ASSESSMENT OF

ENTREPRENEURIAL
OPPORTUNITIES

REPORTER;
SARATAO, HARRIETTE FAITH M.
ACHAY, JEANETH
LASTIMOSO, AILYN
The Challenge of New – Venture Start – Ups
 400,000 new firms
every year since 2010
 1,100 business start-
ups per day.
 US Patent Office
receives approximately
500,000 applications
per year.
Seven Components of
New-Venture Motivation

1)The need for approval

2)The need for independence
3)The need for personal
development
4)Welfare (philanthropic)
consideration
5)Perception of wealth
6)Tax reduction and indirect
benefits
7)Following role models.
Seven Components of New-Venture Motivation
1)The need for approval
2)The need for independence
3)The need for personal
development
4)Welfare (philanthropic)
consideration
5)Perception of wealth
6)Tax reduction and indirect
benefits
7)Following role models.
Entrepreneurs who successfully
started a business were more
aggressive in making their
business real; that is, they
undertook activities that made
their businesses tangible to
others; they looked for facilities
and equipment, sought and got
financial support, formed a legal
entity, organized a team, bought
facilities and equipment, and
devoted full time to the
business.
 Arnold C. Cooper
The challenges to predicting
new-firm performance include
environment effects (the risk of
new products or services,
narrow markets, and scarce
resources), the entrepreneur’s
personal goals and founding
processes (reasons for start-up),
and the diversity of the ventures
themselves (differing scales and
potential).
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The real challenges is for those firms to survive and
grow. In order to do this, they need to have a clear
understanding of the critical factor for selecting venture,
the known reasons for venture failure, and effective
evaluation process.
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Pitfall In Selecting New
Ventures
1.Lack of Objective Evaluation
2.No Real Insight into the
Market
3.Inadequate Understanding of
Technical Requirements
4.Poor Financial
Understanding
5.Lack of Venture Uniqueness
6.Ignorance of Legal Issues
 Critical Factors for New – Venture
Development
Three Phases of a New Venture
1. Prestart-up Phase – begins with an idea for the
venture and ends wen the doors are opened for
business.
2. Start-up Phase – commences with the initiation of
sales activity and he delivery of products and services,
and ends when he business is firmly establishes and
beyond short-term threats to survival.
3. Poststart-up Phases – lasts until the venture is
terminated or the surviving organizational entity is no
longer controlled by an entrepreneur.
 Critical Factors for New – Venture Development
During these two phases (prestart-up and start-up
phases), five factors are critical;
1. The relative Uniqueness of the venture
2. The relative Investment size at start-up
3. The expected Growth of Sales and/or profits as the
venture moves through its start-up phases
4. The Availability of Products during the prestart-up and
start-up phases
5. The Availability of Customers during the prestart-up
phases.
 Why New Ventures Fail
• One researcher study examined 250 high-tech
and found three major categories of causes for
failure; product/market problems,
financial/difficulties, and managerial problems.

Product / market problems involved the following factors;

• Poor timing
• Product design problems
• Inappropriate distribution strategy
• Unclear business definition
• Overreliance on one customer
Your Date Here Your Footer Here 4
Financial Difficulties Category involved the following
factors;
• Initial undercapitalization
• Assuming debt too early
• Venture capital relationship problems

Managerial Problems involved two important factors;

