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TOPIC: Building a Business vs. Selling an Opportunity

Building a Business vs. Selling an Opportunity 10 years 2 months ago #3717

  • Garrett Matthews
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During my years in creating businesses within the African Region, there is one dynamic that has stuck me as both odd and key to understand; that is the distinction between what is a business and what is an opportunity. For many of my colleagues in developed economies, this may seem obvious but it is important to understand this diffidence; for many would-be African entrepreneurs do not create or offer a businesses but are in fact selling an opportunity. Let’s explore further.

A business is set-up to solve a problem or meet a need of a particular market sector. That “set-up” phase is central to the entrepreneurial process, for this is where value is created, skills are developed, ownership earned and wealth is build. Once a business is “set-up” one can take advantage of various opportunities within the market.

An opportunity however is a set of circumstances that makes it possible to do something (i.e. like a relationship, etc.). Many times when you are looking for a business to invest in or partner with, one is in-fact dealing with persons who selling and/or positioning an opportunity as a business.

Why is this a problem?

The value of such opportunities are almost always inappropriately priced. An opportunity that is positioned as a business has a much higher value and importance to the person holding it. This distorts both the value conversation as well as the structure of the business (i.e. the investment in, joint venture and/or partnership).

The result are businesses that are not sustainable, plagued with partnership issues and that do not have strong, active local content. Thus real business ownership and honest partnering, skill development and wealth creation do not reach the levels required.
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