Spotting an opportunity is exciting, but not every opportunity is worth pursuing. Before investing significant time and money, you need to evaluate whether your opportunity is viable and then develop it systematically. Here's how.
Evaluating the Opportunity: Critical Questions
Is the problem real and significant? The fundamental test is whether people actually experience this problem with enough intensity to motivate action. Minor annoyances rarely sustain businesses. You need problems that cause genuine pain, incur costs, waste time, or pose risks
Talk to potential customers without pitching your solution. Ask about their challenges, current approaches, and what they've tried before. If they light up and say "yes, this is exactly my problem," you're onto something. If they respond with "I guess that could be useful sometimes," you probably aren't.
Is the market large enough? A real problem experienced by twelve people isn't a business opportunity. You need enough potential customers to build a sustainable venture.
Estimate the market size roughly. How many people or businesses experience this problem? What's the total addressable market? Even if you capture a small percentage, would that support your business goals? A niche can be profitable if it's a niche of ten thousand rather than ten.
Can customers afford your solution? The problem might be real and the market substantial. But if your target customers can't or won't pay enough to make your business viable, it's not an opportunity.
Consider willingness to pay alongside ability to pay. Are customers currently spending money on inferior solutions? That's encouraging. Are they tolerating the problem rather than paying to solve it? That's a red flag. Price sensitivity varies dramatically across markets and customer segments.
Do you have a credible right to win? Markets with real problems and paying customers attract competition. What gives you an advantage? This might be specialised expertise, proprietary technology, or better distribution. It could be a deeper understanding of customer needs.
If your only advantage is "we'll execute better" or "we'll work harder," that's not sufficient. Everyone believes they'll execute well. You need structural advantages that are difficult for competitors to replicate.
Is the timing right? Too early and you'll spend resources educating the market before it's ready. Too late, and you'll struggle against entrenched competitors. The best opportunities often sit in that sweet spot where the problem has become acute, customers are ready for solutions, but the market isn't yet saturated.
Look for enabling factors that make now the right time: regulatory changes, technological advances, demographic shifts, or cultural movements.
Can you start small and test? The best opportunities allow you to test core assumptions without betting everything. Can you validate demand with a landing page? Build a minimum viable product? Start with a small customer segment before expanding?
Opportunities that require massive upfront investment before any validation are riskier. Look for paths that let you learn and adapt.
Developing the Opportunity: From Concept to Reality
Once you've determined an opportunity is worth pursuing, systematic development increases your chances of success.
Define your customer precisely. "Everyone" is not a target market. Get specific about who experiences this problem most acutely. Create detailed customer profiles: What are their demographics? What's their day look like? What other products do they use? What are their goals and frustrations?
This specificity helps you make countless decisions about product features, pricing and messaging. When you know exactly who you're serving, you can serve them exceptionally well.
Articulate your value proposition clearly. In one or two sentences, explain what you're offering and why it matters. This isn't your mission statement or vision. It's a clear statement of the value you create.
Test this with potential customers. Do they immediately understand what you do and why it's valuable? If you need five minutes of explanation, you haven't clarified it enough. Great value propositions are instantly comprehensible.
Map the customer journey. How do customers currently discover they have this problem? What do they do about it now? How would they find your solution? What would the buying process look like? What happens after they purchase?
Understanding this journey reveals obstacles you'll need to overcome. It might expose that your biggest competition isn't other companies but customer inertia or lack of awareness.
Start with a minimum viable product. Don't build the complete vision immediately. Identify the smallest version of your solution that addresses the core problem. This might be a simplified product, a single service offering, or even a manual process.
The goal is learning, not perfection. Get something in front of customers quickly so you can gather real feedback rather than operating on assumptions. You'll be wrong about some things. Better to discover that with a simple MVP than after investing heavily in a full solution.
Establish clear metrics for success. Define what progress looks like. This might include customer acquisition numbers, revenue targets, engagement metrics, or retention rates. Having concrete goals helps you distinguish between real traction and wishful thinking.
Be honest about what these metrics tell you. If you're not hitting targets, that's information. Maybe your pricing is wrong. Maybe your target customer isn't quite right. Maybe the problem isn't as acute as you thought. Use metrics as feedback, not scorekeeping.
Build feedback loops with customers. Stay in constant conversation with users, especially early adopters. What do they love? What frustrates them? What features do they need? What would make them recommend you to others?
Early customers are incredibly valuable. They're willing to tolerate imperfection in exchange for solving their problem. They'll tell you what really matters versus what's just nice to have. Listen and adapt.
Identify and test your key assumptions. Every business plan contains assumptions. List these and test the riskiest ones first.
If your model requires 10% conversion but you're getting 2%, that's critical information. Better to learn that early when you can pivot.
Plan your resource runway. How long can you operate before needing to generate revenue or raise funding? What milestones do you need to hit within that timeframe to validate the opportunity? What happens if you don't hit them?
Having a clear timeline creates healthy urgency while preventing panic decisions. You know how much runway you have for experimentation before needing to show real traction.
Build a learning plan, not just a business plan. Traditional business plans often become obsolete. Reality rarely matches your initial assumptions. Instead, create a learning plan: What do you need to learn? How will you test it? What will success and failure look like?
This approach keeps you focused on validation. Don't fall in love with your original vision.
Red Flags to Watch For
You're building features nobody requested. If you find yourself adding complexity, you're likely solving problems that don't exist.
Customer acquisition is much harder or more expensive than expected. If you're struggling to find customers or the cost of acquiring them exceeds what they'll pay, reassess your approach.
You keep pivoting without learning. Pivoting based on evidence is smart. Pivoting repeatedly because nothing works might mean the fundamental opportunity isn't viable.
You're the only person excited about this. If you can't find customers, advisors, or team members who share your enthusiasm, that's concerning. Passion alone doesn't validate an opportunity.
The Ongoing Process
Evaluating and developing opportunities isn't a one-time exercise. It's an ongoing practice. As you learn, you'll refine your understanding. Stay curious and remain flexible. Let evidence guide your decisions more than your initial assumptions.
Successful opportunities emerge when founders combine good judgment with a willingness to adapt. Start with a promising opportunity, test it and develop it. And be honest about what you discover along the way.