Chapter 11 ± Assessment and Evaluation of Entrepreneurial Opportunities

The Elements Affecting NewNewVenture Performance Environment Entrepreneur¶s Characteristics Founding Processes Initial Firm Characteristics Performance .

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 NewDevelopment ‡ Uniqueness ‡ Investment ‡ Sales Growth ± Lifestyle ventures ± Small profitable ventures ± High-growth ventures High- ‡ Product Availability ‡ Customer Availability .

Why New Ventures Fail ‡ Product/Market Problems ‡ Financial Difficulties ‡ Managerial Problems .

Sales/marketing 4. Human resource management 8. Economic environment 9. Obtaining external financing 2. Internal financial management 3. General management 7. Production/operations management 6. Product development 5.Types and Classes of First-Year Problems First1. Regulatory environment .

3% Customer Contact 27.3% Product Issues 7.3% .5% Market Knowledge 19.1% Expansion 5.External Problems Experienced by Entrepreneurs Pricing 8.6% Market Planning 14.4% Competitors 6.4% Location 11.

9 ea ership 11.4 al .Internal Problems Experienced by Entrepreneurs Inventory ontrol 12.6 Human Resources 12.8 A ounting Systems 10.0 ash Flow 14.9 O ganizational Structure 10.1 A q a a 15.3 Fa s/ q 12.

strategy Lack of capitalization Lack of vision Poor product design Key personnel incompetent Rank 1 2 3 4 5 6 Entrepreneur Lack of mgt. skill Poor mgt. strategy Lack of capitalization Poor external market conditions Poor product design Poor product timing Rank 1 2 3 4 5 6 .Determinants of New-Venture Failures NewEntrepreneur Lack of mgt. skill Poor mgt.

The Evaluation Process .

Asking the Right Questions .

Comprehensive Feasibility Approach .

Key Areas for Assessing the Feasibility of a New Venture Technical ± Feasibility analysis of product or service Market ± Determination of market opportunities and risks NewNewVenture Idea Financial ± Analysis of financial feasibility & resources Organizational ± Analysis of financial organizational and personnel requirements Competitive ± Analysis of the competition Determination of Feasibility of Planned New Venture .

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