Chapter 9 Assessment of Entrepreneurial Opportunities

By: Loren Solis and Brian Toelupe

I. The Challenge of New-Venture Start-ups

II. Pitfalls in Selecting New Ventures

III. Critical Factors for New-Venture Development

IV. Why New Ventures Fail

V. The Evaluation Process

Chapter Objectives

Challenge of New-Venture Start-Ups

Need for: Approval Independence Personal Development

Also… Welfare (philanthropic) consideration Perception of wealth Tax reduction and indirect benefits Following role models

Pitfalls in Selecting New Ventures Lack of Objective Evaluation

No Real Insight into the Market

Inadequate Understanding of Technical Requirements

Poor Financial Understanding

Lack of Venture Uniqueness

Ignorance of Legal Issues

Critical Factors for New-Venture Development

Uniqueness

Investment

Growth of Sales

Product Availability

Customer Availability

Why New Ventures Fail

Product/Market Problems: Poor timing Product design problems Inappropriate distribution

strategy Unclear business definition Overreliance on one customer

Why New Ventures Fail

Financial Difficulties:

Initial undercapitalization Assuming debt too early Venture-capital relationship problems

Managerial Problems:

Human Resource problems Concept of a team approach

Hiring and promotions Poor relationships Founder focused on weakness Incompetent support

The Evaluation Process

Profile Analysis Feasibility Criteria Approach Comprehensive Feasibility Approach

- Technical- Marketability