An entrepreneur takes the initiative to start the business activities, by exploring and analyzing or Identification of business opportunities. He also bears the related risks. The real entrepreneur is not risk centered, rather he is opportunity centered. The entrepreneurs explore economic and business opportunities and remain ready to take advantage of those opportunities.
An entrepreneur is a person who foresees the opportunity and tries to explore it by introducing a new product, a new method of production, a new market, a new source of raw material, or a new combination of factors of production.
Thus, in terms of Identification of business opportunities, the entrepreneur is a person who always discovers changes, reacts to that, and takes its advantages, as an opportunity.
Hence, the possibility of business opportunity in any entrepreneurial venture gets developed only when it has the possibility of commercial feasibility.
For example, the nature of competition, marketing strategy, price policy future prices in relation to the quality of the product, size of the market, possibilities of future development and arrangements for the sale of the product, etc.
Thus, whether any entrepreneurial venture is in the form of a business opportunity or not may be identified on the basis following two factors.
Whether the demand is in excess of the available existing supply in the market or not.
A reasonable rate of return on investment, which is equal to the general rate of return and risk premium, in the context of specific business opportunities.
Besides, to substantiate the business opportunities, it is also essential that the aforesaid factors may be feasible from commercial, financial, technical, production, and managerial efficiency point of view.
Objectives of Identification of Business Opportunities
As regards the objectives for Identification of business opportunities, it may be said that the entrepreneur always makes attempts to establish new industries, with his qualities, like imagination and creativity, also increases sources of employment, produces new products, develops economic sources by reducing costs, product improvements and innovations.
He makes efforts to quickly give material shape to the profitable ideas, by well considering the risks.
Not only that, but he also gets success in starting new industries by identifying business opportunities.
Thus, the following are the objectives of the Identification of business opportunities:
- Identification of opportunities by an entrepreneur, in the context of probable industries and to decide his own role, the scope of work, and relationships, in accordance with the opportunities.
- To keep watch over the possible market of the commodity or service to be produced.
- To decide a high-level group of managers, so that entrepreneurial ventures may be started.
- To make an assessment of financial resources by making financial forecasts, in the context of the process if industrial development.
- To explore the opportunities for possible entry in other areas.
- To assess the requirements of labor, capital, and materials for the industries.
- To find out the possibilities of short term and long term development in various areas of the economy.
- To have the desire for technical knowledge, awareness towards new opportunities, and acceptance of the changes.
- To see the possibilities of diverting the available resources towards achieving the business objectives.
- To identify those industries, which are not based on local sources, but which may be economically considered, in view of future requirements.
Factors to Consider in Identifying Business Opportunities
Now, the question arises, what factors affect the business opportunities.
In response to it, the following factors affecting the Identification of business opportunities may be mentioned, which should be considered, while identifying the business opportunities.
1. Analysis of Internal Demand
Business opportunities may be identified by assessment of internal demand of the existing and proposed products, as to what will be the possibility of future demand?
Before it, the entrepreneur will have to keep into consideration, the per capita income, population, and national income.
2. Availability of Raw Materials
Easy availability of raw material also has an important role in selecting the business opportunities, the reason being that the quantity and level of future production are decided only by it.
If the raw material is easily available, then not only the production cost is low, but it also makes the entrepreneur ready to establish the industrial unit.
3. External Assistance
Role of external assistance, like – government, suppliers, investors, and specific institutions is also important, in Identification of business opportunities, the reason being that external assistance, support and cooperation are helpful in Identification of opportunities.
In various areas, governments provide assistance, subsidies, and incentives in the identification of business possibilities and the establishment of industries.
As a result, the entrepreneur may easily take decisions for the promotion of the industry.
4. Knowledge about Industrial Development
By obtaining detailed knowledge about proposed industrial development from various sources, the entrepreneur may know, the establishment of which type of industry and at which place will be profitable, and which not?
Besides, by such knowledge, he can also know, which specific industry has wide possibilities of development?
