Business Opportunity Evaluation - Entrepreneurship and Business Coaching

After identifying a business idea, it must be validated to ensure it is economically viable, as not all ideas can be turned into products or services that consumers are willing to buy. In other words, validating a business idea turns it into a business opportunity because an idea itself has no value.

The Different Viewpoints of a Business Opportunity – The Discovery, Recognition and Creation Debate

It is an unsettled debate within academic circles as to whether a business opportunity is discovered, recognised or created. It is one of the most fundamental and enduring discussions in entrepreneurship research. It is not merely a theoretical question but a crucial distinction that influences how entrepreneurs innovate, how investors evaluate startups, and how policymakers design ecosystems, as it shapes how an entrepreneurial opportunity is understood.

This academic conversation generally falls into three main perspectives (Azam et al., 2021):

The Discovery Viewpoint (Objective Approach)

This viewpoint regards opportunities as external, objective realities waiting to be discovered, similar to discovering a new continent. The underlying theory is heavily influenced by the Austrian School of economics and authors such as Israel Kirzner. Israel Kirzner’s theory of entrepreneurship, developed in his 1973 Work Competition and Entrepreneurship, defines the entrepreneur as a person who acts on “alertness” to identify previously unnoticed profit opportunities. This perspective, rooted in Austrian economics, views entrepreneurship not as an act of creation but as a discovery process that moves markets forward (Foss, 2009). The entrepreneur is considered “alert” to existing market gaps, asymmetries, or inefficiencies that others have overlooked. For this reason, opportunities are typically uncovered in stable environments or through exogenous shocks to an industry. The process involves analysing risk, which can often be calculated.

A profit opportunity exists when the resources required to produce and distribute a product can be purchased for less than the product can be sold for. This is often referred to in terms of a “means-end framework,” where a recombination of resources is the means by which the end, the production and sale of the product at a profit, can be achieved.

The Discovery Process of Entrepreneurship Discovery

The discovery process of entrepreneurship is an interactive, often bottom-up, journey involving opportunity recognition, evaluation, and creation to turn potential into actionable business ventures. It centres on identifying, researching, and modelling favourable circumstances, such as market gaps, unmet needs, or new technologies, to create value.

Main Elements of Discovery

Opportunity Recognition. Entrepreneurs, driven by alertness to change, identify potential in market disequilibrium, a key concept often linked to Israel Kirzner’s theory.
Evaluation & Research. This phase involves assessing the opportunity through market research, assessing consumer needs, and validating trends to turn ideas into viable models.
Continuous Discovery. Especially in startups, discovery is a continuous process aimed at finding product-market fit and reducing risks before fully committing resources.

The Entrepreneurial Discovery Process (EDP)

In many contexts, particularly in policy development, the EDP is a participatory mechanism that involves the “quadruple helix” (policymakers, businesses, academia, and users) to identify new areas of specialisation.

Participatory Approach. It engages stakeholders, including startups and firms, to collaboratively identify regional strengths, knowledge, and potential innovations.
Information Generation. The process generates information about emerging activities and opportunities, enabling actors to build, connect, and innovate.

Sources of Entrepreneurial Opportunity

Entrepreneurs often discover opportunities through various triggers:

The discovery phase represents the crucial, initial stage in the 9 Stages of Enterprise Creation, focused on transforming a potential idea into a researched and viable business proposition.

The Creation Viewpoint (Subjective/Constructivist Approach)

The creation viewpoint of entrepreneurial opportunity theory, largely developed by Alvarez and Barney (2007), proposes that opportunities for new products or services do not exist objectively in the environment waiting to be found. Instead, they are endogenously created through the subjective cognitions, actions, and interactions of entrepreneurs. Unlike the discovery view, which sees opportunities as hidden “treasures,” the creation view emphasises that opportunities come into existence only when acted upon. The entrepreneur is proactive and imaginative, developing a new product or service from nothing (bricolage), thereby creating a new market, not just filling an old one.

This approach is used in high-uncertainty environments where information is unavailable or nonexistent. The process relies heavily on iterative learning and trial-and-error, often described as “acting first” and observing the market response later.

Evaluation of the Creation Viewpoint of Entrepreneurship

This perspective suggests that opportunities emerge from subjective, social, and economic actions in situations of high uncertainty, rather than from pre-existing market gaps. [1, 2]

Main Aspects of the Creation Viewpoint

Action-First Approach. Unlike the discovery perspective, which involves searching, analysing, and acting, the creation view relies on acting first, observing the market reaction, and then acting again.
Constructivist Nature. Opportunities are created as by-products of entrepreneurial action, experiments, and interaction with the environment.
Uncertainty Management. This perspective is highly relevant in scenarios with high uncertainty, where the future is unpredictable, and opportunities are unknown.
Entrepreneur as Creator. The entrepreneur creates the very market they serve, often having to define customers, industries, and technologies simultaneously.

