Is there no holdup?


Holdup refers to the bargaining power of buyers and suppliers. If the bargaining power of suppliers/buyers is high, then there is a holdup. If the number of suppliers in your industry is low, then the supplier may have a lot of bargaining power.For example, if a supplier wants to increase the price of products delivered to you, they can hold you up because you don’t have many other options.


Low Bargaining power is high for suppliers/buyers
Medium Bargaining power is medium for suppliers/buyers
High Bargaining power is low or non-existent for suppliers/buyers


If the level is low then you should not go on with your venture, unless you can reduce hold-up through negotiation, contracts, or posturing methods.. If the level is low for your existing business, then you should try the above methods as well. If your level is high proceed to the next question


6. Flexibility (Is it flexible?)


Things don’t always go as planned. Which is why it’s important to build flexibility into your business plan so you can be prepared to handle unforeseen situations. There are two questions that answer “Is it flexible?”


Is Uncertainty Minimized?


Uncertainty in business is knowing that a certain event will eventually occur but you’re not sure when. For example, in customer service we know that every so often a customer will complain but we’re not sure exactly which one or when. When we know that a certain event may occur, we are able to manage that risk and minimize uncertainty.


Low Steps have not been taken to manage risk (i.e. insurance, tax planning)
Medium Some steps have been taken to manage risk
High All expected risks are being managed


Uncertainty in business can somehow be planned for. So, if the level is low for your new venture or existing business, then you should begin managing your risk. It is important to keep in mind that you need to set aside cash to pay for risk management. If your expected risks are being adequately managed then proceed to the next question.


Is Ambiguity Reduced?


Ambiguity in a venture refers to not knowing future events. So how do you plan for future events that are unknown? Unfortunately, its almost impossible to deal with ambiguity in a venture. However, simply trying to reduce it separates ventures that last from those that fail. When trying to reduce ambiguity it means that you are thinking at a higher level. You’re looking at more than daily operations, you are thinking about competitors, industry changes, and any outside factors that can influence your business.-->


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