Evaluating business opportunity
A major step in business creation process is the recognition of the opportunity by the entrepreneur. Opportunity recognition implies perceiving a possibility for new profit potential through the funding and formation of a new venture or the significant improvement of an existing venture.
Once opportunities are perceived, it is important to scan the environment. It is quite possible that many of the opportunities might not make commercial sense. Scanning of the environment involves close examination of the environmental conditions and their impact upon the business idea.
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Evaluating business opportunity is a major process of self-evaluation of one’s ability to start, operate and run a business venture. Some opportunities are sometimes identified while the entrepreneur is having his or her self-assessment in terms of strength, weakness, opportunity and threats universally known as SWOT analysis.
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SWOT analysis is the analysis of the business and the environment in which it is operating. With your understanding of the weaknesses of your business, unexpected threats can be controlled or eradicated well, thereby ensuring favorable competition in the market environment.
There is Business SWOT analysis and Personal SWOT analysis. SWOT analysis is used in evaluating business opportunity using these tips:
STRENGTH: Your strengths could be perceived from both on internal position, from the judgment of the customers and others in the market. In the study of your strength, consider them with your competitors in mind. In a situation where your competitors do not produce quality products compared to yours is strength but they have quality packaging compared to yours is a weakness and a threat to you.
WEAKNESS: Your weaknesses are your limitations that place you at a disadvantage compared to others. Some business weaknesses include poor funding, poor staffing, outdated equipment etc. while some personal weaknesses include low education, restlessness, lack of skill, poor comportment, etc.
OPPORTUNITY: Opportunities are contributions from external chances. Some opportunities may open up connections and affiliations to political group etc.
THREAT: These are external factors that are out of control that could impede the business or the entrepreneur from achieving expected goals.
With this evaluation strategy, you can know if you can continue with the business or not.