Rob at BusinessPundit teases his readers with this post on opportunity recognition. He offers just a hint of some work that is being done at the University of Louisville.

It focuses on your unique skills and knowledge, and leads to ideas that are good for you as an individual. Remember all that talk about how ideas are worthless and execution is everything? Well this ties them together by giving you ideas that you are in the unique position to execute.

How true. That is why I always insist that our students and the entrepreneurs I work with take the time to engage in thoughtful and reflective self-assessment. I look forward to hearing more about this in the future.

Entrepreneur magazine has its 2006 list of what they consider to be the “hot” opportunities. Food, security and kids are the business categories where they see the most opportunities. This type of list can be a great way to help brainstorm new business ideas.
The most common source of good business opportunities are products/services that have worked in another market. Look for businesses that have taken off in another city, but have not yet caught on where you live. Just because the business has not arrived in your town is not reason enough to start one up. Finding such an opportunity is just the first step.
You still need to do your homework. You need to understand your local market and the potential customers you want to attract. Here are some of the types of questions you need to research:
– What are the similarities and differences between your market and the market where the business has succeeded? Are they similar sizes? Do they have similar demographics? The business idea may require a certain sized city to make sense. It may also require a certain concentration of a specific group of customers to be feasible, for example a large population of retired citizens may make ideas like the retrofitting of seniors’ homes make sense.
– Does your market have a similar or different customer base? Are there regional cultural differences that make an idea work in one location, but not in another? Certain foods are popular in once city, but attempts to market these same foods in another may be a flop. Even mass merchandisers like Target and Wal-Mart stock products based on regional preferences.
– Are there other folks with the same good idea as you? Keep your eye open for potential competitors. Competition may or may not be a problem. Some products are so specialized or the customer base so small that there is only room for one or two players. On the other hand, if the potential customer base is big enough for multiple entrants into the market it is sometimes best to be second or even third into the market. This is one of the many pieces of wisdom that the late Peter Drucker left us. Let the other guys educate the market about the product. Let them spend the money to build a buzz about the product before you jump in and take advantage of the customer awareness they have created. Educating customers about a new product can be quite expensive. Also, the first to offer a new product or service often makes mistakes in a new market that you can learn from. See what they have done wrong and then offer a better option to customers.
Once you get excited about an idea it is critical to quickly become a skeptic. Try to prove to yourself that the idea cannot work. Have others poke holes in your idea. Try to find all of the flaws in the business model. Make sure that your great idea is a real business opportunity.
Taking this approach will help increase your odds of success as an entrepreneur. It will help you throw away seemingly good ideas that just can’t work. It will also make sure that you have planned ahead for many of the challenges that you will face during start-up and growth. You can never anticipate all of the things that can go wrong, but you should be able to identify and plan for enough of them to significantly increase your chances for success.

This invention was a reaction to a possible national crisis. To avoid food poisoning, homemakers were over cooking turkeys to the point that they were dry and tasted like cardboard. The California Turkey Producers Advisory Board was concerned that Americans might change to another culinary theme for Thanksgiving if they did not find a solution.
Michael Taylor of the San Francisco Chronicle tells how one Eugene Beal led the effort to save our beloved national holiday:

Trying to solve the turkey cooking problem went on for days and days. Then one day…Goldy Kleaver looked at the ceiling sprinklers and realized they were triggered by flames melting something inside.
“Why can’t we use that principle in the turkey?” Kleaver asked his fellow board members.
…It was Beals who ran with the idea, working with another board member to find and test the alloys that would “melt at a certain temperature,….’
The group spent almost a year testing what temperatures were best suited for the cooking of turkeys.

So how does the little red pop-up actually work? Well, the best place to find out how stuff work is to go to Howstuffworks.com:

A pop-up timer found in a turkey or chicken normally has four parts:
– The outer case (typically white or light blue) (a)
– The little stick that pops up (typically red) (b)
– A spring (c)
– A blob of soft metal similar to solder (d)

The soft metal (shown in gray in the diagram) is solid at room temperature and turns to a liquid (melts) at about 185 degrees Fahrenheit (85 degrees Celsius). When the metal turns to a liquid, it frees the end of the red stick that had been trapped in the metal. The spring pops the red stick up and you know the turkey is done!

Beal sold the invention to a company that was later sold to 3M. But as told in StartupJournal, the little invention that saved Thanksgiving did not always work right. So another company, Volk Enterprises, developed a similar product that would work better.

Tony Volk shifted to a pop-up timer of his own design, similar to the Dun-Rite/3M device. Oldest son Anthony crisscrossed the country pitching pop-ups to processors and supermarket chains. In Turlock, the clan donned sanitary hairnets and put together pop-ups around the kitchen table at night.
The Volk family business was sued by 3M for patent infringement in 1982. After several years of litigation, the two sides negotiated a settlement that permitted them to manufacture pop-ups under each other’s patents. Thanks to Tony Volk’s contacts in the turkey business, his own timer business took off and, a few months before his death from cancer in 1991, Volk Enterprises acquired 3M’s pop-up business.

