Sunday, January 07, 2007

Management Lite & Ezy 22 – Evaluating a New Venture

When starting a new business, it is wise to conduct solid analysis to evaluate the feasibility of the product/service. Entrepreneurs must put their ideas through this analysis in order to discover if the proposals contain any fatal flaws.

Many approaches have been developed to evaluate a new venture, one of which involves asking the right questions:

· Initial Competitive Advantage

Is it a new product/service idea? Is it proprietary? Can it be patented? Is it unique enough to get a significant head start on the competition before it can be imitated?

· Product Development

Has a prototype been tested by independent testers? What are its weak points? What level of R&D should it receive over the next 5 years?

If it is a service, has it been tested on potential customers?

· Marketing

What is the overall market? What are the targeted market segments?

Has market research been conducted?

How big is the market? How fast is it growing? What are the trends?

What are the advertising and promotion plans?

· Distribution

What are the distribution channels? How will the products be transported?

· Production

How will the product be made? How much will it cost?

Will it be produced in-house or by others?

What is the present production capacity?

What is the breakeven point?

· Expansion

Will the business concept be developed and licensed to others or developed and sold away?

· Staffing

Can the company get – or has it already lined up – the necessary skills to operate the business venture?

· Funding

How much capital is needed now? How much more in the future?

Are major stages of fund raising in progress?


Kuratko & Hodgetts, Entrepreneurship – Theory, Process, Practice, 7th edition

Lecture notes of Aric Low

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