Tips and trapsBusiness ideas are interesting, exciting stuff to build a business by, but they are worth nothing (in general) until somebody builds a company around them.

Opportunities are the best of the ideas. An idea is just that. An opportunity is an idea you can implement. You have the resources, and know-how to do it. There is a market. You can make money on it, and the investment will be worth it.

Good business planning filters the opportunities from the ideas. Apply the planning process to the idea to make it an opportunity. Determine the market strength, what exactly is needed, how long it will take, how much money it will take, what people are required. Lay it out into steps.

Not all ideas can survive the rigor of planning. Some fall by the wayside, ending up as interesting ideas that aren’t really opportunities.

Some of the factors that count:

  • Risk vs. return. Is what it takes to pursue this idea worth the likely return? This is not scientific. It depends a lot on your business’ attitude about risk, and what other opportunities are available.
  • Realism. How realistic are the forecasts? Give them a good look. Are you pushing the forecast to make things work.
  • Resources. What will really be required? Think of people, know-how, skills, compensation, implied risk (paying people to build this company up). What are the start-up costs, including expenses required and assets required?
  • Market potential. The heart of your sales forecast is the market potential. How much do people want or need the business offering?
  • Business potential. How much money can the business make? How will this impact the business? How big is this opportunity, overall?
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Tim BerryTim Berry
Tim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.