ideas are not opportunities! Unfortunately, most entrepreneurs don’t know the difference. Here are 5 clear difference between business ideas and opportunities. The funny thing is that many budding entrepreneurs don’t even know the differences between a business idea and a business opportunity; and as a result, they use both terms interchangeably.
A blunder that makes you sound dumb! I mean, what’s more ridiculous than not knowing the in-depth meaning of terms that are used every day and you are gearing up to start your own business? Now for those who are yet to identify the difference between a business idea and opportunity, I want you to know that they are not the same; and this article will help you understand the difference.
What is a Business idea?
A business idea is a concept that can be used to make money. Usually it centers on a product or service that can be offered for money. An idea is the first milestone in the process of founding a business. Every successful business started as someone’s idea. Although a business idea has the potential to make money, it has no commercial value initially.
In fact, most business ideas exist in abstract form; usually in the mind of its creator or investor and not all business ideas, no matter how brilliant they may seem, would end up being profitable. To find out about an idea’s chances in the market and check its innovative content and feasibility, you need to conduct a plausibility check. A promising business idea must have the following characteristics:
- Relevant (must fulfill customers’ needs or solve their problems)
- Clear focus
- Profitable in the long run
The acceptability and profitability of a business idea hinges largely on how innovative the idea is. Being innovative means using conventional production or distribution methods that have rarely been adopted before. In fact, the entire business system could be innovated.
For example, FedEx revolutionalized mail post services through 24-hour operation and very quick delivery worldwide. The company therefore adopted an innovative system, which eventually spurred it to becoming one of the world’s leading mail and parcel delivery services.
However, even more important is the benefit that a business idea promises to offer customers. Such benefits could be passed on to customers in the form of reduced costs. (We all like to buy quality for less). So, any business idea that, at least, focuses on lowering costs would most likely be profitable in the long term. A successful business idea must meet the following three conditions:
- It must offer benefit to the customer by solving a problem or fulfilling a need. Customers buy products and services for just one reason; to satisfy a need. So, if your business idea cannot satisfy customers, it won’t be successful. Every successful business idea must have a unique selling proposition.
- It must have a market that is willing to accept it. A promising business idea must offer a product or service that would be accepted by a large market. It must also have feasible arrangements for catering to that large market as well as unique values that differentiates it from the competition.
- It must have a mechanism for making revenue. A successful business idea must show how much money can be earned from it and how the money will be earned. Having discussed in full detail what a business idea means, let’s now look at “business opportunity.”
What is a Business Opportunity?
A business opportunity on the other hand is a proven concept that generates on-going income. In other words, a business opportunity is a business idea that has been researched upon, refined and packaged into a promising venture that is ready to launch.
While multiple business ideas may strike you on a daily basis, only few of them will be profitable in the long run based on market research and feasibility study conducted. These few are the real business opportunities. An opportunity is regarded as one after it has been found to meet the following criteria:
- It must have high gross margins.
- It must have the potential to reach break-even cash flow within 12 months – 36 months.
- The startup capital investments must be realistic and within the range of what you can provide.
- You must have the strength and ability needed to drive the business to success.
- Your level of enthusiasm for the business must be very high.
- It must have the potential for residual income.
- It must have the potential to keep on improving with time.
- It must have a low level of liability risk.
After you have refined and packaged your business opportunity in your mind, you can have it documented by writing a business plan. You can then either implement on your own or sell it to someone else for profit (probably because you cannot afford the capital required to flag off the business).
The Clear Difference Between a Business idea and Opportunity
In conclusion, I want you to know that the world is filled with brilliant ideas but the world lacks entrepreneurs who have the capacity to turn such ideas to profitable business opportunities. It is one thing to develop an idea, but it is an entirely different ball game to turn an idea into a business opportunity.
So, a major difference between an idea and an opportunity is that you can sell a business opportunity, but you cannot sell an idea (it is not entirely impossible but it’s difficult).
Colonel Sanders tried for many years to sell his chicken recipe idea but no one listened to him until he repackaged it and KFC (Kentucky Fried Chicken) was born. The moral of this lesson is that investors invest in business opportunities and ventures, not business ideas.
Now how do you turn a business idea into an opportunity? Well, you can turn a business idea into a business opportunity by conducting market research and feasibility study on your idea, writing a business plan and assembling a business team that will work with you on your idea. Only then will such idea become an opportunity that will attract investors and probably get the needed financing.