New Venture Creation: Team Assignments

Overview

At the beginning of the semester (September 13, 2006) the class will be broken up into about 5 teams consisting of approximately 5 people depending upon the class size. As the semester progresses, the team will complete a number of feasibility analysis assignments associated with the new venture opportunity that they have identified.

According to our text, feasibility analysis is the process of determining whether a business idea is viable. It is a preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing. It takes the guesswork out of a business launch and provides a more secure notion that a business idea is feasible or viable. Entrepreneurs often underestimate the competition or overestimate their personal chances for success.

Feasibility studies should be conducted after the opportunity recognition stage of starting a new business, and should be completed before considering writing a full business plan. If, upon completion of the feasibility study you discover that the idea is not feasible, you have two options: drop the idea, or revise it to the point that it is feasible. If indeed the business idea is revealed to be unfeasible, there is no reason to even consider writing a business plan to implement the idea.

If, during the process, it appears your business is not feasible, then look for ways to change your original ideas to make it feasible. Do more bootstrapping, get creative, be flexible. Do not just give up on a good idea without making an honest effort to make it feasible. However, your grade will not be hurt if your concept is truly not feasible, as the objective is for you to learn how to assess the feasibility of an idea.

On September 13, 2006 each student in class will conduct an, individual, one-minute elevator pitch of a lifestyle business entrepreneurial opportunity that they have identified (described in the individual assignment section of this document). After everyone in the class has completed their elevator pitch, I will select five opportunities that seem the most promising upon my initial inspection of the opportunity. Teams will then be formed around the five selected lifestyle business opportunities. Each team will complete four written feasibility analysis (or related) papers (each paper will consist of one part of a full feasibility analysis or other parts of a full business plan) and one 20-minute presentation to the class of the full feasibility analysis. Students will self-select their team members on September 13, 2006.

As a reminder, a lifestyle business is a type of new venture that is generally somewhat focused in its scope within the industry it competes and growth aspirations for the firm are generally modest. That is, founders of lifestyle businesses are not usually looking to grow their ventures to become large organizations. Another term that you may have heard for a lifestyle venture is a “small-to-medium size company,” or SME. Further, the types of firms that your book refers to as “salary-substitute firms” would fall under this category. Regardless of the growth aspirations of the founder, the entrepreneur is generally interested in starting and running the company for an indefinite amount of time (e.g., they are not looking for a liquidity event), and they generally only have one or just a few physical “office” locations. Characteristics of these types of firms include that they provide their founders with enough financial means to make a living equivalent to what they might earn in a traditional job and they sometimes allow their founders to pursue a particular lifestyle or interest (e.g., in the case of founders pursuing a particular hobby or special interest).

Note: It should be noted that although I will select the five opportunities that will be studied by the team based on the initial elevator pitch, the final form of the business and the components of the business model can and in all likelihood should evolve as the team studies the different feasibility aspects of the opportunity. Further, it is possible that after conducting the various feasibility analyses relevant to the opportunity, the team might conclude that the opportunity is not in fact feasible. Grades on the assignments will not be based on the actual feasibility of the opportunity studied and instead will be based on the comprehensiveness and correctness of the feasibility analyses conducted.

Suggestions for Conducting Research

In terms of the research that the team will conduct for the feasibility analysis papers, everyone on the team should look for information on the topics associated with each paper below. Identify the industry that encompasses your business and the consumers or industry(ies) you will be selling to. Information you are seeking includes:

  • Industry trends, past growth rate and future growth projections, target market wants and needs.
  • Typical products/services offered by competitors, client/customer demographic description, pricing, location, promotional methods, distribution methods, customer service reputation, quality track record, etc. Learn how your competitors operate.
  • Sales Forecast – how much revenue you can conservatively expect to generate in your first year in business?
  • Any other information needed to complete your feasibility report.

Suggested Approach to Research:

  1. First determine your NAICS code. This will increase the efficiency of your research.
  2. Locate trade/professional associations; find one for similar companies in your industry. If you are selling to other businesses, then locate a second association for the industry your clients are likely to be in. Start with the Encyclopedia of Associations, which is located both in the library (AS22 .E5) and through the library’s online resources. Contact association(s) within the first few weeks of the term to determine what information they might provide to you. Be sure to discuss the association(s) you researched and describe the pertinent information you found through them in your presentation and memo.
  3. Find magazine/journal articles or books about your type of business; photocopy the articles. Describe the articles and books you researched as well as the pertinent information that you found. Online library resources that students have found particularly helpful in the past include Hoovers.com (great for industry and company information and overviews) and Business Source Complete database (great for articles). While these are great sources, do not limit your research to them. I put them here merely as a suggestion.