• Concept of a team approach
Problems associated with the managerial team were
found;
1. Hiring and promotions on the basis of nepotism rather
than qualifications
2. Poor relationship[ with parent companies and venture
capitalist
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3. Founders who focused on their weaknesses rather than
on their strengths (though weakening the company, they
supposedly were building their skills)
4. Incompetent support professionals (e.g., attorney who
were unable to read contracts or collect on court
judgements that already had been made).
• Human resource problem
Interpersonal Problems;
1. Kickbacks and subsequent firings that resulted in an
almost total loss of customers
2. Deceit on the part of a venture capitalist in one case and
on the part od a company presidents in another
3. Verbal agreements between the entrepreneur and the
venture capitalist that were not honored
4. Protracted lawsuit around the time4 of discontinuance.
 Types and Classes of First-Year Problems
1. Obtaining external financing
• Obtaining financing for growth
• Other or general financing problems
2. Internal financial management
• Inadequate working capital
• Cash-flows problems
• Other or general financial management problems
3. Sales/Marketing
• Low sales
• Dependence on one or few clients/customers
• Marketing or distribution channels
• Promotion/public relations/ advertising
• Other or general marketing problem
 Types and Classes of First-Year Problems
4. Product Development
• Developing products/services
• Other or general product development problems
5. Production/ operations management
• Establishing or maintaining quality control
• Raw materials/ resources/ supplies
• Other or general production/ operations management problems
6. General Management
• Lack of management experience
• Only one person/ no time
• Managing/ controlling growth
• Administrative problems
• Other or general management problems
 Types and Classes of First-Year Problems
7. Human resource management
• Recruitment/selection
• Turnover/retention
• Satisfaction/morale
• Employee development
• Other or general human resource management
problems
8. Economic environment
• Poor economy/recession
• Other or general economic environment
problems
9. Regulatory environment
• Insurance
 The study recognized the risk associated with the initial size of
the venture being developed. Specific applications of the model
included the following ;
1. Role of profitability and cash flows
2. Role of debt
3. Combination of both
4. Role of initial size
5. Role of velocity of capital
6. Role of control
 The Traditional
Venture Evaluation
Processes
Profile Analysis Approach
 A profile analysis is a tool
that enables entrepreneur
to judge a business
venture's potential by
sizzing up the venture’s
strengths and weaknesses
along a number of key
dimensions or variables.
Feasibility Criteria Approach
 Is it proprietary?
 Are initial production costs realistic?
 Are the initial market cost realistic?
 Does the product have potential for very high margins?
 Is the time required to get to market and to reach the break-
even point realistic?
 Is the potential market large ?
 Is the product the first of a growing family?
 Does and initial customer exist?
 Are the development costs ad calendar times realistic?
 Is this growing industry?
 Can the product and the need for it be understood by the
financial community?
The Traditional Venture Evaluation Processes
Comprehensive Feasibility Approach
A comprehensive feasibility study of a new venture;
• Technical
• Market
• Financial
• Organizational
• Competitive
 The Traditional Venture Evaluation Processes
Two merit special attention;
• Technical
• Market
Technical Feasibility
 Functional designs of the product and attractiveness in
appearance
 Flexibility, permitting ready modification of the external
features of the product to meet customer demands or
technological and competitive changes
 Durability of the materials from which the product is made
 Reliability, ensuring performance as expected under normal
operating conditions
 Product safety, posing no potential dangers under normal
operating conditions
 THE ENTREPRENEURIAL PROCESS

1. Say yes to 6. Eliminate

your your
yearning excuses
2. Visualize 7. Know that
our there is no
success “right time”
3. Evaluate 8. Start small
your beliefs
4. Do what
Facing 9. Answer
Your “what ifs”
you love 10.Ask for help
5. Get Fears!
educated
Marketability
Three major area in this type of analysis are;
1. Investing the full market potential and
identifying customers (for users) for the goods
or service
2. Analyzing the extent to which the enterprise
might exploit this potential market
3. Using analysis to determine the opportunities
and risk associated with the venture

General Sources
 General Economic trends
 Market data
 Pricing data
 Competitive data
 The Contemporary Methodologies for
Venture Evaluation

The Design Methodology

 This methodology can be a vital source of assessment for
entrepreneurs and their early stage venture concepts

Design and Learn

Design is a learning process that shapes ad converts ideas
into form, whether that is a plan of action, an experience, or
physical thing.
Example; Learning for qualitative research, Learning from
prototyping and Learning from feedback
Design Development
 Utilize skills we all possess but are
generally ignored due to more
conventional problem solving
practices.
 The design method converts ideas
into form by integrating what s
desirable from user’s point of view
with what is technically and
economically viable.
 Proof of Concept Feasibility, Proof
of concept Desirability and Proof of
Concept Viability
 Design-Centered Entrepreneurship
Researcher Michael G. Goldsby, Donald F Kurakto, Matther R.
Marvel, and Thomas Nelson

Four Action Stages of developing an opportunity;

• Ideation – involves taking action and leering that culminates
in a venture concept for further development.
• Prototyping Stage – addresses the technical issues of the
concept, and ensures that a feasible product or service can
be made and delivered
• Market Engagement Stage – refines the concept for the
customers, as well contributing to the acquisition of
knowledge, or learning, from early users.
• Business Model Action Stage – completes the development of
the opportunity by identifying the varying components of the
model that will need to be in place for the concept to be
financially viable.
 The Lean Start-Up Methodology
 Provides a scientific approach to creating early venture concepts
and delivers a desire product to customers'’ hands faster.
 Its philosophy originates from Japanese concept of lean
manufacturing, which seeks to increase value-creating practices
and eliminate wasteful practices.
 It begins with the premise that every new venture is a grand
experiment that attempts to answer questions such as “Should
this venture be created” and “Will it be sustainable business?
 First developed in 2011 by Eric Ries, founder of IMVU Inc. as a
way to prevent waste in start ups and ensure that the business
plan remains a living document.
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