Last time I mentioned going forward we will be looking at business opportunities. However, I just want to get everyone on the same page, because in business often a term means different things to different people or is open to more than one interpretation, and most importantly it has to be understood within its context.
The goal of the next few posts is to get everyone on the same page to be able to offer or take advantage of various business opportunities, remember what I said last time, in business there is no handholding and you need to be resourceful, I’ll say what has to be said to get it out of the way one time anyone else not up to speed that is their problem.
Background: up until now we have only been looking at the idea which is simply the spark to start a business, you still need to do research and validation, find suppliers, and do everything on your own. Now we are going to the next step: business opportunities that can be implemented.
Let us get context out of the way first, our focus is small to medium business or to be able to start with a small to moderate amount of money in South Africa.
The goal here is to build a framework that can be easily understood by all parties, so it can be easy to offer and take advantage of business opportunities.
The business chain
What makes up a business
What is a business opportunity
The business chain
Now within a business opportunity, there are three parties: the vendor offering or proposing the opportunity, the entrepreneur taking advantage of the opportunity, and the customer of the entrepreneur.
A vendor sells the pizza oven startup kit
A entrepreneur buys the pizza oven kit and makes pizza
A customer buys the pizza and eats it
Between a vendor and entrepreneur, a business opportunity is often defined as a “packaged business investment that allows the buyer to begin a business”.
Between the entrepreneur and the customer, a business opportunity is defined as a “consumer need or want that can be potentially be met by a new business”.
So the relationship between the vendor and an entrepreneur is a B2B (business-to-business) one and the relationship between the entrepreneur is usually B2C (business-to-consumer), however, the opportunity can also service other businesses. But for now, let’s just keep things simple.
So the goal is to create “packages” or programs of business opportunities that can be followed in an easy-to-understand format (what I called a framework earlier on). Because we are B2B we only look at connecting vendor and entrepreneur. Going to market and dealing with clients as an entrepreneur you are on your own (unless you buy into a franchise but more on that later on).
Before we look at the entrepreneur and vendor opportunities let’s get some things out of the way.
What makes up a business
Now first and foremost what makes up a business:
A business is often made up of the following: Equipment, Materials, Skills, Products and/or Services (and sometimes location/space/site/premises is included in the equation).
The elements of an opportunity usually include these four elements:
1. A need. 2. The means to fulfill the need. 3. A method to apply the means to fulfill the need. 4. A method to benefit
So when we think of a whole or complete business opportunity we often think of a franchise, which is the most complete and controlled example (you pay the franchisor premium and you get the equipment, materials, and skills to make a product or carry out a service).
So you take a pizza franchise for example you pay the franchisor a premium for the packaged business opportunity. You get your ovens (equipment), your supply of raw materials dough, cheese, toppings, etc., and even your packaging like pizza boxes and marketing material via the franchise network. Your staff will then get training to make pizzas the franchisors way and how to use the point of sale system etc. and you might even get a site or location. This is a very rigid system that has its positives and negatives (to some) you have to toe the line as per your franchise agreement but it also comes with support and brand cachet especially when it comes to international brands. However many don’t like this control and prefer more freedom. But it is one example of a complete business opportunity.
But a business opportunity can be anything. Using the pizza example, and breaking it down, it can be a:
1. Existing business for sale (which can include a franchise)
2. New Franchise
3. The equipment required to start a business (such as pizza ovens) / and contacts to a supplier of raw materials
4. Skills training, how to make pizzas and use ovens with contacts of suppliers of ovens and supply of raw materials
So you see we go from what essentially requires the least amount of work to start: 1. an existing business (and most expensive) to the most amount of work and least expensive (4. skills only).
To start at an existing, established opportunity or a well-researched and packaged franchise will require far less work than if you were to start from the bottom or from scratch or from only an idea. So anything in the pizza chain mentioned above can be packaged as a business opportunity. If a person comes from Naples and can make pizza well, that person can absolutely become a vendor and start an opportunity at number 4 offering training and sharing the know-how of ovens they use, yes to the entrepreneur it requires a lot of work to just start with knowledge but if the entrepreneurs learned from the Naples pizza master they can partner with someone with funds or even with a fast sales channel like a pub and start making Naples style pizza.
What is a business opportunity
So that being said within our context, I prefer to call a business opportunity anything that you can offer or that is offered to you that can make money, so any moneymaking opportunity. For entrepreneurs, this is in contrast to finding and developing a business opportunity yourself.
