In this article, I give you the main differences between an idea and an opportunity.
As I’ve taught innovation to hundreds of entrepreneurs and executives, I’ve noticed a lot confusion between the two terms.
It’s not just theory.
The confusion has practical impact: It affects how they make decisions about the kind of business, product, or service they should make and invest in.
So, let me explain the distinction.
What’s a business idea
A business idea refers to a concept for a new product or service that has the potential to generate revenue and create value for your customers.
An idea is something that comes from our minds. It may or may not have a clear market or business model in mind.
What’s a business opportunity
A business opportunity refers to a favorable set of circumstances or conditions that exist in the market or industry, which can be leveraged to create value and generate a profit.
An opportunity comes from observations and analysis. It’s based on identifying an unmet need, a gap in the market, or a change in consumer behavior, among other factors.
Read more: If you’re interested in understanding the nuts and bolts of a business opportunity, have a read at my reflections on what’s a business opportunity.
Business ideas vs. Business opportunities
As you understand, business ideas and business opportunities are different.
An idea is the spark of creativity that gives a vision for a business or product, while an opportunity is the a set of circumstances in which an idea can be turned into a successful business.
Here’s what it means for an entrepreneur:
It’s possible to have what seems to be a great business idea, but if you haven’t identified a good business opportunity, your idea won’t succeed. You won’t turn it into a strong business.
You could also stumble upon what seems to be a good opportunity, but if you can’t find a feasible and viable idea to go after it, it’ll be difficult to capitalize on the opportunity.
Ideas vs. opportunities, which come first?
In The Opportunity Lenses, I make the point that an opportunity should be the first step to building a business or a product.
It is possible to reverse engineer finding an opportunity for an idea, but it is much harder than going after a well-identified opportunity.
Things can be more complex, though…
Often, when someone has an idea, this is both the expression of a business idea and a business opportunity.
What to do then?
If you’re in that case, force yourself to make the distinction. Which part is the opportunity (the favorable circumstances)? Which part is the idea (the concept for a product or a service)?
The key differences between a business idea and a business opportunity
If I compare an idea to an opportunity, I can see differences on three factors:
- A business idea is a concept for a new product or service
- A business opportunity is a situation or market gap that can be exploited for potential profit.
Where it comes from:
- A business idea originates from our imagination.
- A business opportunity comes from observations of a gap in the market.
Assessing its potential:
- A business idea is good if it is technically feasible, commercially viable, and there is a market opportunity.
- A business opportunity is good if there’s growing demand, not too much competition, and it has the potential to be exploited effectively by the company.
You can see that the idea provides the direction and vision for the business, while the opportunity provides the context in which the idea is being implemented.
An analogy to understand the distinction between a business idea and a business opportunity
Let me use an analogy (from the world of farming) to explain the relationship between a business idea and a business opportunity.
Think of a business idea as a seed and a business opportunity as fertile soil.
- The seed has some potential to grow, but.. without fertile soil, it cannot take root and flourish.
- A business idea has the potential to be the start of a successful business, but without a good business opportunity, its potential cannot be realised.
In farming, the fertile soil is the environment that’s needed for the seed to grow. In business, an opportunity are the market conditions that must be favorable for a business idea to succeed.
Let me push the analogy further:
- A farmer needs both a good seed and fertile soil to grow its crops.
- An entrepreneur needs both a strong business idea and a business opportunity to start a successful business.
So, just as a farmer needs to choose the right soil to grow its crops, an entrepreneur needs to go after the right opportunity to grow its business.
Going deeper into business opportunities
It was just a quick dive into a key distinction in business.
As we’re reaching the end of this article, I’d like to tell you about my latest book: The Opportunity Lenses.
I wrote the book to share all my insights on how you can identify and choose the big opportunities that you can go after to grow your business or your next product.
You’ll find good tools and tips to help you find new opportunities. So, have a look at The Opportunity Lenses.