Selecting the right opportunity

The essentials

An entrepreneur usually has several ideas but limited money, time and skill. Selecting the right opportunity means screening the ideas and choosing the one that best matches market demand and the entrepreneur's resources. The process moves from a broad list to a narrow choice.

Typical steps:

• Idea generation: list many possible ideas.
• Screening: drop ideas that are clearly unsuitable, illegal, or beyond available resources.
• Feasibility study: examine the remaining ideas in detail.
• Final selection: choose the opportunity with the best balance of returns and risks.

Key points

• Market feasibility: Is there enough demand? Who are the customers and competitors?
• Technical feasibility: Are the technology, machines, raw materials, location and skills available?
• Financial feasibility: How much capital is needed? Will revenues cover costs and give a reasonable profit?
• Economic and social feasibility: benefits to society, employment, effect on environment.
• Personal fit: the entrepreneur's interest, skills, experience and willingness to take the risk.
• A SWOT analysis of each option helps compare them.

Exam tips

• When a question checks whether machines or raw materials are available, the answer is technical feasibility; when it checks demand, it is market feasibility; when it checks capital and profit, it is financial feasibility.
• Remember that screening comes before a detailed feasibility study.

Common mistakes

• Choosing an opportunity only because it is popular, ignoring personal skills and resources.
• Assuming a large market alone makes an idea feasible; cost and capital matter too.