How Do I Perform an Opportunity Analysis?

An opportunity analysis evaluates your business' position in the market, usually with the intent of determining where money can be made and where, therefore, sales efforts should be spent. To perform such an analysis, you must honestly evaluate two things: your business and the market. You must then look for ways that your business can satisfy market demands. An opportunity analysis can be conducted independently at any time during a business' life, but is almost always part of any business plan.

Experts disagree as to whether it is best to first analyze your own business or the market. Proponents on both sides of the argument state that analyzing the sides in the wrong order can bias your opinions and outcomes. In the end, it is up to you to decide which you prefer to analyze first, bearing in mind that you need to make a conscious effort to remain open-minded and honest throughout the process. If you fail to do so, the results of your opportunity analysis will be inaccurate, and any plans you make based on those results may fail.

To analyze your business, first determine what you currently do. This may seem like a simple task, but it is not as easy as it seems. For example, a wedding planner might state that she plans weddings; in reality, though, what she does is plan events.

In order to evaluate the market, you must first look at the potential customer base. Determine how many people might buy your products, where they are, how they shop and how much they spend. Then look at your competitors. Find out how many there are, where they are, how much they charge and what the strengths and weaknesses are of each. Remember to try very hard not to over-estimate the potential market nor to under-estimate your competition.

Now that you know yourself and the market, you can complete your opportunity analysis by determining where you fit in. If you find a strong need for the products or services you can provide and you have few or no competitors, document this fact — and consider yourself lucky. Most likely, you will find that you will be competing with others if the products or services are in demand.

If this is the case, decide how you can stand out. This might be by being less expensive, more exclusive or offering related services. The wedding planner, for example, might determine that, while there are many wedding planners in town, there are no corporate event planners. This might lead her to offer those services as well, or even to completely change her business model.

Above all, the intent of an opportunity analysis is to ensure that there is a viable market for your products or services. If you find you have no competitors, reanalyze the market. It's possible you've been the first to find a new opportunity; it's also possible that you're over-estimating the need for or profitability of the offering.