Bus 400 week 8 ppt 3

©Gundry & Kickul (2007). Entrepreneurship Strategy. SAGE Publications.
Entrepreneurship
Strategy
Strategies for Evaluating Opportunities:
The Assessment Process
Chapter 3

“Being an entrepreneur doesn’t
mean jump off a ledge and make a
parachute on the way down.”
—Fred Smith,
Founder, FedEx

“Be wary of the man who urges an
action in which he himself incurs no
risk.”
—Joaquin Setanti

Key Areas for Assessing the
Feasibility of a New Venture
People — Experience and competencies
of the entrepreneur and the team
Resources—Capital and expertise
available to the entrepreneur
Knowledge and Information —
Market research and the venture
concept
Revenue—Ability of the idea to
generate revenue
New
Venture
Idea
Determination
of Feasibility
of Planned
New Venture

How Do Others See It?
Market Advantages Return
Need
Market Structure
Pricing
Market Size
Timing
Cost Structure
Barriers to Entry
Intellectual
Property
The Team
Distribution
Channels
Profitability
Time to Breakeven
Investment
Needed
Exit Strategy
Return on
Investment

The Innovator’s Toolkit:
Business Evaluation
Scoring Technique (BEST)
(Williams, 2006)

Fourteen Questions to Ask
1. What is the need you fill or problem you
solve? (Value Proposition)
2. To whom are you selling? (Target Market)
3. How could you make money? (Revenue
Model)
4. How will you differentiate your company from
what is already out there? (Unique Selling
Proposition)
(Allis, 2003)

5. What are the barriers to entry?
6. How many competitors do you have and of what
quality are they? (Competitive Analysis)
7. How big is your market in dollars? (Market Size)
8. How fast is the market growing or shrinking? (Market
Growth)
9. What percent of the market do you believe you could
gain? (Market Share)
10. What type of company would this be? (Lifestyle or
High Growth Potential, Sole Proprietorship or
Corporation)
(Allis, 2003)

11. How much would it cost to get started?
(Start-up Costs)
12. Do you plan to use debt capital or raise
investment? If so, how much and what type?
(Investment Needs)
13. Do you plan to sell your company or go
public (list the company on the stock markets)
one day? (Exit Strategy)
14. If you take on investment, how much money
do you think your investors will get back in
return? (Return on Investment)
(Allis, 2003)

Idea Evaluation: ALUO
A = the advantages of this idea
L = the limitations of this idea
U = what is unique about the idea
(different from others in the industry, from
what exists in the market now, etc.)
O = the opportunities presented by this
idea
(Gundry & LaMantia, 2001)

ALUO Process
A: What are the advantages of the idea?
How does it build on or extend what is
already available in the market?

L: What are the limitations of the product
or service? This may be hard for the
entrepreneur to realistically assess (watch
out for idea infatuation!). You may want to
ask others for their opinions on this. What
might not work as well as predicted? What
flaws might exist?
ALUO Process

U: What is unique about the idea? What
can’t be substituted by something already
available in the marketplace? Is your idea
easily imitated by others? How can the
entrepreneur make it difficult for others to
copy? If the product or service is not
unique, are there ancillary products or
services that could be packaged to
maintain uniqueness?
ALUO Process

ALUO Process
O: What opportunities emerge from the
unique features and advantages (or even
the limitations, as you consider ways these
could be minimized)?

Give Me Five . . .
 Five things we think our customers (and
competitors) would say about us.
 Five things our venture should be thinking
about or doing right now globally.
 Five things members in the new venture team
want to see happen if the team does things
right.
 Five things we can learn from our global
partners (lessons learned) that will help us
reach new markets.

The KIC
Current Industry
 Describe the industry—what are the unique problems, challenges,
opportunities?
Market Potential for This Industry
 Is the industry in a period of decline, stability, or growth?
 What is the market demand likely to be for the next one to three years?
 Other new ways to augment industry, add entrepreneurial spin on the
industry (tap the countertrend, switch the niche, etc.)
Competition
 Beyond direct and indirect, in what ways can you rethink how you can
compete in this industry? (See following slides and class discussion
within HBR article on creating new market space.)
Customers
 Who are the customers in the industry? Demographics, personal
characteristics, etc.
 What new customers may be attracted to this industry (or pull in from
other markets)?

Feasibility Analysis:
The Organizational Opportunity Proposal
Section I: Description of the Business
Section II: Product/Service Benefits, Potential Flaws,
Requirements and Delivery Costs
Section III: Industry and Market Analyses, including KIC,
current trends, economic and regulatory factors
Section IV: Management, including managerial and
technical expertise of the entrepreneur and the team
Section V: Financing, an estimation of start-up costs,
expected annual sales forecast, cost of goods sold,
operating expenses, profit, pricing, and capital sources

Bus 400 week 8 ppt 3

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Bus 400 week 8 ppt 3