Sadly, the little red pop-up that Eugene Beal and Tony Volk made possible gets little respect. From StartupJournal:

Yet during holiday food shows and in cooking columns, the pop-up seldom comes in for praise. In her recipe for “Perfect Roast Turkey,” Martha Stewart advises fans to toss the little timer. “An instant-read thermometer is a much more accurate indication of doneness,” avows Ms. Stewart.
Rick Rodgers, author of “Thanksgiving 101,” says he avoids pop-ups because he worries basting will prevent them from popping properly. Sgt. First Class David Russ, a U.S. Army chef from Fort Bragg, N.C., who won the National Military Culinary Chef award in 2004, can’t stand the puncture a pop-up leaves behind. “If you get a piece of turkey on your plate with a hole in it,” he says, “you wonder where it came from.”

I intend, in my own small way, to honor the two entrepreneurs who saved Thanksgiving. In my Thanksgiving blessing I will give thanks to Eugene and Tony, and for the legacy of moist birds they left behind.

Americans have taken pet ownership to new heights in the past few years. And where there is money and there is a need, there is opportunity.
Entrepreneur.com highlights some of the businesses that are taking advantage of the current trend of Americans to spoil their pets. The pet products are now the seventh largest segment of retailing.

Just look at the numbers spurring this continuous growth. Pet spending has more than doubled in the past 11 years–from $17 billion in 1994 to a projected $35.9 billion by the end of this year, according to statistics from the APPMA. Fueling this trend are empty nesters lavishing attention and money on their pets, young adults who are having children later and currently put their time and energy into their animals, and a pet industry that has become more sophisticated at consumer marketing….

Just as a couple of examples, you can see local stories written about this trend in the Coloradoan, the Philadelphian Inquirer, and the Charlotte Business Journal.
I wrote a few months back about our search for a new kennel for our dog, Keb. I was amazed at how many options would have cost us more per night than we typically spend on a hotel when we travel!

This little guy is cute, but he is not worth over $100 a day for a private room with a raised bed and television, and special chilled doggie treats at bed time.

There was a lot of hand wringing when the music industry consolidated, yet again, a few years ago to create three giant companies that seemed poised to dominate the market. It was 2003 and I had just moved to Nashville. Many of my friends wondered what an entrepreneurship professor was doing moving to a city dominated by such a mature industry and taking a job at a university that has one of the largest music business programs in the country.
Well, beneath the feet of the three dancing dinosaurs that dominate the current industry structure there is a whole new structure beginning to take form. The music industry has long been made up of lots of small businesses and independent contractors, as seen in this article from StartupJournal.
What has changed is that this grass roots level of music entrepreneurship is beginning to become more than self-employed artists (see the Future of Music for a discussion of these changes). Technology and consumer preferences are facilitating a restructuring of the music industry that will lead to an unprecedented shift of power. Both content and distribution have been firmly in the hands of the industry giants for the past few decades. However, the changes that are taking place in how music is made and how it is gotten into the ears of its customers are beginning to loosen the “big three’s” grip.
It would be a mistake to assume that we are simply taking a small, controlled step forward to the “next thing,” as when we moved from the 45 to albums and from albums to CDs, and that the industry giants will somehow grab control of digital distribution. Why? It is because this step in the evolution of the music industry is not being created by the market leaders as seen with the last few changes. This change is outside of their established system. It is revolution, not evolution.
I think that the iPod does not represent the “next thing” in the industry, as many are assuming, but really just one of several catalysts that will help propel entertainment into several years of entrepreneurial innovations and breakthroughs just as we witnessed in the information/computing industry in the 1980s and 1990s.
The music and entertainment industry is entering a period of new beginnings. This is spring time in the music business.

Where there is customer pain there is opportunity.
A former student of mine from Minne-so-cold, Natalie, sent along a profile from seattlepi.com of a business that may deal with not only the pain of the customer, but a pain experienced by retailers who try to serve these customers. The common source of these pains? Teenage retail employees.

Experticity, which recently landed $1.2 million in angel financing, is testing a technology for in-store computer kiosks that would allow shoppers to touch a flat-panel screen and then get questions answered from a customer service agent — one who may be located thousands of miles away. With a broadband connection transmitting data and voice, the customer service agent could advise a shopper on the benefits of certain products, pull up pricing information on eBay or show diagrams of how products work. The system also could be designed to allow shoppers to speak with agents in Spanish, Russian or other languages.

