Many small business are successfully started from scratch. It is our purpose to examine the justification of starting a new business in a given location, and that the proposed business venture is sound. A genuine business opportunity may be defined as a need for the proposed good or service in sufficient volume at a high enough price and low enough cost to operate at a profit. This definition requires elaboration. The term “need” must be broadly interpreted to include existing wants and those that can be developed with resources available to the enterpriser. We know that most purchases are made to satisfy wants in contrast to basic needs, and that the buying public is often slow to accept some innovations even though considerable additional benefit would result from doing so. The entrepreneur considering a radically new product or service should make a realistic appraisal of the time, effort, and cost of graining acceptance for his offering. He may also be faced with stubborn opposition and even ridicule that could discourage certain beginners before their proposition has a chance to prove its merits.

As we will see, every successful business has a set of policies that states the reasons for its existence and how it will operate. Justifying an idea as a genuine business opportunity furnishes the basis for the general policy.

Most situations involving justification will require action in one of three major categories: appraising the need for another business similar to those already established, testing an idea for a new type of business, shopping to discover a genuine business opportunity. The last represents the typical situation of a young, prospective small businessman who has decided he “has what it takes” to be on his own but has not yet decided what kind of business to start or where to begin.