The discovery of the entrepreneurial opportunity is the first and most important phase of the entrepreneurial process.
In this stage, the entrepreneur identifies a possible new product or service to introduce to the market at a profit. An idea is developed into a business form, which often involves serving customers differently and better. During the discovery phase, an opportunity is identified and evaluated. It is critical because it sets the stage for developing a business plan, procuring the required resources, and establishing a new venture dedicated to the exploitation of that opportunity.
Sometimes, especially for technology-based opportunities, the discovery of the entrepreneurial opportunity gets confused with the pursuit of an invention or technologically challenging idea. Just because an idea may be radically new or have the potential to move a knowledge field forward does not necessarily make it ripe for entrepreneurial discovery. An idea may be technologically advanced and bring the admiration of peer scientists, however, there needs to be a market in which customers would be willing to pay for a new product or service. It is even trickier when the product or service is truly novel, and customers do not yet know about it: how can one estimate a market that does not yet exist?
Evaluating the entrepreneurial opportunity is a key element in the entrepreneurial process because that is the time to determine whether the particular idea is worth exploring further and whether it realistically can generate sufficient revenues and profits. The questions that need to be answered at that time include:
• What is the market need that the new product or service has to meet?
• What market research should be performed to determine the need?
• What competition exists for that product or service?
• What resources are needed to bring the product or service to market?
• How can such resources be marshaled, e.g., through angel or venture capital, partners, existing companies, existing entrepreneurial infrastructure in small business incubators, universities and government agencies?
Successful entrepreneurial endeavors in technology areas combine a sound innovative idea with heavy footwork in the areas of organization, marketing and finance. Often inventors are focused on the technological achievement rather than the organization that is needed to bring it successfully to market. A true entrepreneur, in contrast, is dedicated above all to the new venture: the implementation of the idea in an organizational form and its survival and growth, even if that means the invention is modified or scaled down to make it economically feasible. Painstaking market research, often through interviews and focus groups, is needed to critically evaluate the opportunity. Knowledge of entrepreneurial finance helps navigate the process of applying to sources of capital and bootstrap on minimal funding in the meantime.
In summary, entrepreneurial business knowledge and skills are needed as much as an innovative technical idea in order to get a new venture off the ground. Successful entrepreneurship that can create jobs and improve the economic climate is most often the product of thriving teamwork between visionary inventors and detail-oriented and erudite business specialists.
Ivan Manev, a scholar in international business and entrepreneurship, joined the faculty of the University of Maine in 1997 and serves as dean of the Maine Business School.