How to Spot a Business Opportunity

UPDATED: May 20, 2024
PUBLISHED: September 29, 2021
How to Spot a Business Opportunity

Everyone can solve problems. And at its core, entrepreneurship is simply problem-solving. Thus, everyone can be an entrepreneur. It’s hard, but nobody is stopping you.

Whether you’re looking to upgrade your career or venture out on your own, identifying problems and coming up with innovative solutions is a crucial addition to your skill set. It starts with priming yourself to see and identify problems, which sounds simple but proves difficult in practice. Start with these steps.

Position yourself to see opportunities.

Opportunity is all around you all the time. But the larger part of the equation is priming yourself to see it and take action. This process looks different for everyone, but it always includes being present wherever you are. If you often work in coworking spaces or coffee shops, take time to observe your environment. Strike up conversations with strangers. Immerse yourself in the details you normally miss. Note your observations. Do this often and you’ll create a habit of noticing the world around you in ways you hadn’t before.

Look for a problem.

Although it sounds simple, what you may think is a problem is really only a symptom of a larger underlying issue. For example, you might notice your local coffee shop is losing customers because there is always a 10-plus person line. You might think the problem is understaffing, but the real problem is a 20-year-old espresso machine that wasn’t built for the volume it sees now. Symptoms are everywhere; problems are harder to identify. Start with your own life and work to dig deeper than the symptoms.

Identify a solution.

This is not the time to reinvent the wheel. You’re going to have a lot of bad ideas, and that’s expected.

Next to your list of problems, throw out ideas for solving them. In the beginning, don’t worry about viability or cost; these are the training wheels for spotting business opportunities. As you prime your brain to observe, identify and solve, alternative ways of thinking will become second nature and slowly improve.

9 Ways to Find a Hole in the Market

1. Upgrade: Take a basic product and add value or status, like artisanal cookies.

2. Downgrade: Take a status product and remove the frills, like Spirit Airlines.

3. Bundle: Combine multiple products, like a camera and a cellphone.

4. Unbundle: Dismantle bundled products and specialize, like a modern typewriter.

5. Transport: Introduce a successful product into another region.

6. Mass-Market: Scale a product to the national level, like extra-virgin olive oil.

7. Niche Down: Capitalize on an ever-segmented market, like a store that sells only lightbulbs.

8. Get Bigger: A one-stop shop, like Sam’s Club and Amazon.

9. Price: It’s common knowledge that generic brands offer better prices without losing key ingredients.

Humphrey Ho

Humphrey Ho

Managing Director at Hylink Digital
Santa Monica, California

I was destined to go to medical school, to make my parents proud. Instead, I became an entrepreneur. My startups have taken me around the world and in a variety of industries, like automotive and consulting, advertising and now to an integrated marketing company. To me, two key things separate good from great business opportunities:

3 Does it make you want to stay up until 3 a.m. for an endless amount of days?

3 Can you directly drive and see success in the short term—think nine to 12 months?

Passion is the only thing that runs you past 9 p.m. You need to really love it. If you do good work, the money will come.

David Snell

David Snell

Founder of CajunCrawfishCo. com, and
Los Angeles

I joke that I’m a legalized drug dealer during crawfish season. What I really am is a problem-solver. All of my businesses addressed problems I saw in my own life or my community. Identifying problems is only half the equation. Your idea must be battle-tested. This is what’s worked for me:

  • Write your idea.
  • Dispel the idea that you need a lot of money.
  • Partner with different people to save on startup costs.
  • Look at the pros and cons
  • Be a cynic—think of every negative that could go wrong. Be prepared
  • Reach out to other business owners. Get their feedback.

This article originally appeared in the September/October 2021 issue of SUCCESS magazine.
Photo @edric/Twenty20