So this can be:
Business for sale
Equipment and materials for manufacturing
Distribution, wholesale or retail opportunity
Training and skills or how to start a business, create or take advantage of a business opportunity etc.
And just to be clear we will not be looking at any low-effort high-risk opportunities such as stock/forex/crypto just traditional hard work. Also no MLM (multi-level marketing) and network marketing, just clean business.
The “complete” entrepreneur can find a business opportunity themselves and execute on it, however, some people are better at building networks and finding and developing business opportunities (vendors in our context) than they are running it while others are better at running it than they are finding and developing it (entrepreneurs in our context) and it is often when these two connect that a transaction is completed. So our hope is to successfully connect these two.
We’ll start with the entrepreneur which is what our audience is mainly made of people looking for business ideas and opportunities.
Entrepreneurs guide to taking advantage of a business opportunity
You have to examine both the opportunity (do you meet the requirements, have the funds, have the abilities to execute) and the market potential to successfully execute a business opportunity.
Taking advantage of an opportunity
In order to take advantage of a business opportunity you need to do the following:
- Read and study the business opportunity completely including accompanying information
- Research the business and industry if you are not familiar with it
- Stop and reflect / Apply your mind, try to visualise yourself doing the business
- Do you understand the requirements? Do you meet the requirements, skills, know-how etc.
- Your suitability: Does the business suit your temperament/disposition? (e.g. if a business requires you to knock on doors and you very shy then its probably not for you)
- Do you have the required funds/capital to start?
Can you afford to lose this amount? (Know what your affordable loss is – I have spoke about this numerous times in the past, for the guys coming here after losing all their money in forex trading this would be your stop-loss, in business, even if you selling toffee apples you need to set an affordable loss, an amount of money that you are willing to invest this much and no more, an amount if you lose it that you can still bounce back from or you will end up homeless in the street)
- Do your due diligence (if possible)
- Do your research into the market the business is in
- Validate the business opportunity with the target market in area/site if possible
That is the analysis of the business opportunity out of the way. Then you need to have your money-making plan or look at your go-to-market strategy depending on the opportunity. As I said before opportunities will come in various forms and “stages” like some will be that you to start from scratch and others might be an existing business that does not mean that you can just sit back and twiddle your thumbs, while others will only be equipment and materials and you need to build the business. For this, you usually do a lean business plan so you can get the overall picture quick (more on that next time as it’s long already). But it all depends on your level of experience.
Within our context, a vendor is someone that offers a business opportunity to an entrepreneur.
Developing an opportunity
It has been said (Shane and Venkataraman) that individuals must possess prior knowledge and the cognitive properties necessary to value such knowledge in order to identify the new business opportunity and potential market. This normally allows a triggering of the opportunity which can then move forward to scoping and validation.
Now, this is important to note in a country like South Africa that has a well-developed economy with a lot of existing and new competition. But new opportunities are opening up all the time, even with the country and economy in decline new opportunities will open up.
Some people are better at building networks and finding and developing business opportunities than they are running the business or offering service or selling the product and you often see these people working B2B supplying entrepreneurs. This can be for various reasons: they have the knowledge, contact, resources to buy bulk etc.
Vendors guide to offering a business opportunity
A business opportunity should contain the following information:
All the information that an entrepreneur will need to see if the opportunity is for them.
The amount of money needed to start, potential profits, and other important information. Please also state whether or not any type of training or financial assistance is provided.
Understand your target market and tell them how it will benefit them. Are you focussing on the lower-end, middle, or top end of the market? You have to remember South Africa has millions of people are the bottom end of the market, and if you are not targeting them, you need to communicate this very clearly or you will get a lot of poor quality leads.
Make sure you write a detailed prospectus as possible and cover all possible FAQ’s (frequently asked questions) or you might have to field a lot of questions especially the dreaded “more info pls”.
The more detail you add, the higher likelihood of good leads coming in even include what is considered common sense.
Next, we will look at our role and then publish a form to see what types of opportunities there are to offer and available from the community.
Unfortunately, not everyone can propose a successful business opportunity or take advantage of one this is often due to lack of initiative and mindset issues and usually due to refusing to put in the work required to make a success of it. I touched on this last time, business, self-employment, entrepreneurship is not for everyone and it is important to know yourself as to whether you can become successful or not going down this path.