Business Tips

Business Opportunity: Definition, Meaning and Classification

Business Opportunity Definition, Meaning and Classification

Are you thinking of becoming an entrepreneur? Or, are you already self-employed and looking for new ways to earn more? If the answer to any of the two questions is positive, what you actually need is a good business opportunity. Luckily, the choices are becoming greater by the day. You can opt for home, online, federal or any other type of business opportunity.


Let’s try to define a business opportunity

A business opportunity is not an easily definable term. For starters, it is often confused with a business idea. But an idea is just the beginning. We can compare it to a seed.

On the other hand, an opportunity is an idea that has already been thought through. Our seed has started developing. Of course, that does not happen automatically.

There is a long way from an idea of making a moving company, to the business opportunity of a startup, and finally to a successful company like The idea needs a lot of shaping, refining, researching, and testing before becoming a possible business opportunity, and eventually a prosperous business.

A business opportunity is defined as a packaged business investment allowing the buyer to begin a certain business. But it is not always that simple.


A business opportunity doesn’t always have the same implications

What is confusing is also the fact that 23 states all have different laws to define business opportunities and regulate their sales.

Their definitions are not entirely identical, and it so happens that what’s considered to be a business opportunity in one state is not covered by the definition in another.

However, here are some parts that they do have in common:

  • A business opportunity includes selling or leasing a certain product, equipment or service to enable the buyer to start a business.
  • The initial fee that the buyer pays is equal to or more than $500.
  • The seller is obliged to help the buyer find the ideal location for their business or provide the product to the buyer/licensee.
  • The seller guarantees an income that is equal to or more than the price the buyer pays for the product when it is resold.
  • T]Also, the seller is obliged to buy back any product bought by the buyer/licensee in case it can’t be sold to prospective customers of the business.
  • The buyer/licensee is obliged to buy any products or services developed by the seller/licenser.


Let’s avoid the confusion

You might notice that the mentioned criteria sound similar to franchising. In fact, a franchise is a type of business opportunity, but it is not reciprocal. That means that not every business opportunity is a franchise.

Many venture opportunities do not imply the continuing relationship between the seller and the buyer upon the sale. Franchises do require buyers to perform their business operations the way the seller indicates. You can opt for a life insurance cover to be on a safer side in the long run.


Business Opportunity


One man’s trash is another man’s treasure

Not all of us have the same perceptions of life and business. What seems like a profitable business idea to one person might look like a complete waste of time to another.

An idea alone can never be a guarantee for success. It takes a lot of time and effort to turn an idea into an opportunity. And, everybody has their own way of making it work.

Naturally, some ways will prove to be more successful than others, meaning some ideas will turn into opportunities and others won’t.


Business opportunity classification

Not every business opportunity has the same functioning principle. Let’s take a look at the four most common types of venture opportunities and their examples:


1. Franchising

We have already explained how this type of business opportunity works. It is the best choice for entrepreneurs who do not like experimenting.

They get the business plan already made up and brand recognition is not something they should be worried about. Some of the most successful examples are 7/11, Dunkin’ Donuts, McDonald’s, Anytime Fitness, etc.


2. Distributing and dealing

A distributor agrees to sell products and/or services another company makes or provides. Barns&Noble is a good example of the distribution model.

A dealer is pretty much the same as a distributor, but this person focuses more on the product they are selling. People selling life insurance or cars are great representatives of a dealership.


3. Network Marketing

A network marketer is a person who strives to recruit other marketers in order to create a network of distributors. If they are good at what they do, they can earn considerable income through commissions made by the distributors working for them.

People selling Tupperware are the ones who have opted for a network marketing type of business opportunity.


4. Licensing

Licensing is when you get a license to use a brand name on your products. For instance, if you are selling T-shirts, leather jackets, etc. with a license from Harley Davidson company to use their name, that is called licensing.


Some guidelines to follow on your road to success

  • Be an enthusiast – If you are not happy to introduce a new product or service, your clients will notice that and they will not buy from you. Can you blame them?
  • Be completely in the know about the product or service that you are selling – If you don’t know all the details, who will know them?
  • Research the market before opting for any business opportunity – Is there a need for this kind of item? Is your timing right? You can find some of the necessary data in business magazines you should read regularly.
  • Contact other entrepreneurs who have bought the same product from the same seller – find out about their experiences. Did the seller manage to keep his/her promises? Bear in mind that it will probably take a few years or longer before the results can be realistic.
  • Check if there is some training or seminar you can attend to improve the possibility of your success in taking a business opportunity of your choice.

Finally, you should always consult a team of professionals before you make the final decision. An attorney, business consultant or an accountant should assist you in assessing a business opportunity you are about to invest in.

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About Shristi Patni

Shristi is the Chief Content Officer at Raletta. She enjoys writing about food, fitness, finance and everything in between.
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