Evaluation and Theoretical Context

In contrast to Discovery. The creation school (popularised by researchers like Alvarez and Barney) serves as a contrast to the discovery school, which views opportunities as objective and exogenous to the entrepreneur.
Theoretical Standing. While it has been described as a “school” rather than a fully developed theory, the creation view addresses significant gaps regarding how new opportunities arise in unfamiliar markets.
Applicability: It aligns closely with the Lean Startup framework, where firms launch, learn, and iterate, and is suitable for fast-changing or entirely new industries.

Strengths of the Creation Perspective

Explains Novelty. It offers a better explanation for the development of new markets or disruptive technologies that could not have been “found” in existing data.
Focus on Process. It emphasises the iterative, experimental nature of entrepreneurship (e.g., experimentation) rather than just the initial idea.
Practical Relevance. This view provides a practical, “toolkit” approach that resonates with contemporary entrepreneurial practice, often using methods such as effectuation.

Limitations of the Creation Perspective

Limited Empirical Testing. Few empirical studies specifically test the underlying assumptions of creation, as opposed to the more studied discovery viewpoint.
Uncertainty Limitations. The view may not explain situations in which objective opportunities do exist or the market information is readily available.
Individualistic Bias. Critics argue that it may overemphasise the “heroic” role of the entrepreneur, potentially neglecting external market conditions.

In conclusion, the creation viewpoint is a vital, constructivist framework for understanding entrepreneurship in uncertain environments, highlighting that, sometimes, the only way to find an opportunity is to create one.

The Synthesis/Duality Viewpoint

The duality viewpoint regards opportunities as creative problem-solving, pointing to the discovery or identification of a problem, and the creation of a solution for it (Siqueira et al., 2012). Modern research increasingly suggests that opportunities can be both discovered and created, often simultaneously or in different phases of a business.

Scholars argue for a “duality” perspective, recognising that entrepreneurial action involves a mix of planning (discovery) and serendipity/experimentation (creation). Many ventures may begin with a discovered need (e.g., seeing a trend) and then create a unique, nonexistent product to fill it.

Main Differences in Academic Perspective

Role of the Entrepreneur	Discovery Theory	Creation Theory
Nature of Opportunity	Objective/Exogenous (exists outside)	Subjective/Endogenous (exists within)
Role of Entrepreneur	Active seeker/Scanner	Creator/Enactor
Information	Market information exists	Information is created by action
Market Status	Pre-exists	Created by the entrepreneur
Key Research Focus	Opportunity Recognition	Opportunity Creation

The debate persists because, while both theories offer valuable insights, empirical data show that entrepreneurial opportunities often involve a mixture of these two distinct approaches.

What Is a Business Opportunity?

Before we continue, it is important to understand what a business opportunity is and distinguish it from a business idea.

Amazon Business Editorial Desk (2024) refers to a business opportunity as“a situation where a person or organisation identifies a need or demand in the market that can be met through a new business venture or expansion of an existing one. Opportunities for a business involve a specific product, service, or niche that has the potential for profit.”

An idea and a business opportunity are not the same. According to LibreTexts (Maokosy, n.d.), an idea may be creative but not a successful business idea. An idea becomes an opportunity if it fulfils the following:

It meets a clear customer need
Meets the demand of a target segment of the market
It fulfils measurable demand
It is financially feasible
It can generate sustainable revenue

For this reason, entrepreneurs must evaluate ideas critically before investing significant time or capital to ensure they can be commercialised.

Shane and Venkataraman (2000) are known to be the first to develop an integrated framework for the field of entrepreneurship, which they defined as “the scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited”. The interaction between opportunities and entrepreneurial individuals is commonly described as the individual-opportunity nexus (Shane and Venkataraman 2000).

Types of Business Opportunities to Search For

Jobs to Be Done

Entrepreneurship is the process of using available resources to fill unmet market needs. One way to identify those needs is through Christensen’s Jobs to be Done theory, which states that people don’t buy a product; they “hire” it. Jobs-to-be-Done (JTBD) theory posits that customers don’t just buy products; they “hire” them to make progress or achieve a specific goal in their lives. By focusing on the underlying functional, emotional, and social tasks customers want to accomplish, companies can create more predictable, effective, and innovative products. o do a job.

