Framework Of course, there are many ways to organize the effort of planning, launching and building a venture. But there are a set of fundamentals that must be covered in any approach. We offer the following as a way to break down the basic activities necessary. It is useful to break the entrepreneurial process into five phases: idea generation,
opportunity evaluation, planning, company formation/launch and growth. These phases are summarized in this table, and the Opportunity Evaluation and Planning steps are expanded in greater detail below.
Although it is natural to think of the early steps as occurring sequentially, they are actually proceeding in parallel. Even as you begin your evaluation, you are forming at least a hypothesis of a business strategy. As you test the hypothesis, you are beginning to execute the first steps of your marketing plan (and possibly also your sales plan). We separate these ideas for convenience in description but it is worth keeping in mind that these are ongoing aspects of
your management of the business. In the growth phases, you continue to refine you basic idea, re-evaluate the opportunity and revise your plan. This website is focused on the early phases of new ventures. It does not delve into the process of generating the original idea. Nor does it cover the phases of growing a company much beyond it’s initial launch. However, the topics of evaluation and business planning remain relevant well into the early life of the company. The
focus here is the evaluation and planning phases. We first develop a framework for understanding and analyzing this process. This table summarizes this framework:
Operating plan To take this analysis one level deeper, we can break down each of these phases as follows. Opportunity EvaluationIt is helpful to think of the evaluation step as continually asking the question of whether the opportunity is worth investing in. You are actually constructing and then continually revising an “investment prospectus.” There are five basic questions that you should ask as you evaluate an opportunity.
If you can answer all of these questions affirmatively, then you have persuaded yourself that this opportunity is worth investing in. This is the first step toward being able to convince others, whether they be prospective customers, employees, partners or providers of capital. These ideas are developed in the Opportunity Evaluation section PlanningStrategyThere are four main areas of strategy: determination of the target customer set, business model, position
and objectives. These are described briefly below and in more depth in the sections devoted to these topics. Target customers The target customer is the set of potential buyers who are your focus as you design your company’s solution. The more you know about them, the better off you are. Your characterization should be both qualitative and quantitative. Business Model The business model is your theory about how you will make money. It involves a definition of a solution to the customer’s need, an hypothesis about how and how much the customer will pay for that solution. If there are any assumptions required for your theory to be true (such as the existence of complementary product or services, or the customer’s willingness to change business processes) these should also be articulated. Position “Position” refers both to how your company is differentiated from any competitors and also how it relates to other companies in the value chain. This is an opportunity to define, at a fundamental level, what your company will do and what it will not do. An element of position is your company’s vision: how it wants to be known or thought of. A compelling vision is necessary to inspire investors, recruit and motivate employees, and to excite customers and partners. Milestones / Objectives As a first step toward creating your operating plan, you should create a set of high level objectives for your business. This should include:
A clear articulation of objectives will allow you to set priorities for your venture, which will be critical as you face the many tough decisions that any entrepreneur must face. These ideas are developed in the Strategy Development section Operating planYour operating plan is where you spell out all of the things that you plan to do and what they will yield for your business. The activities will cover all areas of the business: marketing, selling, engineering, etc. These activities should yield products by a certain date, possibly partners, customers, etc. These activities will drive the financial performance of the company. Your operating plan will be a combination of plans, i.e., these people working on this topic for this period of time will produce result X, and forecasts or projections, i.e. predictions about what results will occur. The primary and most important forecast concerns revenue, but predictions about costs of materials and other things may be important as well. The operating plan is the core of your business, and you should make it as good as you can – your plans should be as thorough as possible and your forecasts should be based on the best and most complete evidence you can compile. Begin with your strategy and break down what needs to be accomplished to achieve your objectives – this is the basis of your plan. The more detailed and fine grained analysis you can develop, the more accurate and reliable your plan will be. Company timeline Financing
plan This includes the capital needs of the company, the timing of those needs and the desired/expected sources of that capital. Planning processHere are a few important principles:
The plan becomes more manageable when you break it down into major functional areas. The traditional breakdown is as follows, but you don’t have to be bound by this except in so far as you should follow Generally Accepted Accounting Practice.
You should monitor your budget carefully and continually, and make adjustments as needed. Execution Execution is organized by the core functional areas of the company What is new venture risk taking?Risk-taking in entrepreneurship is the process of identifying, evaluating, mitigating, and trying out potential opportunities and strategies that may help you build or grow your business but could also lead to personal or professional loss.
What are the barriers you may face while starting any new venture?The 5 toughest things entrepreneurs face when starting a business. Lack of support.. Lack of money.. Lack of confidence.. Lack of a clear pathway.. Lack of experience and knowledge.. What are the most common challenges that entrepreneurs face when starting a venture?8 Common Challenges Entrepreneurs Face (and How to Overcome Them). Deciding what to sell. Probably the biggest challenge of entrepreneurship is figuring out what kind of product or service to offer. ... . Marketing. ... . Hiring talent. ... . Delegating authority. ... . Managing time. ... . Guarding cash flow. ... . Finding capital. ... . Projecting confidence.. What are the reasons for failure of new venture?Here is a look at 11 common reasons new businesses do not make it.. Not Having Enough Money. ... . Not Knowing Your Market. ... . Lack Of Vision. ... . Biting Off More Than You Can Chew. ... . Trying To Be Everything To Everybody. ... . Not Enough Marketing. ... . Poor Planning. ... . Not Accepting Constructive Criticism.. |