One of the questions I always ask those who are considering starting many types of retail operations is this: “Do you want your financial future left in the hands of a bunch of high school kids?!”
While this may solve part of that problem, the Luddite in me cringes at the thought of another computer to interact with. You see, I still get yelled at by the woman’s voice in the computerized self check-out for messing something up every time I try to buy a few groceries at Publix …..

Rob at BusinessPundit has a great post that proves the old entrepreneurial saying: “There is a pony in every pile of manure if you just dig deep enough.”

Very few entrepreneurs start their business out of true innovation and even fewer out of true invention. Most of us apply simple solutions to simple markets needs.
Randall Rothenberg, director of intellectual capital at Booz Allen Hamilton, offers his insights to this premise from a marketing perspective in an excerpt from a new book to be released soon The Big Moo: Stop Trying to Be Perfect and Start Being Remarkable (edited by Seth Godin).
– Imitation Across Industries Is More Efficient and Effective Than Blue-Sky Creativity and Innovation.
Take what has worked in a different market or for different customers and apply in a new place. Ride the wave of change that is already at work rather than trying to create a new wave.
– The Energy Isn’t in the Idea; it’s in the Execution.
Vince Lombardi would tell us that plays do not happen on the chalk board. It takes blocking and tackling to move the ball down the field. (Sorry, but after our first win — finally — I had to work the Packers in some how).
– You Must Create True Believers Before You Can Win New Converts.
Your best sales people are your own customers. Word of mouth is something that entrepreneurs want, but it takes “true believers” to make it happen. You have to create the “true believers” in how you execute your new business.
I got the link to this article from National Dialogue on Entrepreneurship. They seem to be disheartened by these arguments. They want to keep the focus on the high growth, high potential ventures that so enthrall most academics I know. Hey guys, get with the entrepreneurial economy, which is mostly made up of simple, yet powerful market solutions.

“But, where do I find an idea?”
Many aspiring entrepreneurs may have the passion to strike off on their own, but they sometimes lack the business idea to make it happen. Most of the time they are trying too hard to find the “next Microsoft” or invent the “next iPod.”
The best business opportunities I typically see come from things people know something about. It is like Dorothy in the Wizard of Oz discovering how to get back to Kansas; the answer was right in front of her all along.
StartupJournal provides a couple of good examples in recent articles posted at their site. The first is a woman who turned a grocery shopping annoyance into a business:

Missy Cohen-Fyffe’s business began when other moms gave her unsolicited feedback as she strolled down grocery-store aisles with her son riding in blanket-like protection in the shopping cart.
“I just didn’t want my son biting on the gross, grimy metal,” she said of her Clean Shopper invention.
Seven years and four employees later, Cohen-Fyffe has turned her crafty idea into a full-time career: selling the Clean Shopper and other baby products from her New Hampshire home base.

The second example is of a woman who turned her hobby of tennis into a new business and a new career:

Ms. Parker targeted a tiny but lucrative market: the sticky “overgrips” that some tennis players wrap around their racket handles. Overgrips cost a few cents to make, yet they retail for about $2 each. Full of naive optimism about her prospects, Ms. Parker hoped to turn a drab-looking product into a fashion accessory that might catch the public’s fancy.

Don’t over think of ideas for new businesses. The best ideas come from our work experiences, our hobbies, or our everyday lives. Find something from your experiences that is also a need for others. There may be competition, but they just do not quite take care of the need. Or if you are lucky, it may be a niche that nobody has discovered. Either way, solving everyday problems that you understand is the best path to your first business venture.

We’ve all heard the claims for generations. Small towns and large cities become known for a particular product. For example, Sheboygan, Wisconsin (and for that matter Bucyrus, Ohio) claims to be the Bratwurst Capital of the World. (Growing up on Wisconsin bratwursts is probably what has made my cholesterol so high….).

There are claims of the World Capital of This and the World Capital of That all over America. Fortune Small Business profiles some of the current “World Capitals” in their September issue.
Most entrepreneurs look for a unique niche to start a business, as this is often considered the safest way to start a new venture. But, every rule has an exception.
In the business phenomenon known as a cluster, businesses find advantages in operating in close proximity to their competitors. Clusters are a bit of a paradox. They can help attract customers (Auto Dealer Row), make getting materials from suppliers more efficient, take advantage of a geographic anomaly, or tap into a specialized labor pool. This is particularly true with today’s successful clusters.

Concentrations of specialized experts may result from a university producing patents on new technology and graduates who understand them, or a large corporation sloughing off workers who see entrepreneurial opportunities their less nimble employer didn’t. Silicon Valley is a prime example of a brainpower-based capital, as is our lesser-known find, Orlando, where the University of Central Florida feeds the local virtual-reality industry.

What ever the reason, sometimes it pays to be in a crowded market.