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?

SMEs - the stress of start up

What do you do if you suddenly find you have sold your business? Yes, it can happen that the process is so quick, that you suddenly find yourself without a business. You have some capital, but not enough to live off, for very long. You need to live off the capital and start a new business really quick before you consume the capital. The pressure you suddenly find yourself under, can reduce your ability to think clearly and inhibit your creative processes.

A quick rule of thumb is to try and start a business that will give you some real income fairly quickly, especially if your capital base is fairly small. Remember that most businesses, particularly business-to-business sales, often have a 3 to 6 month lead time. Do you have enough capital to last 6 months? If not look for a small cash only retail opportunity. This may then cover your living expenses while at the same time preserving your capital for the development of another business with greater growth opportunities.

Once the other business is up and running you can then sell off the small cash retail business or let your wife or kids run it. Remember to ensure it has immediate sales, and no long sales cycles, which invariably means a consumer type product or service. However, even this kind of business, unless a franchise outlet, is likely to become a major source of profit overnight. However, it may generate sufficient cash flow to sustain the business into the profit zone.

SMEs - the pleasure of meeting with a true entrepreneur.

It does not happen often, but when it does you have a real great experience, a memorable one.

I have recently had the pleasure of meeting with two entrepreneurs. One is wealthy and the other is not. However, I have no doubt in my mind that they will both be in the long term. Why?They are both opportunistic! They are both looking for opportunities all the time. They are both focused on their success. They both have clear visions, and if not a written business plan, a clear mental image of one.

Talking to them both I was left with an immense sense of excitement about and with them. They sucked me in to their vision to the extent you just want to be part of it all. As an entrepreneur myself, I always enjoy to have my batteries recharged by someone with this kind of enthusiasm, and I am now running on full.

SMEs - becoming opprotunity aware

SMEs generally survive big business, simply because they find niche markets, or because they are innnovative. Research shows that innovation is generally driven by SMEs. So how do you become innovative? Is innovation about coming up with creative ideas? Not really!

First off you have to know what is going on in the market place. So to do that you need to read, and obviously if you already trade within the industry, it is a lot easier to know what is going on in the industry. Often reading customer complaints in trade journals and other magzines, as well as internet websites that are specific to the industry, often provide an insight into customer needs. Never lose sight of the fact that innovation is generally driven by customer dissatisfaction.You need to read very widely. not only to find problems, but also to find solutions.

Remember that much innovation comes from other industries. A good example is Dell and Amazon. Dell sarted selling stuff locally in the USA using telesales and then moved to selling internationally on the internet. Amazon thought, if they can sell computers, why can we not sell books? Two very different markets - one solution! So get reading and find your next big opportunity!

SMEs - the research is valid and correct

I had the pleasure, as part of my PhD research, to interview a successful business owner, as part of my fine tuning of my questionnaire. It was a pleasure because he confirmed so much of my research to date.

Key to his success has been a vision/plan on where he wants to be down the road. He reads a lot, networks at every opportunity and has done some additional skills courses subsequent to leaving school. He funded his own business by initially working in the industry and gaining experience, and then saving until he had enough money to start his own business. He is a strong believer that the point of business is wealth creation not income creation.

Finally he said that he is extremely opportunity aware, and once he has identified a genuine opportunity, he does not delay in making the decision to proceed. He does very little without seeking out possible opportunities, and he is wired for opportunities. He has learned from his peers and through studying, and has full confidence in his skills.All this is directly in line with my research to date, as this man is undoubtedly a natural entrepreneur.This leads me to my next blog. Can we create entrepreneurs?

SMEs - ideas versus opportunities

I must say I get fairly intense when people talk about ideas generation being important for developing new businesses.

IT IS NOT ABOUT IDEAS!!!! IT IS ABOUT FINDING OPPORTUNITIES!!!!!

What is an opportunity. An opportunity exists when in the process of doing our environmental scanning for our PESTEL analysis, we see that by applying our strengths to a current event in one of the environments, we can turn the event into an opportunity. If you do not have the strengths to take advantage of an event, it is not an opportunity. An opportunity is an event that you can benefit from by applying your strengths.

