Assessment and Evaluation of Entrepreneurial Opportunities
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Transcript of Assessment and Evaluation of Entrepreneurial Opportunities
Chapter 11 – Assessment andChapter 11 – Assessment and Evaluation of Evaluation of Entrepreneurial Entrepreneurial Opportunities Opportunities
The Elements Affecting New-The Elements Affecting New-Venture PerformanceVenture Performance
Entrepreneur’sEntrepreneur’sCharacteristicsCharacteristics
EnvironmentEnvironment
FoundingFoundingProcessesProcesses
Initial FirmInitial FirmCharacteristicsCharacteristics PerformancePerformance
Pitfalls in Selecting New VenturesPitfalls in Selecting New Ventures
• Lack of Objective EvaluationLack of Objective Evaluation
• No Real Insight into the MarketNo Real Insight into the Market
• Inadequate Understanding of Technical Inadequate Understanding of Technical RequirementsRequirements
• Poor Financial UnderstandingPoor Financial Understanding
• Lack of Venture UniquenessLack of Venture Uniqueness
• Ignorance of Legal IssuesIgnorance of Legal Issues
Critical Factors for New-Venture Critical Factors for New-Venture DevelopmentDevelopment
• UniquenessUniqueness
• InvestmentInvestment
• Sales GrowthSales Growth– Lifestyle venturesLifestyle ventures– Small profitable venturesSmall profitable ventures– High-growth venturesHigh-growth ventures
• Product AvailabilityProduct Availability
• Customer AvailabilityCustomer Availability
Why New Ventures FailWhy New Ventures Fail
• Product/Market ProblemsProduct/Market Problems
• Financial DifficultiesFinancial Difficulties
• Managerial ProblemsManagerial Problems
Types and Classes of First-Year ProblemsTypes and Classes of First-Year Problems
1. Obtaining external financing1. Obtaining external financing2. Internal financial management2. Internal financial management3. Sales/marketing3. Sales/marketing4. Product development4. Product development5. Production/operations management5. Production/operations management6. General management6. General management7. Human resource management7. Human resource management8. Economic environment8. Economic environment9. Regulatory environment9. Regulatory environment
External Problems Experienced by External Problems Experienced by EntrepreneursEntrepreneurs
Expansion5.5%
Market Knowledge19.3%
Customer Contact27.3%Competitors
6.3%
Market Planning14.4%
Product Issues7.6%
Location11.1%
Pricing8.4%
Internal Problems Experienced by Internal Problems Experienced by EntrepreneursEntrepreneurs
Facilities/Equipment12.6%
Cash Flow14.9%
Adequate Capital15.9%
Accounting Systems10.4%
Organizational Structure10.8%
Leadership11.1%
Human Resources12.0%
Inventory Control12.3%
Determinants of New-Venture FailuresDeterminants of New-Venture Failures
Lack of mgt. skillLack of mgt. skill
Poor mgt. strategyPoor mgt. strategy
Lack of capitalizationLack of capitalization
Lack of visionLack of vision
Poor product designPoor product design
Key personnelKey personnelincompetentincompetent
Lack of mgt. skillLack of mgt. skill
Poor mgt. strategyPoor mgt. strategy
Lack of capitalizationLack of capitalization
Poor external marketPoor external market conditions conditions
Poor product designPoor product design
Poor product timingPoor product timing
EntrepreneurEntrepreneur RankRank EntrepreneurEntrepreneur RankRank
11
22
33
44
55
66
11
22
33
44
55
66
The Evaluation The Evaluation ProcessProcess
Asking the Right Asking the Right QuestionsQuestions
Comprehensive Comprehensive Feasibility ApproachFeasibility Approach
Key Areas for Assessing the Key Areas for Assessing the Feasibility of a New VentureFeasibility of a New Venture
Technical – Feasibility analysis ofTechnical – Feasibility analysis of product or service product or service
Market – Determination of marketMarket – Determination of market opportunities and risks opportunities and risks
Financial – Analysis of financialFinancial – Analysis of financial feasibility & resources feasibility & resources
Organizational – Analysis of financialOrganizational – Analysis of financial organizational and organizational and personnel requirements personnel requirements
Competitive – Analysis of theCompetitive – Analysis of the competition competition
New-New-VentureVenture
IdeaIdea
DeterminationDeterminationof Feasibilityof Feasibilityof Plannedof Planned
New VentureNew Venture