Opportunity Evaluation

feasability analysis

1. product/service feasability: desirability and demand

2. industry/target market feasability: industry and target market attractiveness

3. organizational feasibility: management prowess and resource sufficiency

4. financial feasability: total start-up cash needed, financial performance of similar businesses, overall financial attractiveness of the proposed venture

→ overall assessment

strength of business idea (1)

1. extent to which the idea:

   • takes advantage of an environmental trend

   • solves a problem

   • addresses an unfilled gap in the marketplace

2. timeliness of entry to market

3. extent to which the idea “adds value” for its buyer or end user

4. extent to which the customer is satisfied by competing products that are already available

5. degree to which the idea requires customers to change their basic practices or behaviours

industry-related issues (2)

1. number of competitors

2. stage of industry life cycle

3. growth rate of industry

4. importantce of industry’s products and/or services to customers

5. industry operating margins

target market and customer-related issues (3)

1. dentification of target marget for the proposed new venture

2. ability to create “barriers to entry” for potential competitors

3. purchaing power of customers

4. ease of making new customers aware of the new product or service

5. growth potential of target market

founder related issues (4)

1. founder’s experience in the industry

2. founder’s skills as they relate to the proposed new venture’s product or service

3. extent of the founder’s professional and social networks in the relevant industry

4. extent to which the proposed new venture meets the founder’s personal goals and aspirations

5. likelihood that a team can be put together to launch and grow the venture

financial issues (5)

1. initial capital investment

2. number of revenue drivers

3. time to break even

4. financial performance of similar businesses

5. ability to fund initial product/service development and/or inital start-up expenses from personal funds or via bootstrapping

criteria for opportunity evaluation

1. strength of business idea

2. industry-related issues

3. target market and customer-related issues

4. founder-related issues

5. financial issues

criteria to evaluate business opportunitites from a strategic perspective

• profitability

• demand

• market capacity/size

• revenue

• sales growth

• feasability

relevance of assessment criteria

• trying to predict which idea/opportunity will be succesful

• by applying criteria, we try to reduce the risk

• prediction is always uncertain, some uncertainty remains

• evaluation is a continuous process

• uncertainty can lead to paralysis/inaction