One of the many reasons why startup businesses fail is often the confusion of entrepreneurs about two very important terms: business ideas and business opportunities. What is the difference between these two terms?

Both terms are highly used by entrepreneurs in the startup process. However, it is notable that businesses are often started only with the idea that they do not convert or transform into a real business opportunity. Because of that, business startups immediately begin to suffer after the startup stage.

This suffering is manifested through a lack of customers and, therefore, a lack of money for financing the normal business operation.

An entrepreneur is a person who can see opportunities where all other people see problems. That is the most significant advantage of an entrepreneur.

Key Concepts

Let’s start with defining key concepts: a business idea and a business opportunity.

What is a Business Idea?

All businesses result from a problem or market need discovered by the entrepreneur. However, a business idea originates from an individual problem that the entrepreneur has discovered for himself. In such a frustrating situation, he comes up with a business idea. However, that frustrating situation is personal to the entrepreneur.

Does anyone else, besides the entrepreneur, find themselves in such a frustrating situation? If the answer is no, it is still not a business opportunity, even though the business idea is good. If the answer is yes, it is necessary to check the business idea to see if it represents a business opportunity.

A business idea is something that might solve a market problem or a customer’s want or need. Perhaps your business idea will be recognized and adequately valued by the market. But here we say “maybe,” not for sure. We are not 100% sure that this will be the case. Even you, as a future entrepreneur, are not 100% sure this is so. Therefore, the business idea is only an assumption that it will solve a problem, need, or desire in the market.

So, a business idea is a concept that could solve a problem, satisfy customers’ needs or desires, and be used for financial gain but hasn’t been validated in the market. It is the very early stage of a potential business. As you can see, we are talking about “could” and “potential business,” but we don’t say “can” or “will.”

Entrepreneurs with business ideas must conduct thorough research and planning to transform these ideas into viable business models.

Business Opportunity

A business opportunity is a more concrete proposition that has demonstrated potential for success and profitability. It is usually accompanied by a more concrete plan and strategy, market research including potential customer base, competitive analysis, and financial projections. In other words, a business opportunity has already been validated through its business model in the market and has a higher chance of success than an idea. You can use the business model canvas from Strategyzer to validate your idea and transform it into a business opportunity for a potential future venture.

Business opportunities are often based on existing market gaps or consumer problems that need solutions. Identifying these gaps and problems can lead to innovative and successful ideas.

However, not all business opportunities are created equal. It is crucial for entrepreneurs to carefully evaluate each opportunity before investing time and resources into it. This evaluation includes conducting market research and understanding the market demand, competition, potential risks and challenges, required resources, and projected revenue.

So, entrepreneurs who identify business opportunities have the advantage of working with concepts that have already shown some level of market demand or interest.

How Does This Work in the Practice When It Comes to Business Ideas and Business Opportunities?

Many companies (I think about successful businesses) are simply the results of the problem or need that exists on the market and is identified by an entrepreneur. However, on the other hand, many companies result from the personal problem of an entrepreneur who, in such a frustrating situation, comes up with one or more business ideas. But, this frustrating situation at that moment is known only to him. Only he feels frustrated by his problem.

Are there some other people besides entrepreneurs who find themselves in the same frustrating situation?

If the answer is no, although these ideas are brilliant, they aren’t business opportunities ready for successful businesses. So, according to this, a business idea and a business opportunity are two different things.

On the other side, if the answer is yes, it is necessary to check if the business idea is an excellent business opportunity.

You need to validate each of your ideas before they can become a business opportunity. Here is how to validate your business ideas. A successful business venture first develops business concepts and business models around an idea and tests them on the market to validate that a business idea is a great opportunity. If testing such a business model shows the potential for growth and sustainability, enough consumer demand and profitability, then there is a strong opportunity.

How to Transform Business Idea Into Opportunity?

As you can see from what I said earlier, the business idea is:

• known personally only to the entrepreneur,
• based on their own entrepreneur’s frustrations and problems,
• an innovation by the entrepreneur.

However, is an idea great only because it is excellent for you? Probably not. Not every idea can be translated into a successful business.

In the business world, one fundamental principle says:

If an entrepreneur personally knows at least ten other people who are eager enough to buy a product or service as a result of a business idea, with proper price and other conditions, there are probably at the market additional hundreds, thousands, or millions of potential customers who would buy the same products and services if they know about it.

So, to transform your ideas into business opportunities, you need to bring another person into the process. That person is the customer.

Business opportunity = Validated business idea = business idea + customers

So, it is not enough to have business ideas. You need to do many things additionally. Look at what you need to do related to your ideas.

What Criteria Need to Meet Specific Business Ideas to Become Business Opportunities

An idea can become a business opportunity only if it meets all the following criteria:

• The business idea is attractive to customers.
• Customers can afford products and services that result from the specific business idea.
• An entrepreneur can turn a specific business idea into a business reality.

If the idea is not attractive to potential customers, it is not a good business idea. Because of that, you need to check whether there is a real need on the market for the products or services that result in your initial idea.

On the other hand, if the business idea creates an expensive product or service, potential customers cannot afford it. This is also a bad idea, at least now. And lastly, you, as an entrepreneur, will need to implement the business idea, and you must have specific knowledge and skills to realize it in practice.

Conclusion

Turning a venture idea into a viable business opportunity requires market research, pivoting, and testing on the market. It takes individual-level factors (skills and capabilities) and external factors (favorable combination of circumstances) to turn a venture idea into a venture opportunity.

A venture concept can only become a venture opportunity if a favorable combination of circumstances makes it desirable and feasible. These circumstances can include changes in the market, advancements in technology, or shifts in consumer behavior.

So, a business opportunity is not the same for every entrepreneur, as individual perspectives and goals can vary. It is important for entrepreneurs to thoroughly research and understand their target market, competition, and potential customers in order to determine the most viable business opportunity.