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Lesson 2 of 6Ideas and Opportunities for New Ventures
Unit 2 · Lesson 2 of 6

Ideas, Opportunities and Trends

An idea becomes an opportunity only when enough customers will pay for it, the timing is right and the entrepreneur has the resources to act, and economic and social trends are a rich source of such opportunities.

5 min read1 quick check8 practice questionsAsk AI about this →

Key things to remember

  1. 1Idea = a thought about a possible product or service. Opportunity = an idea that can become a profitable business.
  2. 2The four opportunity tests: customers willing to pay, can be acted on, right timing, available resources.
  3. 3The same need can be satisfied in different ways (Western or traditional medicine; organic or conventional produce), and each way can support businesses.
  4. 4Economic trends (youth income, gig economy, online shopping) and social trends (aging population, cultural diversity, sustainability) create new needs and wants.
  5. 5Ventures succeed by spotting an unserved need or want and responding to it before others do.

Ideas are cheap. Everyone has had one: a better snack, an app, a T-shirt design. But most ideas never become businesses, and many businesses that do start fail because the idea was never really an opportunity. Before you put money and time into a venture, you need to check whether the idea has the four things that turn it into an opportunity. This lesson shows you how, and where to look for ideas that are likely to pass the test.

What turns an idea into an opportunity

An idea is simply a thought about a possible product or service. An opportunity is an idea that can be turned into a business that makes money. To count as an opportunity, an idea must meet four conditions.

dog walkingphone casestutoringsnow removalcustom T-shirtsmeal-prep appFilter 1Real need or wantDoes it solve a problem peopleactually have?Filter 2Enough paying customersWill enough people pay a pricethat covers costs?Filter 3Doable with resourcesDo you have the money, skills,time and supplies?Filter 4Right timingIs the market ready now, nottoo early or too late?An idea must pass all fourOpportunityan idea worth pursuing
Fig 1Only ideas that pass all four tests become opportunities.
  1. Customers willing to pay: enough people want it and will pay a price that covers costs and leaves a profit. Saying "that's cool" is not the same as paying.
  2. It can be acted on: the entrepreneur can actually produce and deliver it, legally and with available technology.
  3. Timing: the market is ready now. Too early and customers do not understand it; too late and competitors have taken the customers.
  4. Resources: the entrepreneur has, or can get, the money, skills, time, equipment and people needed.
IdeaCustomers willing to pay?Can be acted on?Timing?Resources?Opportunity?
Selling hot chocolate at outdoor winter school eventsYes: cold crowds buy warm drinksYes: kettle, urns and cupsYes: events in winterYes: low start-up costYes
A student-built electric carPossiblyNo: needs engineering and safety approvalUnclearNo: far too expensiveNo
Snow shovelling for neighboursYes: busy and older homeownersYes: shovelsOnly in winterYesYes (seasonal)
Checking three ideas against the four opportunity tests.
VideoCompare the video's framework for testing an idea with the four tests in this lesson that an idea must pass to become an opportunity.Watch on YouTube

Ventures that responded to needs and wants

Successful ventures usually begin by noticing that a group of people has a need or want that nobody is serving well. Vancouver-based Lululemon grew by selling clothing designed for yoga as the activity became popular. Shopify, based in Ottawa, began when its founders wanted to sell snowboards online in the mid-2000s and found the available online-store software frustrating, so they built their own and then sold that software to other merchants. Manitobah Mukluks, an Indigenous-owned company in Winnipeg, makes mukluks and moccasins for customers who want warm, traditionally inspired footwear. In each case, the venture started from what customers needed or wanted.

The same need can also be satisfied in very different ways, and each way can support its own businesses. This is useful to an entrepreneur: you do not have to beat the existing solution head-on if you can satisfy the same need differently for a group of customers who prefer your approach.

NeedOne way it is satisfiedAnother way it is satisfiedBusinesses that serve it
Health and healingWestern medicine: doctors, hospitals, prescription drugsTraditional Indigenous medicine or traditional Chinese medicine: herbal remedies, healers, practices passed down through generationsClinics, pharmacies, traditional practitioners, herbal shops
FoodConventionally grown produce: lower price, wide availabilityOrganic produce: grown without most synthetic pesticides and fertilizers, usually at a higher priceGrocery chains, organic farms, farmers' markets
Getting to school or workOwning a carTransit, cycling, car-sharingCar dealers, transit systems, bike shops, car-share services
Similar needs met in different ways. Each approach has its own customers who prefer it.
Stay neutral
As an entrepreneur, your job is not to decide which approach is better for everyone. It is to understand why some customers choose each one, such as price, tradition, values or convenience, so you can serve the customers who share those reasons.

Worked examples

Reveal one step at a time and try to beat it to the next line.

Example 1
Maya wants to sell handmade phone charms at school for $6 each. Test her idea against the four opportunity conditions.
Example 2
Identify the trend behind each venture idea and say whether it is economic or social: (a) a study-notes swap app; (b) a service teaching seniors to use video calls; (c) an online store selling student artwork.
Example 3
The need for a healthy lunch is satisfied in different ways. Describe two approaches and suggest which student customers each would attract.

Where marks get lost

  • Treating friends' compliments ("I'd totally buy that!") as proof of customers willing to pay. Only actual purchases or firm commitments show demand.
  • Ignoring timing. A good idea launched after the trend has peaked, or long before customers understand it, can still fail.
  • Assuming an opportunity for one entrepreneur is an opportunity for everyone. Resources and skills differ, so the same idea can pass for one person and fail for another.
  • Quoting precise statistics about trends without a source. Describe the direction of a trend unless you have checked the numbers with a source such as Statistics Canada.
  • Judging one way of satisfying a need as "wrong". An entrepreneur needs to understand why customers choose each approach, not rank them.

Flashcards 8

Idea
Opportunity
The four opportunity tests
Trend
+ 4 more

Practice

1
Which best describes the difference between an idea and an opportunity?
2
Match each trend to its type.
Aging population
Growth of online shopping
Interest in sustainability
The gig economy
3
A student wants to launch a sunscreen kiosk at an outdoor rink in January. Which opportunity test does this idea fail most clearly?
4
Organic produce and conventionally grown produce are an example of...
5
What is the term for money left over after paying for necessities, which teenagers often spend on wants?
6
Which venture idea responds most directly to the aging-population trend?
7
Order these checks from what you should confirm first to last before treating an idea as an opportunity, following the order used in this lesson.
  1. 1The idea can be acted on
  2. 2The resources are available
  3. 3The timing is right
  4. 4Customers are willing to pay
8
Name one social trend that could create opportunities for a student venture.

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