Friday, December 31, 2010

SMEs - types of opportunities

The starting point for me with writing this document was Prof Mark Casson from the University of Reading on the UK.

As an economist he wanted to know how many opportunities there were and who decided who got which opportunities.

I did a little desktop research as I found the question intriguing. My research revealed the following. Opportunities vary in complexity. Therefore the skills, knowledge and experience needed to sell fruit to people at a taxi rank in a developing country is minimal. However, at the other end of the scale, identifying two companies for a merger, and then succeeding in achieving a merger between the two, requires a high level of skills, knowledge and experience.

So the first thing to note is that opportunities can be graded from extremely simple through to extremely complex. Similarly, the simpler the opportunity, the more of them there are, and the converse is also true for complex opportunities.

The second thing to note is that as complexity increases so too does the profitability in respect of both % and actual value. While you may be selling oranges at the taxi rank for US $1, the merger could be a US $10bn deal.

Therefore the question must be asked as to whether you are looking for simplicity or complexity when looking for a new business opportunity?

Bear in mind that your ability to handle complexity will be informed by your education and experience.

How complex is your business or your new idea?

No comments: