Sensing opportunities

The essentials

An entrepreneurial opportunity is a situation in which a new product, service, process or market can be introduced and sold at a profit. Sensing an opportunity means noticing such a situation before others do. Good entrepreneurs are alert: they observe what customers complain about, what is in short supply, what is changing in society and technology, and what is working well elsewhere but is missing locally.

An idea is not automatically an opportunity. An idea becomes an opportunity only when there is real demand for it, it can be produced or delivered at a cost below the price customers will pay, and the entrepreneur has (or can arrange) the resources to act within a suitable time window.

Key points

• Opportunity = idea + market demand + feasibility + timing.
• Sources of opportunity include unmet needs, changes in government policy, new technology, changes in population and lifestyle, and gaps in existing supply.
• Entrepreneurial alertness: the ability to notice opportunities that others overlook.
• Prior knowledge, experience and a wide social network help in sensing opportunities.
• Opportunities have a window: if the entrepreneur acts too late, competitors fill the gap.

Exam tips

• When a question describes someone noticing a shortage or a frequent complaint and starting a business, the concept is "sensing an opportunity".
• Remember the difference: an idea is a thought; an opportunity is an idea with commercial potential.

Common mistakes

• Treating every new idea as a good opportunity without checking demand and cost.
• Thinking opportunities come only from new technology. Changes in policy, population and lifestyle are equally important sources.