Fall 2008


For a PDF copy of this newsletter please click here.


How To Knowledgeably Assess Your New Or Ongoing Business


It seems like a great idea doesn’t it? Starting your own business and having the freedom to do your own thing. As a business owner you are your own boss, you can tell others what to do, and you can make it rich. Simple, right? But anyone who has ever failed in business will tell you that it’s not that simple. The idea was great but there was no market. There were too many competitors. The margins were too low. Not enough sales. There are endless factors that can contribute to failure of a business. So how do you make a knowledgeable decision on whether your venture is worth investing in or not?


Unfortunately, there is never a guarantee that your business will be successful. However, we do have a methodology that can allow you to make an educated business decision before investing in your new project. There is a general framework that every entrepreneur/business should follow when pursuing a new business idea, evaluating a current organization, or when making an investment decision. It is called the New Venture Template.


You always have to question yourself. Is this a real business? Can you keep it? Can you do it? The New Venture Template, developed by Ronald K. Mitchell, is a systematic approach that can be used to evaluate any business venture and answer these simple, yet complicated questions.


We have found that this template can serve as a powerful tool when evaluating a new business idea or improving an existing venture. It allows you to view the business from the eyes of venture capitalists or other financiers such as banks and private investors. It is a guideline that can help you answer critical questions and identify opportunities and gaps in your business idea or existing venture.


Mitchell states that there are six fundamental areas that need to be addressed to evaluate new ventures as well as ongoing businesses. The first three areas address market issues that answer the question, “Is it a business.” The remaining three categories address competitive issues that answer the question, “Can you keep it?”, in other words, “Is it sustainable?” Mitchell also provides questions to address the question, “Can you do it?”


Mitchell identifies six fundamental areas of new venture failures:


  1. The failure to Innovate
  2. The failure to Create Value
  3. The failure to Persist over time
  4. The failure to Maintain Economic Scarcity
  5. The failure to Prevent the Appropriation of Created Value
  6. The failure to Maintain Flexibility


There are a series of questions under each fundamental area which allows an entrepreneur/manager to decide whether or not to proceed with the venture.


A) Is it a business?


Innovation (Is It Innovative?)


In order to address whether your business idea or current venture is innovative, you must answer two sub-questions.


Is it a new combination?


A new combination occurs when a new entrepreneurial discovery is found. There are two categories of entrepreneurial discovery (Scientific & Circumstantial). Scientific discovery occurs when something is invented and applied in a new and valuable way. Circumstantial discovery occurs when something of economic value is revealed. -->


1 2 3 4 5 6 7>