To be a successful entrepreneur you need to have a good process for evaluating business opportunities. Evaluating a business opportunity is not the same as evaluating a business plan.

In analyzing business opportunities you must be able to pass them through a test to determine if they truly are valid. To be successful, all of your ideas must have a demonstrated need, ready market, and the ability to provide a solid return on investment.

You need to determine if the idea is feasible in the marketplace? Is there a real demand? Can it actually be done? Are you able to pull together the right people and resources to develop the business before the window of opportunity closes?

Good entrepreneurs focus on the opportunity and start with the customer and the market in mind. They analyze the market considering market structure, market size, market growth rate, market capacity and attainable market share. They also consider operational issues such as cost structure, exit strategy issues, time to break even, opportunity costs, and barriers to entry.

To help you evaluate your business opportunities here are some questions to ask yourself about your idea:

1. What is the need you satisfy or what problem do you solve?
2. Who are you selling to - who is your target market?
3. How would you make money? What is your revenue model?
4. How will you differentiate your company from what is already out there? What is your Unique Selling Proposition (USP)?
5. What are the barriers to entry? How are you going to overcome them and how do they stop others entering the market?
6. How many competitors do you have and of what quality are they?
7. How big is your market in monetary terms?
8. Is the market growing or shrinking and how fast is it doing so?
9. What percent of the market do you believe you could gain, what assumptions are you basing this on?
10. What type of business would this be? Is it a lifestyle business or are you going all the way to an Initial Public Offering (IPO)?
11. How much would it cost to get started?
12. Do you plan to use debt capital or raise investment? If so, how much and what type?
13. Do you plan to sell your company or go public - what is the exit strategy for you and your investors?
14. If you take on investment, what Return On Investment (ROI) can you offer your investors?

Don’t start writing a detailed business plan too early in the process or it can result in wasted time producing works of fiction. At first, your only issue is to decide: “Am I interested in pursuing this business opportunity any further?”

If the answer is yes, then it’s time to start working on your business plan.

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