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Assignment#09

The document discusses 5 critical factors for new venture development: 1) venture uniqueness, 2) investment size, 3) expected growth of sales/profits, 4) availability of products, and 5) availability of customers. It then elaborates on each factor and provides examples. Additionally, it lists the top 3 reasons why new ventures often fail: product/market problems, financial difficulties, and managerial problems.

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Asim Qureshi
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93 views3 pages

Assignment#09

The document discusses 5 critical factors for new venture development: 1) venture uniqueness, 2) investment size, 3) expected growth of sales/profits, 4) availability of products, and 5) availability of customers. It then elaborates on each factor and provides examples. Additionally, it lists the top 3 reasons why new ventures often fail: product/market problems, financial difficulties, and managerial problems.

Uploaded by

Asim Qureshi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Institute of Southern Punjab (ISP) Multan

Southern Business School (SBS)

Assignment No: 09

Discipline: BBA

Section:B

Date:29/06/20

Subject: Entrepreneurship

Student Name:Muhammad Asim

Student Reg #: BBA-023R16-82

Student Signature: Asim

Submitted to:Sir Muhammad Azhar


Question#
Elaborate critical factors for new venture development.
Answer#

5 Steps of critical factors for new venture development.

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 phase,
4. The availability of products during the prestart-up and start-up phases,
5. The avail- ability of customers during the prestart-up and start-up phases.

1. Uniqueness
Venture uniqueness is further characterized by the length of time a non-
routine venture will remain non routine.
2. Investment
Another finance-related critical issue is the extent and timing of funds needed to move through
the venture process.

Will industry growth be sufficient to maintain break even sales to cover a high fixed-cost structure during
the start-up period? Do the principal entrepreneurs have access to substantial financial reserves to protect
a large initial investment? Do the entrepreneurs have the appropriate contacts to take advantage of various
environmental opportunities?

3. Growth of Sales
 What is the growth pattern anticipated for new-venture sales and profits?
 What is the expected growth pattern for sales?
 What type of venture is this?
 Lifestyle venture: small business, autonomy, comfortable living
 Small profitable venture: autonomy, grow, make profits, control
 High-growth venture: significant sales growth, attract big investments or an IPO
on the stock market.

4. Product Availability
His availability of a salable good or service at the time the venture opens its doors.
Lack of product availability in finished form can affect the company's image and its bottom line.

5. customer availability
A critical consideration is how long it will take to determine who the customers
are, as well as their buying habits.
Why New Ventures Fail
1) Product/Market Problems
 Poor timing: Is the market ready - 1st mover vs. 2nd mover?
 Product design problems: Does product function as intended?
 Inappropriate distribution: Can you deliver?
 Unclear business definition: Value proposition?
 Overreliance on one customer: What if you lose your one account?

2) Financial Difficulties

 Initial undercapitalization: Not enough cash?


 Assuming debt too early: How do we pay back our debt?
 Investor relationship problems: Differing goals, vision, motivations?

3) Managerial Problems

 Team issues: How are decisions made and who controls what?
 Human resource problems: Are we hiring the right people?

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