Identifying new business opportunities begins with recognizing that they are a subset of a larger process, a SWOT analysis, which defines strengths, weaknesses, opportunities, and threats. A SWOT analysis should be a core part of your annual strategic planning and business review process to ensure you have a firm understanding of each of the four key areas: strengths, weaknesses, threats and opportunities.
Why start with a SWOT analysis?
Simply focusing on opportunities without understanding the strengths available to leverage these opportunities—or the weaknesses and threats that could impede effectiveness—can be counterproductive, putting desired outcomes at risk.
For example, while you’re pursuing a particular opportunity, another organization may be striking at the heart of your organization or industry. We saw that with the rise of streaming services like Netflix that essentially put Blockbuster out of business. At its peak, Blockbuster had thousands of stores globally, and earned billions of dollars in revenue. But that came to a crashing end when a competitor with a very different business model upended the industry. We all know how that story ended for Blockbuster.
So, before you can focus on opportunities, you really need to understand and be confident in your assessment of your strengths, weaknesses, and threats.
Every idea deserves a chance
In looking at ways to build, expand and secure the future of your business, give every idea a chance. What I mean by that is don’t allow current restrictions or hurdles to get in the way. It’s all about positive energy which creates possibility. Imagine the tremendous barriers to entry that Netflix faced in the late 1990s. This was a model that many people believed could never be successful.
To get started, I like to go offsite, someplace where I’m not going to be interrupted and can feel energized to allow the creative juices to flow. If you’re doing this as part of a team process, the same environment should be encouraged, and the one rule is that every idea has a chance. I write down and map out all ideas on a sheet of paper, then draw lines to connect the dots between different ideas to create a visual. Once I’ve thoroughly vetted all of these ideas, I’m able to narrow the list down so that one or two really stand out from the rest.
7 criteria for identifying opportunities
The next step is to apply your own business criteria to test the viability of each idea that made the cut. I use the following, but feel free to add other criteria to your process, as well.
- Passion - Which ideas do you feel most passionate about? Without passion, it’s difficult to harness the perseverance and persistence required to see the opportunity through. Each new idea or endeavor will be accompanied by its own unique challenges and pitfalls, so passion is the juice that sees it through to fruition.
- Return on investment - While it’s great to be charitable, good ideas should make money for your business. There’s an opportunity cost to pursue any venture and knowing what will satisfy your company and/or stakeholders is critical.
- Define when enough is enough - Most entrepreneurs that I know never like to quit. However, knowing when “enough is enough” is important. If an idea draws significant talent, money, and other resources away from your core business, it may not be the right opportunity. Set some specific criteria around what your “walk away” point looks like, so you know when to move on to other ideas.
- Timeframe – Time-to-market matters. If it takes too long to get to market, your idea may no longer be relevant, or a competitor could beat you to the punch. So be smart about timing by developing a realistic timeline for all perceived opportunities.
- Organizational needs - In discussing opportunities that are within your areas of business expertise, ask yourself how this idea adds to or enhances your organization’s current product(s) or suite of services. How does it fit in? How does it contribute to organizational grow?
- Client needs - While client or consumer needs may seem self-explanatory, many business owners forget to ask: Is there a market for this? Am I solving a need with a product or service that will help add value to my client’s life? Does it save them time? Does it make something easier for them or create a level of happiness? While I’m not always a proponent of focus groups (New Coke versus OriginalCoke), there are situations where they can be immensely valuable. You always need to be thinking about how this new product or service will add value in the marketplace.
- Synergy – Lastly, and this is the hardest one to predict, does the new opportunity create synergy with your existing product or service lines? What value does it add to existing products or services, clients or end-users, and your own team members? I like to use the formula: 1+1 = 3. If it does provide exponential value, it’s a bonus, not a necessity.
While new ideas are the life blood of any dynamically growing organization, having a process in place to vet those ideas and understand where they fall within your SWOT analysis is critical for long term business success.
Investment advice offered through Planned Financial Services, a Registered Investment Advisor.