which will disappear with your money.
5. Is comprehensive training available? A company requires knowledgeable, trained staff
to increase sales and in turn make profits. A company that is willing to take the time to train
staff to achieve success is taking a step in the right direction. If there isn’t really any training
to speak of, it will require a lot more ‘trial and error’ on your part in order to succeed.
6. Is ongoing support offered by the company? Do they help you until you give them your
money and then move on? Or do they actually guide you through the entire process? This is
an important question that new business owners should be asking.
7. Does this business align with your personal goals and interests? When you invest in a
new business, you want to feel passionate about it. If you don’t like it, you most likely won’t
make much money at it.
8. Can you get in touch with a real person at the company? Do they have an office you can
visit? Are they responsive to emails or calls? You don’t want to get involved with any company
which will not get back to you to answer questions.
9. Are there others who are successful using the company’s business model? Talk to
others who have gotten involved before you make a decision. Don’t just take the testimonials
published by the company at face value.
10. Do you have a gut feeling about the company one way or the other? If you have a bad
feeling about this company, listen to your instincts and stay away from this opportunity.
If you have passion, enthusiasm, determination, and a little luck you can succeed in business.
Use this checklist when considering your business options. There are plenty of opportunities

tion
IBA/University/
2.3 Assessing and selecting a suitable business market

Your target market is the foundation of your business. It is a specific group to that you
must direct your market research efforts on and know their needs and wants.
You need to understand your target market thoroughly. An intimate knowledge of their
needs and a personal rapport is what brings your business closer to them. The level of
your understanding of your products and services in relation to your customers governs
the influence that you exercise over your target market, which in turn determines your
success and of course, your business revenues.
The following checklist acts as a guide in choosing the target market for your product.

• The TM has a problem that they need a solution to. Your target market is
underserved or the solutions on the market are insufficient.
• The problem is big enough that the target market will act by paying money to get
it resolved.
• Your target market is easily identifiable. For example, they may be part of a
certain ethnic or age group.
• Depending on the products and services you offer, your target market is able to
afford what you are selling.
• There is proven history of your target market paying for the products or services
you offer. This speaks directly to the viability of your business. If there is
competition, this is a positive sign since it indicates the existence of a viable,
paying market.
• The size of your TM is sufficiently large to sustain your business.
• You have the necessary expertise and offer excellent services or products. You
also have the experience in dealing with your TM in order to satisfy their needs.
Customers favor reliability and expertise - that is what ultimately motivates them
to buy.

By applying the above tips when you are formulating your business, you will be able to
accurately identify your target market, saving you precious time and allowing you to
focus on growing your business.
Networking
Networking is something all successful entrepreneurs are good at. The # 1 Skill of All
Entrepreneurs. Professionals too in this age, have to be great networkers including
Lawyers, Doctors. Over a period of time, as they gain experience they not only demand a
premium but also have access to an invaluable intangible asset CONTACTS.

Entrepreneurs of the Information Age have to build contacts no matter what, it is not an
option but a pre-requisite for survival in this world of intense competition. It is no
surprise that successful entrepreneurs swear by CONTACTS. It is rightly said that who
you know is equally important than what you know.

Also, in this lightning fast, changing world. Deals are finalised in a fraction of a
second, the common man can know about these deals, only by the newspaper. Now
the question, an individual who starts a business from scratch, how does he have
access to such transactions.

The answer is again CONTACTS.

Purpose of networks
• Networks provide valuable information
• Networks provide valuable contacts and connections
• Facilitates the sharing of experiences
• Helps relieve entrepreneurial stress
Networking skills
In her book, Building relationships and opportunities, Jocelyn Carter suggests certain
characteristics that the entrepreneur should cultivate in themselves and at the same
time look for them on others.
a) Supportive – These are the people who will enjoy your success and they will
be eager to lend a helpful year whenever you face problems. They will also
share your victory without creating an obligation on you.

b) Continuous communicators - As opposed to people who will call you only

when they need something, look for those people who establishes
relationships even before a need arises. This is a critical skill for an
entrepreneur who will always need to call people for certain favours e.g.
contacts. Keep them informed of your doings, and encourage them to do the
same.

