By Dr. Ken Barnes

“…Classical microeconomics teaches that for any meaningful production process to take place, there is the need for the requisite factors to be assembled and be present. Classical economist classified these factors as labor, made up of time, efforts both mental and physical, ample gifts of nature like water, air and geographical location, Capital comprising human capital, startup and working capital, and other machinery tools and heavy duty equipment. It is an entrepreneur’s job as the fourth factor of production to organize all the other factors.

Modern proponents like Barringer and Ireland (2012), have broadened the role of the entrepreneur and have accorded that factor more responsibility. To these proponents, the success or failure of a new venture hinges on how good the entrepreneur is to cover all the basis. To Barringer and Ireland, therefore, the basics of starting a business include entrepreneurial passion, feasibility studies, and analysis, identification of customer base, knowledge of the industry and good capital management (Barringer & Ireland, 2012).

Role of Passion

Many entrepreneurs have started businesses with a thousand dollars or less. Some have started businesses at the spare of the moment and others have started businesses after exhausting all the laid down processes, yet one common characteristic feature binds all of them, the passion to succeed (Schawbel, 2012).

Passion is that which carries the young entrepreneur through the emotional ups-and-downs and the minor crises that come with business ownership. When things get tough, the young entrepreneur needs a constant reminder of the motivation behind the venture – and it is much easier to keep going if you’re working for something that one truly believes in and is passionate about. It is passion which pushes the entrepreneur to work long hours, make difficult phone calls and do the additional research that will make the difference. Passion drives the business owner to speak the same language as the clients, sleep where they sleep and relate to them more easily (Archer, 2009).

Opportunity

An opportunity in business is a favorable set of circumstances that creates a need for a new product, service, or business. Entrepreneurs recognize an opportunity and turn it into a successful business. some business ventures are externally stimulated while others are internally stimulated. Under the external stimulus, an entrepreneur decides to launch a business, searches for and recognizes an opportunity, and then starts it as was the case of Amazon.com. Under internal opportunity stimulation, an entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it (Barringer & Ireland, 2012).

Regardless of which of these two ways an entrepreneur starts a new business, opportunities are not easy to detect. Identifying a product, service, or business opportunity that a novelty is difficult and demands a lot of ingenuity, creativity, curiosity and being inquisitive. One common mistake entrepreneurs make in the opportunity recognition process is picking a product, service or commodity already on the shelves and trying to vary it slightly in quality, function or packing under a new business venture. The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that an entrepreneur wants to make and sell (Barringer & Ireland, 2012).

Idea

An idea is a thought, an impression, or a notion. An idea may or may not meet the criteria of an opportunity. Many entrepreneurial ventures fail despite all the hard work from the entrepreneurs because there was no real opportunity to begin with. Before getting excited about a business idea, it is crucial to understand whether the idea fills a need and meets the criteria for an opportunity (Barringer & Ireland, 2012).

The Differences

It is important to understand that there is a difference between an opportunity and an idea (Barringer & Ireland, 2012). Paul Morin(2011) of CompanyFounder.com in an essay on the differences between business opportunity and idea wrote that the inability of an entrepreneur to differentiate between the two does not bring enough financial rewards and success to all the hard work in entrepreneurial ventures (Morin, 2011).

Adam Toren (2010) in an article titled ” Great Entrepreneurs Know the Difference Between Idea and Opportunity” wrote that an idea is just an idea. until entrepreneurs give a structure to it through a sound strategy. An opportunity, on the other hand, is filled with promise and potential and needs an entrepreneur to organize their ideas and march them to action. According to Toren, True opportunities are a treasure; extremely rare and exceedingly valuable. He advocates for strong business planning as a way of turning an idea into opportunity (Toren, 2010).

Another proponent, Tom Byers(2006), explains that all business opportunities are based on ideas, but most business ideas do not represent authentic business opportunities. The difference between opportunities and ideas are that opportunities are ideas that will result in a successful business. The first step to identifying business ideas will be to generate suitable ideas (Maxx, 2010).

Feasibility Studies

Feasibility analysis is defined as the process of determining if a business idea is viable. The most effective businesses emerge from a process that includes the following sequence of events; recognizing a business idea, testing the feasibility of the idea, the writing a business plan, and the launching of the business. If a business idea falls short on one or more of the four components of feasibility analysis, it should be dropped or rethought through. Many entrepreneurs make the mistake of identifying a business idea and then jumping directly to writing a business plan to describe and gain support for the idea…”

Culled from a presentation made to young business students of Entrepreneurship interested in going into business.

Dr Ken Barnes is a Management Consultant with Specializations in Entrepreneurship and Business Management, Marketing and Human Capital Development.