Business people are practical individuals who use their instincts to make the most of the opportunities around them. When something transpires, decision-making comes from instincts, or if we want to call it, intuition. But where do these entrepreneurs derive their instincts from? Experiences.
Thus, the question is how do we conceptualize these instincts in spotting opportunities? Let’s start off with Business Model Canvas (BMC) created by Alexander Osterwalder. There are nine components in the canvas but three of them are the pillars to spot business opportunities.
The three pillars are Value Proposition(s), Strategic Partner(s), and Customer Segment(s). Let’s envision this based on one of my small business stories: Steamed corn snack in a cup business.
Value Propositions story (part 1): One day, Diana, a colleague of mine, approached me in the office with a verbal business proposal. She started off by asking me to join in her business idea with a punch line statement, “I know how to make the snack; I know the ‘secret recipe’.” This statement ticks off the first pillar of spotting the opportunity.
However, this is not enough to convince me to invest and be involved in the business.
Strategic Partners story (part 2): Then Diana made her second punch line statement, “My uncle is the distributor for the supplies of frozen corn packages to one of the malls in the city, and we can get the supplies from him at a discounted price.” This statement ticks off the second pillar of spotting the opportunity.
Diana and I brainstormed for quite a bit, and I responded, “I know a good friend working as a manager of a food court where teenagers like to hang out. We can get a spot to open our stand there.” So the manager-friend is also a strategic partner.
Customer Segments story (part 3): This is easy at this point, teenagers are our target market, and the food court is for middle-high income groups, which is perfect for our business. For customer segments, it’s recommended to analyze market positioning for our product while aligning it with our value proposition, the ‘secret recipe’. This ticks off the third pillar of spotting the opportunity.
The three pillars to spot opportunities are a cognitive framework for us to checklist for business feasibility. Value Proposition: The ‘secret recipe’, not just identifying the problems but also the ‘know-how’. Strategic Partners: The ‘who you know’, people who can connect you to the customer segments or may become prospective customers themselves in the future as well. Customer Segments: The specific demographic group of people who will buy your product and or hire your services to solve their problems.
Last but not least, if the business involves logistics activities – e.g. mining is a logistic business – then Channels is the fourth pillar to tick off before engaging in the business. Channels are not mainly how a business interacts with customers but instead how fast customers can make a purchase and payment. Any business would love it when customers pay right after receiving a product or service.
Channels story (part 4, for mining business): I was a business analyst for a mining company that was interested in a mine site on a remote island. I had ticked off the three pillars – Value Propositions, Strategic Partners, and Customer Segments – and going to write a report to recommend this project to the Board. However, when I investigated further into the loading and unloading site, I asked the mine owner, “How often can you make your shipments?”
“Once a month if the weather is favourable. Once in two months if not,” the mine owner responded. It took me awhile to process these situational consequences. I began to self-think, “How will this affect my cash flow?” Receiving payments from customers once a month only is too risky. If once in two months, that means I had to take a payroll loan to cover the first month, thus extra burdening the company’s expenses. In the end, I did not tick off the fourth pillar, and the business proposal was closed. After many years, I was glad it was the right call.
To conclude, ticking off the three pillars is key to spot business opportunities and take the next step. However, if the business involves logistics activities, the fourth pillar – that alludes to cash flows- has to be ticked off before proceeding.
Jacob Tan
Senior Advisor