c) Reliable and responsible – Look for people who are responsive to your
requests, and who carry out tasks promptly. These are people who take their
responsibilities seriously and do not have a lot of excuses or empty promises
 d) Influential – Influential people may have wealth, prestige or position, but
there are those individuals who may not have these things but they get things
done and they can persuade others to see things in their perspective.

e) Knowledgeable – Apart from being stores of information, knowledgeable

people normally have a wealth of experience which they draw on to help
others who face similar challenges.

f) Active listeners – This trait is rare as it is difficult to quantify. Active

listeners listen both intellectually and emotionally. They are able to
understand the hopes, fears, concerns and dreams behind the actual words,
and they are able to offer valuable feedback.

g) Emphatic – Caring for the person before the opportunity. Understanding the
other person’s feelings and experience not just from what you hear from
them.

h) Appreciative – Little things mean a lot. Thank you notes, follow- up emails,
gifts tokens, all these express gratitude, and the feeling that other peoples
action have meaning and value.

i) Connection conscious – Those people who are always eager to step forward
and bring symbiotic people in contact with each other (people who can
benefit from each other).

QUIZ
1. Define the following
 • Business opportunity
• Franchise
• Networking
2. List 5 examples of business opportunities
3. What factors should an entrepreneur bear in mind in analyzing a potential business
opportunity?
4. List 4 advantages and 3 disadvantages of a business opportunity as opposed to a franchise
5. List and briefly describe the two types forms of networking

ANSWERS TO THE QUIZ

1
• A Business Opportunity is viable business potential to create something new, i.e a
product or a service establish new markets by engaging new technologies
• A franchise is a business arrangement where the franchisor develops a plan for the
provision of a product or service and another, the franchisee uses the plan to avail the
product or service
• Networking is the process of enlarging the entrepreneur’s circle of trust through
negotiation. This can either be a formal or informal arrangement
2.

• Self - Discovery
• Re - invention
• Joint Venture
• Distributorship.

• Rack – Jobbing

3.

• He should ensure he has proper legal representation.

• He should ensure he has sufficient financial representation

• Carry out an independent survey of other owners of business opportunities sold by the
parent company.

• Contact competitors
• Check the credit of the seller

4.
Advantages

• Requires a lower initial fee than a franchise.

• A proven system of operation or product.

• Intensive training programs. Better financing options.

• Purchasing power.

Disadvantages
 • Poor site selection.

• Lack of ongoing support..

• Exclusivity clauses.

5.

Informal networks
These exist where the entrepreneur makes use of his range of friends, acquaintances, and business
associates to obtain resources and opportunities for his firm.

Formal Networks
These are more organized forms of associations where the entrepreneur goes into a joint venture
with other entrepreneur for mutual business benefit.

EXAM QUESTIONS

CASE STUDY
In order to weather the storm of current economic difficulties, many of today’s mold
manufacturers are seeking out new business opportunities to diversify—and thus remain in
business—whether it be focusing on a new niche, offering a value-added service, exploring a new
industry, finding a new custom base or joining a collaborative effort. LSR Engineering
(Lancaster, MA)—a division of Built Rite Tool & Die, Inc.—is one such mold manufacturer.
Recently the company decided to foray into the world of LSR molding (liquid silicone
rubber/LIM (liquid injection molding) to join the very few in this country that can create
flashless, automatic running molds for liquid silicone.
Need for diversification

According to Craig A. Bovaird, President of Built Rite and all of its divisions (LSR Engineering
and Reliance Engineering), the company’s plan for growth has always been aggressive, with a
focus on “niche opportunities available from diverse market segments.” The company began to
seriously look at the LIM process two years ago. “We really did our homework,” Bovaird recalls.
“We felt that it was a good fit as the process is the reverse of injection molding, hot mold, 350-
380°F and cold material. This fit well with our existing skill set and it required precise
moldmaking capability. That is where our parent company Built Rite came in. We are very strong
in mold design and we have invested heavily in the latest machining technology. In the last two
years our investment in the mold shop has exceeded $1,000,000. This investment includes two
new Sodick sinker EDMs and a Sodick Wire EDM—together with a new Hurco milling center
and several other pieces of support equipment.”

