As a business owner you should always have one eye on your external environment. This knowledge is very useful for restructuring the way you do things. Part of growing as a business owner is innovating periodically. This article briefly touches on how to identify new opportunities in your business.

Identify who you are or who you want to be

The first thing you need to know about seeking new opportunities is you need to first understand who are as a business and where you fit in your industry. For example: if you were in the furniture business, you are either on the top of the value chain cutting down the trees, or you are the sawmill converting the log to lumber, or the one who assembles the furniture or the retailer. Each strategic business unit in the value chain fulfills the consumers need for furniture in different ways but all are important to creating value.

Knowing where you fit is important because the better you understand how all the processes in your industry works, the better you can position yourself for success. For example a retailer in the furniture industry after examining its industry value chain may decide to skip the assembler and charge a nominal fee to the consumer to assemble the furniture in their home. This cuts costs for both the retailer and the consumer. The retailer is happy because the product cost less to produce and the consumer is happier to pay less for the same product.

Recognizing where you can cut costs as a business owner and yet increase customer satisfaction is just one advantage of examining your industry value chain. Another advantage is it shows you how you can capitalize on your strengths and opportunities in the market place.

What about the service business

In service businesses, it is very likely that all the processes/ activities that provide value to the consumer are all produced in one business unit (firm). However, this does not preclude you as the business owner from observing your industry to see where you could have a competitive advantage. As a service provider you should understand the way your competitors do business, what it costs them to do business and how much they charge for similar services. You then figure out how to differentiate yourself from the market. You derive a lot of market knowledge from studying your competitors.

Do a SWOT analysis

The second thing you want to do is a SWOT analysis. This enables you as a business owner to see how you can capitalize on the opportunities you have found in your industry. SWOT stands for strengths, weaknesses, opportunities and threats. A SWOT analysis allows a business to leverage its strengths, compensate for its weaknesses (by outsourcing or partnering), while taking advantage of opportunities and planning for threats.

Identify the opportunity

With knowledge of the external environment, you should be able to identify a list of opportunities. The opportunity pursued should be one that capitalizes on your strength while minimizing weaknesses and threats.