How to explore and evaluate entrepreneurial opportunities. If you don’t want to work for others all your life, then choose to start your own business. But how to discover and tap opportunities that are most suitable for you and have a relatively high success rate?
In fact, there are many sources of entrepreneurship, mainly from four aspects
. Redesign and improvement of existing products and services.
.Follow new trends such as e-commerce and the Internet.
. By chance.
.Discover entrepreneurial opportunities through systematic research.
We must start from these aspects when exploring entrepreneurial opportunities.
Let me share with you how to find entrepreneurial opportunities.
1. Analyze special events to explore entrepreneurial opportunities.
For example, a blast furnace steelmaking plant in the United States had to purchase a mini-steel furnace due to lack of funds. However, the unexpected result was that the profit rate of the latter was higher than that of the former. After further analysis, it was discovered that the structure of the U.S. steel market has changed. Therefore, this steel mill will focus its future investment on mini-steelmaking technology that can quickly respond to market demand.
2. Explore entrepreneurial opportunities through the generation of new knowledge.
For example, when human genetic images are completely solved, it can be expected that it will bring a lot of new business opportunities in the fields of biotechnology and medical services.
3. Analyze contradictory phenomena to explore entrepreneurial opportunities.
For example, most of the services and products provided by financial institutions are only targeted at large professional investors, but the general investing public, who account for 70% of the market's funds, have not received due attention. Such contradictions show that the product market that provides investment services to the general public will have great potential.
4. Explore entrepreneurial opportunities through the generation of new knowledge.
For example, when human genetic images are completely solved, it can be expected that it will bring a lot of new business opportunities in the fields of biotechnology and medical services.
When we find a good entrepreneurial opportunity, we must set our goals and move forward bravely. Whether it is starting a business or dreaming of starting a business, it is not a simple game. You must devote yourself to it. The factors that affect success or failure are extremely complex. Entrepreneurs need to have considerable courage and independent spirit to compete for success. Some people say that in life, you have to dream, build your dreams, be practical, be the master of your own life, and never give up.
Below we propose a set of evaluation criteria based on the market and benefits of entrepreneurial opportunities and explain the connotation of each criterion factor. The purpose is to provide entrepreneurs with a decision-making reference for evaluating whether to invest in entrepreneurial development.
.Market evaluation criteria
Market positioning A good entrepreneurial opportunity must have a specific market positioning that focuses on meeting customer needs and can bring added value to customers. Therefore, when evaluating entrepreneurial opportunities, the market value that the entrepreneurial opportunity may create can be judged by whether the market positioning is clear, whether the customer demand analysis is clear, whether the customer contact channel is smooth, whether the product is continuously derived, etc. The higher the value a business brings to customers, the greater the chance of success.
, Market structure An analysis of the market structure of entrepreneurial opportunities includes barriers to entry, the bargaining power of suppliers, customers, and dealers, the threat of substitute competitive products, and the intensity of competition within the market. From the market structure analysis, we can know the future position of the new enterprise in the market and the extent to which it may encounter counterattacks from competitors.
Market size Market size and growth rate are also important factors affecting the success or failure of new enterprises. Generally speaking, those with large market sizes will have relatively low barriers to entry and the intensity of market competition will decrease slightly. If you want to enter a very mature market, then even if the market is large, the profit margin will be very small because it is no longer growing, so this new enterprise may not be worth investing in. On the contrary, a growing market is usually a market full of business opportunities. As the saying goes, a rising tide lifts all boats. As long as you enter at the right time, there will be room for profit.
Market penetration will be a very important factor in evaluating the market penetration (the process of realizing market opportunities) of an entrepreneurial opportunity with huge market potential. Smart entrepreneurs know to choose the best time to enter the market, that is, when market demand is about to grow significantly, you are ready and waiting to receive orders.
Market share The market share target that is expected to be obtained from the entrepreneurial opportunity can indicate the future market competitiveness of this new company. Generally speaking, to become a market leader, you need to have at least % market share. However, if the market share is less than %, the market competitiveness of this new enterprise will naturally affect the value of future listings even though it is not high. Especially in the high-tech industry with winner-take-all characteristics, new enterprises must have the ability to become one of the top players in the market to have investment value.
. Product cost structure The product cost structure can also reflect whether the new enterprise has a bright future. For example, from the proportion of material and labor costs, the proportion of variable costs and fixed costs, and the size of economic scale output, we can judge the extent of the added value created by the company and the possible future profit margins.
. Benefit evaluation criteria
Reasonable net profit after tax Generally speaking, an attractive entrepreneurial opportunity needs to be able to create a net profit after tax of at least %. If the expected net profit after tax from starting a business is less than %, then this is not a good investment opportunity.
The time required to reach profit and loss balance. A reasonable profit and loss balance time should be achieved within two years, but if it cannot be reached within three years, it may not be an entrepreneurial opportunity worth investing in. However, some entrepreneurial opportunities do require a relatively long period of hard work to create entry barriers through these early investments to ensure continued profits in the later period. In this case, the upfront investment can be considered as an investment to tolerate a longer breakeven time.
. Investment return rate. Taking into account various risks that entrepreneurship may face, a reasonable return on investment should be above %. Generally speaking, an investment return rate below % is not an entrepreneurial opportunity worth considering.
Investors generally welcome entrepreneurial opportunities with low capital requirements. In fact, many cases show that excessive capital is not conducive to entrepreneurial success and sometimes has the negative effect of diluting the return on investment. Generally, the more knowledge-intensive entrepreneurial opportunities require lower capital requirements, the higher the return on investment will be. Therefore, it is better not to raise too much capital at the beginning of a business but to create capital through surplus accumulation. The relatively low amount of capital will help increase earnings per share and further increase the price of future listings.
. Entrepreneurship opportunities with high gross profit margins have relatively low risks and are easier to achieve profit and loss balance. On the contrary, entrepreneurial opportunities with low gross profit margins have higher risks, and companies can easily suffer losses when they encounter decision-making errors or major changes in the market. Generally speaking, the ideal gross profit margin is %. When the gross profit margin is lower than %, this entrepreneurial opportunity is no longer worth considering. Gross profit margins in the software industry are usually very high, so as long as you can find enough business volume to engage in software entrepreneurship, the risk of serious financial losses is relatively low.
Whether strategic value can create strategic value for new enterprises in the market is also an important evaluation indicator. Generally speaking, strategic value is closely related to the scale of the industrial network, interest mechanism, and degree of competition. The value-added effect that entrepreneurial opportunities can create on the industrial value chain is also closely related to the business strategy and business model adopted.
Capital market vitality When a new enterprise is in a highly dynamic capital market, its profit recovery opportunities are relatively high. However, the magnitude of changes in the capital market is huge. When the market is at a high point, the cost of investing capital is low and it is relatively easy to raise funds. However, when the capital market is at a low point, the incentives to invest in new business development are lower and there are relatively fewer good entrepreneurial opportunities. However, for investors, the cost of market lows is lower and sometimes the return on investment will be higher. Generally speaking, an active capital market for new ventures is easier to create value-added effects. Therefore, capital market vitality is also an external environment indicator that can be used to evaluate entrepreneurial opportunities.
Exit mechanism and strategy The purpose of all investments is to recover. Therefore, exit mechanism and strategy have become an important indicator for evaluating entrepreneurial opportunities. The value of an enterprise is generally determined by a trading market with objective appraisal capabilities, and the perfection of this trading mechanism will also affect the flexibility of the exit mechanism for new enterprises. Since exit is generally more difficult than entry, an attractive entrepreneurial opportunity should consider exit mechanisms and exit strategic planning for all investors.
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