5. Internal Sources
The availability of internal sources also has an important role in the identification of business opportunities.
If the sources of production are regularly available to the entrepreneur, he may take positive steps for the establishment of the industrial unit.
6. Risk in Business Opportunities
Every business involves risk. It goes on increasing or decreasing with the environment in such conditions, the entrepreneur has to identify, when, and how much risk involved in the business opportunities?
He has also to ascertain, to what extent, the taking of this may be profitable to him.
7. Performance of Existing Units
The entrepreneur main objectively analyzes the performance of existing units to identify business opportunities.
For that, he will have to analyze products, and product expansion, capital, profits, employment, assets, export possibilities, etc.
8. Promote Entrepreneurial Activity
The entrepreneur may promote entrepreneurial activity for the establishment of industries having good potential for exports, by identifying suitable business opportunities
It is clear that decisions regarding the profitability or otherwise from the promotion of particular entrepreneur activity, or in which specific areas are Industries, opportunities for promotion are available may be taken on the basis of study and analysis of the aforesaid factors.
Challenges of Identification of Business Opportunities
As regards, challenges involved in the promotion of entrepreneur ventures it is noteworthy that with the beginning of economic liberalization, industries are forced to comfort with international products on another side, they have also to face the challenge of keeping production cost Low to face this challenge.
Lakhs of workers have become unemployed in the country after liberalization and globalization and thousands of industries have been locked, due to not sustaining in the competition.
The criteria of industries and norms of the labour force have also changed, with industrial sickness.
In such very adverse situations, the new promoters and entrepreneurs have to take the important decision, as to what type of entrepreneurial ventures or Enterprises are to be promoted an established.
In addition, the following challenges or problems are also to be faced.
1. Initial Crisis in Beginning of Business
The crisis which an entrepreneur has to face in the beginning is called the initial crisis.
During this period, when an entrepreneur promotes any entrepreneurial venture, he feels fully confident that on the basis of his ability and qualities, he will be able to sell his products or services, by earning profits.
However, it is so complicated entrepreneur activity, because.
- He produces or creates new product and service,
- Introduces a new system of delivery of the existing products and services,
- Create new markets for existing products or services, and
- Creates a new environment for existing products or services or creates their join possibilities.
Thus, when the entrepreneur is effected by any thought, then he analyses it and enters into the new environment so that entrepreneurial ventures may be promoted.
2. Promotion of an Entrepreneurial Venture
For the promotion of an entrepreneurial venture, then the entrepreneur has to perform various activities and functions. So, he works hard to organize the industry.
3. Financial Challenges
Financial crisis or entrepreneurial capital is also a challenge to the entrepreneur for promoting an entrepreneurial venture, the reason being that substantial funds or capital are required for initiating any new venture and that too at the lowest cost.
4. Innovation of New Product
How to present the new product is also a challenge.
5. Unhealthy Competition
Whether the Enterprise will be successful or not is also a challenge, the reason being that some persons Resort to Healthy competition where is other in the lurch in unhealthy competitions also, like not to cooperate, to sell products at prices lower than even the costs, threatening the firm to close, etc.
6. Decision-Making and Leadership
Which is known as the process of delegation of powers or leadership?
Thus, there are many challenges and problems in the promotion of the entrepreneurial venture.
For solving them, many issues, like future demand, availability of capital, other sources of production, possibilities of future profit, etc. are to be considered.
Thereafter, while analyzing the business opportunities, it should be decided, that what commodities are to be produced, the reason being that the entrepreneurs have necessarily to safeguard the present of the business, but he has also to make efforts for making the future, bright.
The specific function of an entrepreneur in any entrepreneurial venture is to make the business so capable at present, so that it may build its tomorrow.
The entrepreneur has to work in a dynamic economic environment. Hence, the need is always keeping the business new in the environment of changes and development.
Besides, an entrepreneur has also taken advantage of the business opportunities, by identifying them, giving place to new methods in the business, making new research for business promotion, and by making the search for new markets, etc.