Evaluating New Business Opportunities in 3 Steps for Aspiring Entrepreneurs

In 2024, everybody wants to be their own boss. The opportunity has never been greater for an individual to control their own destiny and start a business. So how can you break into this modern American dream and start a business for yourself? The key is spotting the right opportunity. With this article we wanted to share our thought process for helping you evaluating new business opportunities that will set you up for success when starting a business. We’ve broken this down into a simple 3 step process you can follow. Let’s dive in!

Criteria #1 – Are You Solving a Problem?

This first step is a litmus test to get you started. It may seem obvious, but you need to solve a problem and meet a customer’s need. This is business 101, and non-negotiable. Whether this is a product (“I need to eat when I’m hungry”) or a service (“I need an expert to install my dishwasher”) – the basic idea is that your business plan should start with the problem you are solving and how your business offers value towards creating the solution.

What are examples of BAD business ideas:

  • “We think this will be really cool or unique”
  • “Our innovative design does XXXX”

Focus on the problem you solve.

Milestone:  Business Unique Selling Proposition (“USP”)

  • Who is your target customer?
  • What is their problem or need?
  • How do you solve this as a business?
  • What is the value to that customer?

Let’s do a simple example for a smoothie shop:

  • Who is your target customer?
    • Individuals that value health and high-quality food options
  • What is their problem of need?
    • Most food options are fast and poor quality. These individuals seek higher quality and higher nutritional food options.
  • How do you solve this as a business?
    • At The Smoothie Shop, we offer high quality smoothies with the best ingredients, and we provide convenience with our 5 minute average checkout to delivery time in the restaurant.
  • What is the value to that customer?
    • High-quality food
    • Time
    • Price

Criteria #2 – Is Your Idea Unique & Can You Take It to Market?

Once you have identified the target customer and the problem you will solve, you will want to shift to market research to make sure it’s viable. The good news is that there are tons of resources online to help you with this step! You should focus on building a knowledge base around your core idea in step 1, and using this market research to help you guide your strategic positioning we will talk about in the next section. Activities that will help you validate your idea:

Competitor Research

  • Identify at least 5 businesses you would identify as competitors OR similar businesses in a different market (IE If you are a pizza parlor, benchmark other cities)
  • How big are these businesses? Total revenue? Total employees?
  • What is their business model? How do they charge for services?
  • How are they promoting their business? What channels are they using – search engines, social media, etc.

Competitive Advantage Mapping

  • Based on the research above, can you offer a compelling service to beat the competitors you listed?  (“Convince me like I was your stubborn uncle”)
  • Do you have a way to make your business stand out?
  • Write down all the ways your business will stand apart from the competitors you listed in #1 above.

Criteria #3 – Do You Have The Resources to Launch Your Idea?

So you’ve made it this far, which means you have a problem you are solving, the idea is unique, and you have done your research on the market to see how you can compete. So the last step, is do you have the resources to take the idea to market?

Do you have a good name that is not trademarked?

  • You need to make sure you have a good business name, and that you are not tramping on someone else’s intellectual property or trademark.
  • If you have a specific name in mind, you can quickly check by searching your name in the US Patent and Trademark Office, or the USPTO.
  • Finally, do some checking in Google and LinkedIn to see if you find any other companies with the same name or a similar positioning.

Do you have the financing available to launch your business?

  • You need to make sure that you have the proper cash structure to execute your idea.  And what is the cash flow plan to become profitable?
  • How do you charge for your services or products?
  • Can you make money? Will people pay for your solution?
  • Write down a financial summary looking at your first 2 years in business. List your start-up costs for equipment, property, people, etc. Next, list out the potential sales you will achieve and start mapping when you can be profitable.

Go Out and Prove It

At the end of the day, you need to have income to sustain your business. And this starts with sales.  Almost every successful entrepreneur will either be good at selling, or resourceful enough to find someone who can do it for them. If you are truly serious about starting a business the best thing you can do is go out to the world and stress test your selling.

Try to close your first customer.  If you are building a product, pitch it and see if you can get an early commitment for an order. And plan on rejection, even many times over before you succeed.  This is how it works, and it’s something every new business owner will need to tackle.

Now, It’s Your Turn

Evaluating new business opportunities can seem like a dream. The brain kicks in dopamine and we feel good thinking about all the glory of working for ourselves.  But it’s difficult, and you must focus on making sure you have a viable business plan before you quit your job. If you find this blog insightful, we would love to hear from you! Drop us an email at info@smallbizsetup.com and let us know any feedback or your favorite tip from this article.