Innovation, creativity, resilience, persistence, ambiguity tolerance, and risk tolerance are the essential traits of a successful entrepreneur but above all opportunity gap recognition is an indispensable trait that is essential for success and growth of an entrepreneur. Entrepreneurial alertness as a cognitive trait enables an entrepreneur to look at things in a bigger picture and from multiple perspectives to identify and map the competitive imperfections in the market that create an opportunity gap. According to Krinzer, ‘Entrepreneurial alertness does not imply that individuals are systematically and rationally searching their environment for competitive imperfections. Rather, these individuals become aware of these competitive imperfections through their day‐to‐day activities’ (Krinzer).
Innovative Business ideas undoubtedly are of considerable importance but unless those ideas are transformed into opportunities business cannot thrive. Let’s look in detail at the difference between business ideas and business opportunities.
An idea is a mere thought, impression, or a notion. However, business opportunity is the ‘suitable set of various different factors that creates a need for a new product, service or business’.
Their difference lies in the fact that opportunities have the ability to create value however ideas cannot do so. Ideas are just abstract versions, a person can dream or presume with ideas. In contrast, opportunities need handwork and deal with the practicality. Investors are not interested in ideas, they invest in business opportunities.
In entrepreneurship ‘Window of opportunity’ is a viral term, used in context of recognizing opportunities. It is defined as:
‘A window of opportunity is a short time period during which an otherwise unattainable opportunity exists. After the window of opportunity closes, the opportunity ceases to exist’
For the short time this window is open, it is controlled by two important factors, ‘market need’ and availability or affordability of solution. When the window of opportunity opens up an entrepreneur has chance to bring innovation in market, in the form of a new product or service and generate whopping revenue. When market saturation occurs that window of opportunity closes but a new window of opportunity opens up. When a window of opportunity exists, for an entrepreneur it’s the ideal time to act.
A good opportunity has following four traits:
- Attractive: An opportunity should be appealing to the public (off course to the entrepreneur too) and it should have the ability to address problems of a wide audience.
- Timely: Opportunity should be recognized and exploited at the right time. According to Ray Kroc principle of success, right time is one of the two main keys of success. He said that: ‘The most important requirement for the major success are: First, Being in the right place at the right time, and second, Doing something about it’ (Ray Karoc).
- Durable: Opportunity should be durable. Its impact shouldn’t be transient. An entrepreneur should give a birds’ eye view, to this trait of an opportunity before exploiting it because an opportunity should have enough time to create value in market.
- Create Value: Value is the worth of something. A good opportunity has the ability to create value in the market.Now this is the right time to address the question that how to find an opportunity? The answer is simple, ‘Every Problem is an opportunity’.
For recognizing opportunity, an entrepreneur should be able to identify the environmental trends that play a vital role in creating an opportunity gap. There are four identified trends that create opportunities which are enlisted in the chart below:
1. Society or social trends: The social forces largely influence creating an opportunity gap. These forces include cultural and ethnic beliefs of people, demographic alterations, and peoples’ way of thinking.
2. Economic: Economic forces effect generating ideas and creating opportunities. It includes the state of the economy, income of the target audience and the spending patterns of consumers.
3. Technological Advances: What are the emerging trends in technologies and how old technologies can be modified to serve the new purpose are important aspects to be considered while recognizing opportunities.
4. Political Actions and Regulatory Changes: Changes in political environment and new rules and bills passed also effect the opportunity gap generation.
All these environmental trends acting together generate an opportunity gap (difference between what is available and what is possible), which ultimately is a gateway for an entrepreneur to think of new ideas and solutions to fill that opportunity gap.
Opportunity recognition or perceiving the possibility, is largely centred upon the personal characteristic of an entrepreneur. Among them entrepreneurial alertness is most important, which is the ability to look at things from different perspectives to map the overall process of opportunity recognition and exploitation. Besides that the person who has an innovative and creative mind is better able to fill the opportunity gap. To most people taking big risks is a challenge so prior experience helps the entrepreneur to better understand the feasibility and applicability of an opportunity. Networking or making and using contacts are other important qualities to help recognize business opportunities. Some rational fellow said, ‘If you want to achieve something bad tell this to people around you, sooner or later in life they’ll show up and help you achieve it’.
For seeking opportunities you start from your contacts and proceed to their contacts. By doing this you will definitely end up finding someone who will help you in your area of interest. Networking therefore is called a ‘hidden job market’. So, exploiting and developing networking and relationships are ways of advancement in professional life.
Corridor principle is another driving force to recognize opportunities. This principle is reverse of conventional linear venture and proposes that when an entrepreneur starts a venture it broadens his outlook to recognize other opportunities which he otherwise wouldn’t be able to recognize if he didn’t take the first step of starting the venture. This principle is more explicitly defined as:
‘The mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture’.
Therefore, opportunity recognition depends upon the personal characteristics of an entrepreneur that includes prior experience, networking, creativity, entrepreneurial alertness and corridor principle.
To sum up all, opportunity recognition is a process that depends upon environmental trends (social, economic, political and technological) and personal characteristics of an entrepreneur. An assortment of these two keys can unlock a gateway to recognize opportunities, to fill that gap and enjoy the perks of entrepreneurial successes.