Main Thinkers and Frameworks

The main thinkers are Clayton Christensen, who popularised the theory through his work on innovation and disruptive technologies; Tony Ulwick, founder of Strategyn and developer of the Outcome-Driven Innovation (ODI) method; Alan Klement, Author and creator of tools for mapping and understanding JTBD, and Jobs to Be Done (JTBD), The Original Framework by Tony Ulwick.

Main Principles of JTBD Theory

People want a progressive life. They buy products to change their current life situation into a preferred one.
Jobs (what people demand is stable) are Stable. Although technology and solutions change, the underlying “job” (e.g., “communicate with friends”) remains constant over time.
It is not about demographics. JTBD ignores, or looks past, customer demographics (age, gender, location) to focus on the circumstances and motivations driving behaviour.
“Hire” and “Fire”: Customers “hire” products to get a job done. If the product fails, they “fire” it and look for another.

The Three Components of a Job

A complete job consists of three, often overlapping, dimensions: [1]

Functional. The core task the user needs to accomplish.
Emotional. How the user wants to feel while doing the job.
Social. How the user wants to be perceived by others while doing the job.

JTBD vs. Traditional Marketing

Traditional marketing focuses on customer profiles (who they are) and product attributes (features), while JTBD focuses on the “job” and the circumstances surrounding it (why they buy).

How to Apply JTBD

Defining the Job. Identifying the “job” rather than the product type.
It is based on Outcome-Driven Innovation (ODI), a framework created by Tony Ulwick that maps out the customer’s desired outcomes (metrics) to measure success.
Identifying competition. Competitors are not just similar products, but anything that helps a user get the job done.
Focusing on Outcomes. Instead of asking for solutions, ask customers how they measure success when doing a job.

Low-End Market Opportunities

Low-end market opportunities involve entering established markets with “good enough,” lower-cost alternatives that appeal to budget-conscious customers overlooked by incumbents. Key opportunities for 2026 include dropshipping, AI-powered services, and niche, mobile, or remote services like virtual assistance, street food, and specialised tutoring. These models often utilise lower-cost structures, such as using TikTok for organic marketing or Shopify for e-commerce.

Main Low-End Market Opportunities Today

Dropshipping and E-commerce. Utilising platforms like Shopify to sell niche products without inventory, specifically leveraging TikTok Organic for high margins (40–60%).
Virtual Assistant and Remote Services. Providing specialised admin, scheduling, or social media management for small businesses.
Freelance Content Creation and Editing. Offering specialised skills like copywriting, Substack writing, or digital content production on freelance platforms.
Mobile Food & Services. Low-investment food trucks, coffee carts, or specialised catering services that target high-foot-traffic areas rather than established restaurant locations.
Eco-Friendly & Sustainable Products. Offering affordable, sustainable alternatives, such as bamboo goods or reusable household items.
Online Coaching and Tutoring. Launching personalised online courses, training, or tutoring, targeting a broad, remote audience.

How to Identify and Execute Low-End Disruptions

Target Over-served Customers. Identify customers paying for premium features they do not use, and offer a stripped-down, lower-cost version.
Focus on Low-Cost Structure. Use digital tools and remote work to keep operating costs significantly lower than incumbents.
“Good Enough” Quality. The offering should be sufficient to meet basic needs, allowing for a lower price point that incumbents are hesitant to defend.
Example Model. The CVS MinuteClinic provides basic medical care, disrupting traditional, higher-cost doctor offices.
Disruptive Innovation Theory, Clayton Christensen Institute.

New Market Opportunities

New market opportunities arise from unaddressed customer needs, technological shifts, or gaps in the competitive landscape, offering potential for business growth. Key areas for 2026 include AI, renewable energy, health tech, and cybersecurity. Companies can capitalise on these by identifying niche markets, adapting to changing regulations, or creating new market segments, such as catering to overserved customers.

Key High-Growth Industries

Artificial Intelligence (AI). Rapid expansion in digital applications.
Healthtech. Continued growth and technological integration.
Renewable Energy. Shifting market towards sustainability.
Cybersecurity. High demand due to high digital threats.

How to Identify New Opportunities

Market Research. Analyse industry reports to find trends, new technologies, and shifts.
Competitor Analysis. Monitor competitor activity to find gaps in their offerings.
Customer Insights. Analyses customer behaviour and feedback to identify unmet needs.
SWOT Analysis. Use SWOT analysis to identify gaps.

