#1. The venture or business should be of high strategic value to a potential acquirer
The venture should be of high strategic value to a potential acquirer
• Pharmaceutical firms acquire entrepreneurial firms for more than what it is
worth because it is of strategic value to them
• Many times technology startups that have accumulated losses and modest
sales get acquired for many times they are worth
• Strategic value comes from having important customers, distribution, or a
proprietary technology that has strategic value to an incumbent in an
industry
#2. The market should be large and growing while evaluating whether an idea is an opportunity or not.
Factors to consider when identifying opportunity?
• Market
– Large market size and growing
– Identify a market niche that provides high value to customers
– Customers are reachable and can be addressed
– No major brand loyalties
– The payback to the customer can be identified and is repeatable
– The benefit to the customer in monetary terms exceeds or at least covers your costs plus a reasonable profit
– Potential for product expansion and being a market leader (20% share)
– Industry should neither be highly concentrated nor highly competitive
#3. Upfront capital and R& D requirement costs should be high while evaluating whether an idea is an opportunity or not.
#4. Cash flows simply put is the difference between the cash that flows in and cash that flows out.
#5. An electrician observed that grocery stores in his area are running successfully and wanted to open one too. He opened one but was not able to make any profits. Why?
#6. Successful entrepreneurship requires the ability to balance technical knowledge and market knowledge.
#7. Why do we need to evaluate an idea?
#8. How to identify whether an idea is a opportunity or not?
Opportunity discovery needs some luck too.
• The odds can be managed once it is discovered.
• We need to remember to be prepared for the opportunity. Just luck will not be enough to achieve success.
• Also, once an opportunity is discovered (due to your prepared mind), then you need to know what to do with it.