The fact that moldmaking and custom molding of LSR takes place under one roof separates LSR
Engineering from its competition, Roger Ikonen, Project Manager, notes. “We have invested in
all-electric Engel, LIM injection molding machines,” Ikonen says. “The machines and support
equipment are all new and state-of-the-art. Our pumping units are made by Fluid Automation. We
have doubled our molding facilities square footage to 20,000 square feet. The LSR Division
occupies 3,000 square feet of this space. This is first-class space and fully equipped to service our
target customer base of medical, defense and aerospace.”

Diving In
LIM of LSR requires a very different way of thinking about the mold, Ikonen notes. “To
successfully mold LSR, the most important factor is the mold,” he states. “All design elements
must be accounted for at the development stage to ensure success, part design, mold design,
material and machine. LSR is a thermoset elastomer and presents unique processing challenges.
Due to the material’s low viscosity, it will fill a .0002 opening in steel and flash. As a result, the
mold shutoffs have to be better than .0002. Rigid construction is critical together with precise
temperature control to prevent flash.
Two Sodick Ram EDMs and one Sodick Wire EDM are amongst the more than $1 million LSR
Engineering has invested in equipment upgrades

For these reasons molds require very tight tolerances,” Ikonen continues. “High processing
temperatures require an understanding of the interaction between the many mold components in a
typical mold and their combined influence on holding tight tolerances. The tolerance requirement
does not only apply to the cores and cavities but to the entire system.”

Other critical factors of LSR molds are vacuumization, ejection and venting. “All of our molds
have a vacuum seal as an integral design element,” Ikonen states. “Evacuation of air and gas from
the cavity is critical to successful LSR molding. Due to the flow characteristics of LSR,
conventional ejection is not recommended. Mold designers must consider part removal as a key
design element. This can be achieved mechanically—with EOAT—[Ed. Note see MoldMaking
Technology February 2009 for more on EOAT] or pneumatically. Each part is different and
requires analysis in the design phase to ensure a successful outcome. We use cold runner systems
for high cavitation molds and we also use conventional runner systems.”

Partnering with Molders

While the company’s primary focus is with OEMs, Ikonen believes the LSR tooling capability
will open up many opportunities with custom molders of LSR. “We have found through our
experiences at Reliance Engineering that custom molders do not see us as competitors, but as
partners that can offer them a high level of tooling expertise—based on the fact that we also are
processors. We also operate under a strict code of ethics that recognizes that customers are sacred
and therefore if we are building a mold for a tooling customer, their customer is off-limits.

“Initially our research indicated that the Austrians and Germans are the leaders in LSR tooling
and that there are only a handful of companies in the U.S. that make LSR molds,” Ikonen
continues. “We have recently completed a 16-cavity cold runner mold for a very close tolerance
part. This mold was evaluated by several experienced processors and molding machine
technicians; and they indicated that the mold and the parts it produced were world class and equal
or better than anything they had worked with. We were very pleased with this feedback and plan
a long and successful future in moldmaking for LSR and LIM molding.”

Company Profile
Founded in 1984, Built Rite Tool & Die, Inc. (Lancaster, MA) has evolved to be a leader in the
manufacturing of precision molds for the liquid injection molding of LSR, liquid silicone rubber,
injection molding of thermoplastics and thermosets and compression and transfer molding of
thermoset plastic materials. They have been fortunate enough to experience rapid growth in the
past nine years. According to President Craig Bovaird, Built Rite is the corporate parent and
driving force behind Reliance Engineering and the LSR Engineering Divisions. “We are really
designed as a niche company with moldmaking expertise as our foundation and driving force,”
Bovaird notes. “Built Rite is the engine that drives our molding divisions Reliance Engineering
and LSR Engineering.”

Reliance Engineering was formed in 1999 as a specialized custom molder of thermoplastic and
thermoset plastic materials that focuses on demanding applications that require high temperature
plastic materials and very close tolerance molding.

Formed in 2008, LSR Engineering is a specialized custom molder of liquid silicone rubber (LSR).
LSR works closely with Built Rite Tool & Die to produce precision molds for applications
requiring high cavitation, insert molding/overmolding of plastic and metal parts and low
cavitation/prototype parts.

Bovaird notes that the company has grown from eight to 55 employees in the past nine years,
between the three divisions. “In that time span, we have completely retooled the company under a
business plan focused on a national and international customer base, financial discipline,
investment in technology and attracting top notch, skilled employees,” he states.

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