The problem is that most SME owners do not do a regular environmental scan. We are all exposed to the environment around us all the time through a variety of media including newspapers and television. You cannot escape it. The question however, is whether or not you simply observe, or whether you observe in the context of business opportunities.

Do you read the newspaper and think, "I could make money out of that"? Someone who does is opportunity aware, an entrepreneur. If not they are merely SME owners. Ideas are also confused with innnovation. In doing our environmental scanning and observation we often see problems portrayed. Innovation is the task of finding solutions to problems that a particular market has. It could be the product that needs to be innovated, or perhaps the process. Either way, innovation is about changing existing products and/or processes to solve problems.

Finally, successful businesses are built on solving problems, ie. meeting the needs of the market. Ideas that are generated in a vacuum are simply that - ideas. They will not make money. Needs and problems make money for the entrepreneur who solves them.

Strike the word idea from your entrepreneurial dictionary, as it will merely lead to disappointment

SMEs - opportunities for the years ahead

The big trends for the next decade or two are:
- new fuels for motor cars
- alternative power generation for electricity such as solar energy, wind energy, wave energy and geothermal energy for warming water instead of electric geysers.
- geothermal heating will be used to warm homes
- there will be new systems for refrigeration and air conditioning using old technology
- they will grow a wider range of fruit and vegetables locally in greenhouses to reduce the damage done in transporting these items around the world
- clothing will move back to natural fibres such as leather, wool and cotton- organic food will be an important issue in the future
- music CD’s will be out
- computer hard drives as we know them will be out
- wind up lights, radios, clocks, and a variety of other items will be in again particularly, but not only, in rural areas
- the cable telephone is going out, particularly in rural areas, and will be replaced by wireless systems such as GSM and CDMA type cellphones
- the Internet will play an ever increasing role in our lives including television delivery
- there will be revolutionary changes in sea and air travel, which might even look like a return to the early days
- security will intensify a lot. Travelling will initially become more difficult, particularly for developing countries, until they can comply with new passport requirements which will require the inclusion of a microprocessor chip that contains biometric data such as eye scans, blood details, DNA details and more. This is due to terrorism. Homes and cars will become more secure and home entertainment will become more and more important.
- as home entertainment becomes more important, so too will getaway type holidays to remote but secure locations closer to home
- AIDS and TB will continue to ravage developing countries. There will be many opportunities to solve the problem for government of AIDS orphans. If they are not looked after they will become a roving band of murdering thieves, as they fight to survive in a society that has not cared for them. Set up homes to care for them and educate them for their future and yours.
- facilities for old people and also for frail people will spring up everywhere in developed countries due to the baby boomers going into retirement
- SMEs will experience enormous growth and many large corporate businesses will downsize once they build the necessary trust relationships with SMEs for outsourcing. Banks will make a large shift in attitude and volume of lending to SMEs.

Rob Smorfitt

SMES - future opportunities

The question of alternative power will continue to grow in importance. So too will the issue of sewage processing. The opportunities that lie here will, I believe, become fairly substantial over the next decade or so.

The use of solar and wind power is going to become very important at a home owners level. This will also see a return to older methods of heating and cooling, in order to reduce the power consumption of the home. These technologies are already being resusciated in the construction of large buildings, so why not smaller homes too?

An effort to reduce the need for power, and to generate a certain amount of own power, could see a significant drop in the need for power from external generators such as utility companies. Initially this will be driven by "green" people, but over time it is more likely going to become a cost issue.

Go look at www.shellfoundation.org.

I believe a similar issue will arise around water and sewage. Many of us allow enormous amounts of rainwater to go to waste, and our toilet systems consume vast amounts of water. By installing a system to recycle sewage so that it creates water for the garden and also an inert compost, we can once again reduce the need for water.

These technologies are not new, but definitely underutilised. Now is the time to start building brand in these areas as these will be long term trends and not short term fads.

Rob Smorfitt