Business opportunities are located in a business environment. It is the duty of the entrepreneur to monitor and scan an environment to be able to identify profitable opportunities and forecast the trends of events. In fact, the ability to identify the business opportunity is one of the fundamental features and function of an entrepreneur.
A business opportunity can be defined as any situation or condition in the environment that can enhance success for a marketer through necessary action. Opportunities are derived from human needs whether psychological or physiological needs. When a need for a people is not satisfied at all or not satisfactorily satisfied, this may constitute an opportunity, especially if the people have money to spend and the willingness to spend it. Drivers of opportunities for an existing business include the various changes in both general and industry environments, which are favourable to it. These may include changes in government policy that encourages local sourcing of raw materials for medium or large scale firms, failure or weaknesses of a competitor, changes in population trend and structure such as immigration to a town or a part of it, changes in the taste of a group of people etc.
For a condition in the environment to be called an opportunity, it must be able to result in profits for the entrepreneur. Therefore, every identified opportunity must be investigated and assessed. Hence the need for feasibility studies in most cases.
Other sources of investment opportunity include emerging needs. Emerging needs are not usually apparent but latent, so require special entrepreneurial skills for anticipating such needs and creation of a product or service to satisfy them.
The entrepreneurial effort required for satisfying customer needs includes invention, innovation, extension, and idea links.