Entrepreneurship and New Venture Creation Exercise 2
There is a committee that considers strategic developments on the basis of business plans. It is concerned that it may be too risk averse and requires some new guidance on evaluating business plans. Having worked through the PORES how would you advise the committee?
First to all it is important to remark that I once that the first Business Plan has been done, a lot of troubles can be identify and manage. As said Delmar and Shane to write a business plan helps entrepreneurs to increase theirs capability, but does less true that before to make a business plan could be very important to make a PORES analysis. Through of this kind of analysis it is possible to identify the profit opportunity and the capability to exploit it reducing the risk of failure and maximize profit potential.
With the PORES analysis I can provide to the committee a list of key assumption that I can check and verify if them are correct. From an external point of view there are several aspects that inside of the company can always look like correct but really aren’t.
For these reason it is necessary to review the following: the initial conditions that provoked the new venture; validate the studies realized about the market identifying the buyers, suppliers, and competitors; analyze the resources that are necessary and check if the kind of resources are available or is required a specific skills that can increase the costs. With all of these characteristics that I can provide will be important to add a dynamic point of view because statics aspect are not enough to validate a business. The dynamic aspect should be studied over all characteristics that a business plan cover as are check if the new idea was consequence of solve a problem or is something that appear after to see a vision or strategy. That usually occurs in development of software because a lot of people forget the labour of IT architects that always try to be according with the enterprise architecture. I can to determinate if the study of market have been done thinking in the new competitors or the growth possibilities of the new venture and if have been done a macro economic analysis identifying the risk (i.e. the increase of interest) and creating a mitigation plans.
Once that the key assumptions have been identified and checked with this model we can to review the profitability of each one and try to analyze if the best strategy to exploit it has been chosen.
Andrew Burke (2009. ‘Entrepreneurship and New Venture Creation’ Study Notes, Warwick Business School.