Venture Opportunity Assessment Guide
Assessing a new business opportunity is never easy. This guide is intended to be used for an initial assessment of an opportunity. There are no right or wrong answers to the questions; however, there should be a conclusion about whether or not the answer to a question makes the opportunity more or less favourable. In order to complete the assessment, you may be required to gather information additional to that you have been presented with.
In some cases you may have to make reasonable assumptions based on the available information. Finally, every venture has its own unique characteristics and there may be additional questions relevant to your venture that you want to add. There is room at the end of the assessment to add these.
Is there a real problem, need or want to be addressed?
Is the customer(s) well understood?
Is the timing right?
Are the market and money making characteristics robust enough to tolerate mistakes?
Can the team make it happen? Is there a significant and well defined/understood problem, need or want that the business is proposing to solve?
How compelling is the purchase decision for the customer?
Who is the customer? Is a customer archetype identified or identifiable?
How does the customer make decisions about buying this product or service?
- Purchase criteria (simple or complex)?
- Key influencers (few or many)
- Cycle time to make purchase decision (short or long)
Are any customers on side/in place now?
Will the business have economically viable access to customers? (simple or multi-stage distribution)
Does proposed pricing scheme seem well thought out and viable?
THE CONTEXT - MACROENVIRONMENT
Is the environment for the business favourable?
- Politically
- Economically
- Socially
- Technologically
- Regulatory
THE CONTEXT - INDUSTRY
Is the total market for the product/service large?
Is the total market for the product/service growing?
If industry is not large, growing, and structurally attractive, can the business be profitable?
Is the industry structurally attractive?
- Threat of new entrants
- Bargaining power of buyers
- Threat of substitutes
- Bargaining power of suppliers
- Intensity of rivalry among current competitors
Can barriers (proprietary protection, lead time, legal, or contractual) to entry be established?
MONEYMAKING CHARCTERISTICS
Are the margins good?
Are the revenues robust?
- Number of revenue streams (single, multiple, interdependent, loss leaders)
- Is the revenue model understood? (subscription/membership, volume or unit based, advertising based, licensing or syndication, transaction fee)
Are the costs understood and manageable?
- Cost drivers? (variable versus fixed)
- Cost structure? (payroll, inventory, space/rent, marketing, advertising, production)
Are the investment requirements understood and reasonable? (relative to the potential of the business)
- What is the maximum financing need of the business?
- Over what period of time is the investment required?
- How long will it take to reach cash flow positive?
- How long will it take to achieve breakeven?
Are the financial characteristics consistent with the personal and financial goals of the founders?
THE PEOPLE (Founders, Management, Key Personnel)
Where are the founders from?
What are their motivations? Personal and financial?
Where have they been educated?
Where have they worked - and for whom?
What have they accomplished - professionally and personally - in the past
What is their reputation in the business community?
Do they know suppliers, customers, employees
How good is their network (with suppliers, customers, employees)?
What experience do they have that is directly relevant to the opportunity they are pursuing
What skills abilities, and knowledge do they have that is directly relevant to the opportunity they are pursuing?
How realistic are they about the venture's chances for success and the trials and tribulations it will face?
How complete is the team?
Can and will they recruit personnel as necessary?
How adaptable and flexible is the team?
Do they have the mettle to make the inevitable hard choices that have to be made?
How committed are they to this venture? Do they have ‘skin in the game'?
How well will they work together?
Is there a good advisory board in place?
Assignment - https://www.dropbox.com/s/0awep3sc9da5hri/Assignment.rar?dl=0