How Business Owners Identify New Business Opportunities

A key question that would-be business owners face is finding the business opportunity that is right for them. Should the new startup concentrate on introducing a new service or product based on an unmet need? Should the venture select an existing service or product from one market and provide it in another where it may not be available? Or if the firm bank on the tried and tested formula that has worked elsewhere, like a franchise operation?

In the first of a series of podcasts for the Wharton-CERT Business Plan Competition, Raffi Amit, a teacher of management at Wharton, talks about these questions and more with Knowledge@Wharton. Along the way, he offers insights into how business owners can identify new business opportunities and assess their potential and their dangers. Knowledge@Wharton: Our guest today is Raffi Amit, professor of Management at Wharton.

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We are going to be speaking with him about determining new business opportunities. Professor Amit, thank you so much for signing up for us today. Knowledge@Wharton: The question that confronts anybody who is thinking about starting a new business or company is, how do you find the opportunity that’s best for you? Could some guidance is provided by you on that? Amit: Sure. There are various resources for new business opportunities for individuals.

Many sources of ideas result from existing businesses, such as franchises. You could license the to provide a business idea. You can work on a concept with an employer who, for some reason, has no curiosity about developing that business. You might have an arrangement with that employer to leave the business and start that business. You can tap numerous sources for new ideas for businesses. Perhaps the most promising way to obtain ideas for new business comes from customers – hearing customers. That is something we ought to continually do, in order to understand what customers want, where they want it, how they need something or service provided, when they need it supplied, and at what price.

Obviously, if you work in a large company, employees might come up with ideas. Indeed, you might want to pay attention to what they have to say. You could pursue these ideas by thinking about some key questions such as, “Maybe the market real? Is the service or product real? What are the risks?

And is it worthwhile? Knowledge@Wharton: Would you offer an example of a start-up that examined a chance and demonstrates a few of the principles you merely stated? Amit: Well, certainly in the age of the Internet, there is no lack of examples of business owners who began a company predicated on a recognized need. You could get back to the start of E-Bay, where an opportunity was seen by them to connect people through launching a virtual flea market.