Strategies for Entry

Niche Markets. Targeting specific, underserved customer groups.
Low-end Disruption. Entering with a lower-cost model that incumbents ignore.
Market Pivot. Changing existing products to meet new market demands.

Evaluating Potential

Before entering, evaluate the market size, growth, competition, and profitability potential to ensure the opportunity aligns with broader business strategies.

Where an idea has been validated, it has been turned into a business opportunity which can now be exploited.

The viewpoint from which an entrepreneur approaches an opportunity, whether it is seen as a discovered market gap or a created venture, significantly determines the methods and criteria used for evaluation. Evaluation is a cognitive process in which information about the environment helps an entrepreneur decide if a third-person opportunity is a desirable and feasible first-person opportunity.

Here is how different viewpoints determine the evaluation process:

Evaluation of Opportunity Discovery Viewpoint (Schumpeterian/Kirznerian)

If the validation of the idea has not been made, the focus should be on identifying existing market gaps, unmet needs, or inefficiencies due to technological or demographic shifts. The evaluation method should focus on feasibility and market demand.

The market research should involve a detailed analysis of market size, trends, and potential customers. Competitive analysis involves evaluating competitors to find a sustainable advantage. Financial projections should be based on traditional analysis such as net profit, return on investment (ROI), and time to break-even.

The key question is whether the market is large enough and the risk acceptable to make a profit.

Evaluation of Opportunity Creation Viewpoint (Effectuation)

The creation view emphasises developing new markets, often in uncertain environments where both supply and demand are unclear. Here is an evaluation of the creation viewpoint:

Action-Oriented Emergence. Opportunities are created by taking action first and learning from the results, rather than conducting extensive pre-action research.
Subjective Cognitions. Opportunities stem from an entrepreneur’s unique mental models, experiences, and imagined future scenarios.
Social & Relational Networks. Opportunities are co-created through interaction with stakeholders (customers, suppliers, partners) rather than being recognised in isolation.
“Making” over “Finding”. Entrepreneurs often create something from nothing, such as reframing a liability (e.g., waste) into a resource (e.g., energy).

Evaluation in this context is iterative and often happens during development, not just before, because the opportunity is not fully formed initially.

It emphasises opportunities as formed, not just found. This view focuses on the entrepreneur’s existing resources, social networks, and abilities.
Experimentation. Using pilot projects and “affordable loss” calculations to test feasibility rather than trying to predict future returns accurately.
Co-creation with Early Customers. Rather than traditional market research, entrepreneurs “first-customer test” their ideas to build the market.
Subjective Judgment. Success is evaluated by how the entrepreneur’s vision aligns with their personal skills and goals, rather than just market data.
Flexibility. Evaluating the potential to pivot or pivot based on feedback, treating the venture as a “building block” for future opportunities.
The evaluation method focuses on alignment and flexibility. The resource assessment focuses on “what can I do with what I have?”
Social network contacts are used to validate the opportunity.
The evaluation is iterative and evolves as the opportunity develops, rather than a single, upfront, formal study.
The key Question” Is this opportunity aligned with my passion and capabilities?”

Strengths and Weaknesses

Strengths are:

It is suitable for high uncertainty and is useful when operating in totally new markets where historical data does not exist.
It focuses on using existing resources and minimises initial capital, thus lowering the cost of entry and testing.

The weaknesses are:

It is highly subjective and dependent on the entrepreneur’s mental state and “sanity” check, which can lead to overconfidence.
It’s a post hoc validation. It is hard to distinguish a real opportunity from a bad idea until after significant action has been taken, making evaluation complex.

In summary, the creation viewpoint is a highly active, iterative process of evaluation where the entrepreneur is a co-creator of the market, evaluating opportunities based on their own actions, learning, and network interactions rather than external market signals.

References

Acs, Zoltan & McMullen, Jeffery & Plummer, Lawrence. (2007). What Is an Entrepreneurial Opportunity? Small Business Economics. 28. 273-283. 10.1007/s11187-006-9040-z.

Alexander, P. (2025). Identifying Entrepreneurial Opportunities. [online] Ced.gov.vc. Available at: https://ced.gov.vc/ced/index.php/guides/identifying-entrepreneurial-opportunities.

Alvarez, Sharon and Barney, Jay, Discovery and Creation: Alternative Theories of Entrepreneurial Action (May 2006). Fisher College of Business Working Paper No. 2006-01-005, Available at SSRN: https://ssrn.com/abstract=900200 or http://dx.doi.org/10.2139/ssrn.900200

Amazon Business Editorial Desk (2024). Business Opportunities: Meaning, Identification & Types | Amazon Business. [online] business.amazon.in. Available at: https://business.amazon.in/en/discover-more/blog/business-opportunities.

