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LDP Session 9: Risk Taking

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LDP Session 9: Risk Taking

  1. 1. SESSION 9 Risk Taking
  2. 2. Perceives OPPORTUNITIES in the environment 2
  3. 3. Introduces INNOVATION 2 WHEN IS A GOOD TIME TO START ON A NEW IDEA??
  4. 4.  Perceives Opportunities In the Environment  Takes Risk  Mobilizes Capital for Business  Introduces Innovation  Organizes Labor and Production  Makes Decisions  Plans Ahead  Sells Product at A Profit  Self Evaluation
  5. 5.  Opportunities will be  Bank Loan Rates: flashed and you will 10% interest; decide to buy or not  Can Loan in to buy an multiples of $1000 opportunity;  You are given your income profile  Should you decide on an opportunity, the entrepreneur will have to update his or her financials;
  6. 6. Takes RISKS 2
  7. 7. Takes RISKS 2
  8. 8.  Information  Market research  Project Study  Financial skills  Guestimation  Network
  9. 9.  Project Study  Business Model  Technical aspect  Marketing aspect  Operations aspect  Financial Aspect  Exit Strategy
  10. 10.  Business Model – the purpose of this is to hilight how the business will generate cash to recover the investment  How will the proposed project generate revenue?  Retailing, Licensing, distribution  Will there be recurring revenue?  Are we offering a business or service?
  11. 11.  Technical aspect- studies the technicalities the project may require.  Required technology to deliver the service  Raw materials availability  Skills availability  R&D requirement
  12. 12.  Marketing aspect- the purpose it to find out if the business can fulfill an identified need.  Market size  Competition  Target market  Location  Selling strategies  R&D requirement  Industry trends
  13. 13.  Operations aspect- the purpose is to find out the most efficient way the product or service will be delivered.  Capacity  Management and Personnel  Physical layout  Equipment and Training  Government and environmental regulations  Plant expansion plans
  14. 14.  Financial aspect- the purpose is to find out the capital requirement for the project and to determine the ROI.  Capital requirement and sources  Financial Projections (BS, CF & PNL)  BE Analysis  ROI  CBA  Plant expansion plans
  15. 15.  Exit Strategy – the method by which an owner or investor can get out of the investment made.  Recovery of investment via dividend pay outs  Cashing Out  IPO  Closure or liquidation of asset
  16. 16.  Gather some pertinent information regarding your idea;  Perform a SWOT analysis of the idea  Prerequisite: Your original idea (something that is challenging, medium scale undertaking)

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