Opportunities are fortunate contexts that one can successfully monetize. Once you get good at it, it’s like transforming everything you touch into gold. Seeking opportunities is essential for growing your business.
Looking for opportunities is generally about finding inefficiencies. That’s why entrepreneurs do their thing, don’t they? They identify inefficiencies and take advantage of them by creating value & wealth. Reread it. And now, let’s dig deeper into the subject.
What are opportunities?
The golden rule of the modern economy is that we succeed when we help others succeed. It’s best if you think of opportunities as possibilities of win-win exchanges between market participants.
It’s crucial to understand that exchanges don’t have to be zero-sum… Some people are comparatively better at specific tasks than others, and as a result, trade leads to wins on both sides of the deal.
The big idea is that each of us can get richer just by trading, without increasing our productivity. The golden rule is to focus on your strengths when choosing your business niche. And here, opportunity costs come into play.
Opportunity cost
Opportunity cost is a critical concept. It means that every time you decide to take on an opportunity, you must forgo others. Think about it. If you choose to go on a vacation to Paris, you’ve given up a vacation to New York that you could’ve gone to instead of Paris. If you decide to marry so and so, then you give up marrying anyone else.
So opportunity cost is the possible gain we give up on due to choosing one option and neglecting the others. For that, we’ve got to choose wisely, don’t we?
Let’s take a practical example and see how differences in opportunity cost between two market participants can create comparative advantages. Think about it this way: you can produce two pieces of bread OR 6 chocolates in 6 hours, and I can produce one bread OR 2 chocolates in 6 hours. You have an absolute advantage over me: you can produce more in the same amount of time.
However, one bread equals two chocolates for me, whereas for you – 1 bread equals three chocolates. Obviously, I’m comparatively better at producing bread than you are. It’s because I have a higher opportunity cost for making chocolates than you do. Isn’t it wise for both of us to focus on the production we’re comparatively better at? Indeed it is, and let’s see why.
Comparative advantage at work
Working 6 hours for bread and another 6 hours for chocolates, we would get together a total of 3 pieces of bread and eight chocolates. But what would happen if we would trade, maximizing our returns?
As I am comparatively better at producing bread, I would do this for 12 straight hours and get two pieces of bread. At the same time, you could spend just 9 hours producing nine chocolates and 3 hours producing one bread. All in all, we would get three pieces of bread and nine chocolates. Just by trading with each other, we created more wealth – one more chocolate to split.
That’s how win-win exchange happens.
Effective marketers can minimize opportunity costs by choosing to focus on their comparative strengths. Weighting and minimizing opportunity costs are the key.
If you’re interested in finding more on the subject, I highly recommend Manuel F. Ayau’s book “Not a Zero-Sum Game.” It elaborates on comparative advantages as a means for spotting business opportunities. But there are many more ways.
Spotting opportunities
Entrepreneurs find business opportunities everywhere! Economic growth, economic recession, market trends, competitors’ activity, stability, or uncertainty – all of these are chances for a business to explore and monetize.
Let’s take a moment and acknowledge that what we perceive as being “at the right place, at the right time” is just about training your eye to see opportunities in any given moment. Then, it comes down to knowing how to make the most of them.
Ultimately, opportunity-seeking comes down to these two factors: training your eye and exploiting the opportunities you notice. But let’s get a bit more practical.
Practical advice
Trade makes all of us prosperous, and the economy thrives. But how can you start finding and exploring great opportunities in a way that meets your desired level of business success?
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Bring the buyers and sellers together.
As simple as that. For instance, you don’t have any resources. No product, no audience, nothing! But you find somebody who has a product but not an audience. Then, somebody who has an audience, but guess what? – no product. Simply by identifying two halves of a whole and bringing them together through a business contract, you’re enabling a win-win exchange. Ultimately, you’re creating wealth both for you and the other two players.
You’d be surprised by the amount of wealth created in the world’s economy by bringing halves together. Consumer and buyers. Offers and needs. Easy.
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Look for comparative advantages.
Don’t fall into the trap of thinking you have to be the best in your area to start and to succeed. Nor do you need to have the absolute advantage. It’s a fallacy. You have to find where you’re comparatively better in terms of your opportunity costs! Many corporate giants prefer to collaborate with small businesses because they’re highly specialized and have lower opportunity costs. It’s always about win-win exchanges.
Small steps can put your business in hyper-growth mode. It’s the perks of being an opportunity seeker. And then, there are also performers out there.
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Partner with performers.
Although underrated, partnerships can put your business on a fast track. I can’t stress enough how important it is for small businesses that are not willing to grow slowly & steady through word of mouth. Do not underestimate the power of partnering with the right companies nor your value as a partner. Even at a monetary cost, you owe yourself and your future customers growth.
Let’s think about this. You’re starting a business. You have neither the time nor the willingness to grow slowly. However, by partnering with somebody with a greater audience and greater possibilities than yours, you can get it going much faster. Your partner has the absolute advantage (bigger audience), while you have a comparative advantage (a specific product this audience wants).
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Take the initiative.
The things we talk about here are valuable in every context one might find oneself. I’ve already spoken about businesses, but what if you’re an employee? It works the same way; go ahead and advance an opportunity you’ve spotted to your current boss. Get the whole responsibility for implementing the idea at no cost to your boss. If it works, ask for a cut of the profits.
On the other hand, if you’re an employer, teach your employees to be opportunity seekers. And then reward them and celebrate opportunities. And never underestimate the value an undertaking employee might bring.
Now you know what opportunities are and how you should train your eye to see more of them. You know how your mind changes as a result, and your business thrives.
Summary
Remember, the world doesn’t belong to hard workers. It belongs to smart workers, and that is what opportunity seeking is all about.
Does opportunity-seeking sound appealing to you? Here is a summary of how to find opportunities everywhere:
1. Looking for opportunities is always about finding inefficiencies.
2. Opportunities are possibilities for win-win exchanges between market participants.
3. Wealth is about production and trade.
4. Business exchanges are never zero-sum because of comparative advantages.
5. Focusing on your strengths rather than your weaknesses can minimize opportunity costs.
6. Seeing comparative advantage is one of the most outstanding market skills you can have.