Right now there are more than 2 million entrepreneurs actively engaged in starting a business in the UK. Sadly, though, many of their ventures will never get off the ground. Of those that do, the majority will fail. Of those who seek funding from business angels or venture capital investors, less than one percent will get the money they seek.

This picture of entrepreneurship is not a pretty one. The entrepreneurial road is long and daunting. Why, then, are nearly one in 18 adults in the UK - and one in ten in the USA - actively pursuing entrepreneurial dreams? In a word, opportunity! Opportunity to develop an idea that, to its originator, seems a sure-fire success. Opportunity to be one's own master - no more office politics, no more downsizing, no more working for others. I know, because I've been there, too. 

Unfortunately, most opportunities are not what they appear to be, as the business failure statistics demonstrate. Most new ventures fail for opportunity-related reasons:

  • Market reasons: perhaps the target customer won't buy
  • Industry reasons: it's too easy for your competitor to eat your lunch
  • Entrepreneurial team reasons: your team may lack what it takes to cope with the wide array of forces unseen forces that can bring a fledgling entrepreneurial venture to its knees.

Of course, none of these pitfalls will derail your new venture, will they?

Can You Avoid the Opportunity Trap?

Opportunities are best understood in terms of three crucial elements: markets, industries, and the one or more key people that make up the entrepreneurial team. The seven domains model (see the graphic) articulated in The New Business Road Test: What Entrepreneurs and Investors Should Do Before Launching a Lean Start-Up, brings these elements together to offer a clearer way to answer the crucial question that every aspiring entrepreneur must ask him- or herself every single morning: "Why will or won't my idea work?"

The model offers a systematic toolkit for assessing and shaping market opportunities and a field-tested way for entrepreneurs or entrepreneurial teams to assess the adequacy of what they themselves bring to the table as individuals and as a group. The model also provides the basis for what I call a customer-driven feasibility study that entrepreneurs might use to guide their assessments - before they invest precious time and effort in writing a business plan.

At first glance, the seven domains model appears to simply summarise what ‘everybody' already knows about assessing opportunities. So it does. Upon more careful scrutiny, however, the model goes further to bring to light three subtle but crucial distinctions and observations that most entrepreneurs - not to mention many investors - overlook:

  • Markets and industries are not the same things.
  • Both macro- and micro-level considerations are necessary. Markets and industries must be examined at both levels.
  • The keys to assessing entrepreneurs and entrepreneurial teams aren't simply found on their resumes or in assessments of their entrepreneurial character or drive.

Moreover, the model's seven domains are not equally important. Nor are they additive. A simple scoring sheet or checklist won't do. Worse still, the wrong combinations of them can kill your venture. On the other hand, sufficient strength on some factors can mitigate weaknesses on others. Attractive opportunities - like those that developed into today's Nike and Costa Coffee - can be found in not-so-attractive markets and industries.

As the seven domains graphic shows, the model is comprised of four market and industry domains, including both macro and micro levels, and three additional domains related to the entrepreneurial team. These seven domains that emerged from my research (‘everybody' knows at least some of these, of course, but I found most don't think of them in this way) address the central elements in the assessment of any market opportunity:

  • Are the market and industry attractive?
  • Does the opportunity offer compelling customer benefits as well as a sustainable advantage over other solutions to the customer's needs?
  • Can the team deliver the results they seek and promise to others?

What to Do Before You Launch

So, take heart. Road test your entrepreneurial opportunity before you even think about launching a start-up. If the seven domains road test looks positive, you will have jump-started your journey, and you will have gathered a body of evidence with which to guide your launch.

And what if you've found too many of the almost inevitable and perhaps fatal flaws? You can redirect your precious entrepreneurial talent and energy to another opportunity with greater potential. You wouldn't buy an automobile without taking it for a road test, would you? Enjoy the drive!