Ana Cristina O Siqueira, Larry W Cox, and John G Shearer, 2012: Discovery and Creation of Entrepreneurial Opportunities: A Creative Problem-Solving Perspective. Proceedings, 2012, https://doi.org/10.5465/AMBPP.2012.12453abstract

Azam, Saleha & Hussain, Sajjad & Azam, Hamza. (2021). A Brief Review of Opportunity Recognition in Entrepreneurship Research. 2. 91-112.

Chia, R., and Holt, R. (2008) On managerial knowledge. Management Learning, 39 (2). pp.141-158. (online at: https://journals.sagepub.com/doi/10.1177/1350507607087579)

Cote, C. (2020). How to Come Up with an Innovative Business Idea | HBS Online. [online] Business Insights – Blog. Available at: https://online.hbs.edu/blog/post/how-to-come-up-with-a-business-idea.

Cote, C. (2022). How to Identify Business & Market Opportunities. [online] Harvard Business School Online. Available at: https://online.hbs.edu/blog/post/how-to-identify-business-opportunities.

Dam, R.F. and Teo, Y.S. (2016). What is Ideation – and How to Prepare for Ideation Sessions. [online] IxDF – Interaction Design Foundation. Available at: https://ixdf.org/literature/article/what-is-ideation-and-how-to-prepare-for-ideation-sessions.

Eckhardt, Jonathan & Scott, Shane. (2003). Opportunities and Entrepreneurship. Journal of Management. Journal of Management. 29. 333-349. 10.1016/S0149-2063(02)00225-8.

Entrepreneurial Development Centre (EDC). (2014). Idea vs. Opportunity? [online] Available at: https://edcinc.org/idea-vs-opportunity/ [Accessed 10 May 2026].

Foss, Nicolai. (2009). Entrepreneurial Alertness and Opportunity Discovery: Origins, Attributes, Critique. Historical Foundations of Entrepreneurship Research.

Human, S.E., Clark, T., Baucus, M.S., & Eustis, A.C. (2004). Idea or Prime Opportunity? A Framework for Evaluating Business Ideas for New and Small Ventures. Journal of Small Business Strategy, 15, 59-80.

Hills, G., & Singh, R. (2004). Opportunity recognition. In W. B. Gartner, K. G. Shaver, N. M. Carter, P. D. Reynolds (Eds.) Opportunity recognition (pp. 260-272). SAGE Publications, Inc., https://doi.org/10.4135/9781452204543.n24

Lumpkin, G.T., Hills, G., & Shrader, R. 2004. Opportunity Recognition. In H.P. Welsch (ed.) Entrepreneurship: The way ahead. New York: Routledge (online at: https://www.researchgate.net/publication/285025716_Opportunity_Recognition)

Maokosy, S. (n.d.). Identifying Business Opportunities CCBY. [online] LibreTexts Business. Available at: https://biz.libretexts.org/Courses/Reedley_College/Operation_of_a_Small_Business_for_College_Students/02%3A_The_Entrepreneurial_Mindset_and_Cultural_Diversity/2.03%3A_Identifying_Business_Opportunities [Accessed 13 May 2026].

Nexford Staff (2024). What Is Idea Validation and Why Does It Matter? [online] Nexford University. Available at: https://online.hbs.edu/blog/post/market-validation [Accessed 10 May 2026].

Reyell, B. (2017). How Ideation Techniques Can Solve Business Problems. [online] Northeastern University Graduate Programs. Available at: https://graduate.northeastern.edu/knowledge-hub/ideation-techniques-impact-on-business/.

Ricketts, M., Kirzner, I.M. (1992). Kirzner’s Theory of Entrepreneurship: A Critique. In: Caldwell, B.J., Boehm, S. (eds) Austrian Economics: Tensions and New Directions. Recent Economic Thought Series, vol 30. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2186-6_3

Schlichte, F., Junge, S. The concept of entrepreneurial opportunities: a review and directions for future research. Manag Rev Q 75, 3699–3725 (2025). https://doi.org/10.1007/s11301-024-00466-5

Shane S, Venkataraman S (2000) The promise of entrepreneurship as a field of research. Acad Manag Rev 25:217–226

Entrepreneurship and Business Coaching

Conception

Design and Development

Planning

Execution and Launch