Elevator Pitch in Evaluating Venture Opportunities - Coursework Example

Elevator Pitch in Evaluating Venture Opportunities Name Institution Course Date Elevator Pitch in Evaluating Venture Opportunities Entrepreneurship is an important factor for economic growth (Robson, Wijbenga and Parker, 2009). The significance of new ventures has led to scholar to search the enablers of venture performance. New ventures’ strategic decisions are fundamental for their success as they represent how these ventures line up their strengths and weaknesses with environmental factors representing opportunities and threats (Robson, Wijbenga and Parker, 2009). Entrepreneurship can be defined as the process whereby people pursue opportunities that will enable them to start their own business. In order to start a new venture, there are so many things that one needs to take into consideration. An entrepreneur should be creative and should consider factors such as capital for start-up, physical location, customer availability, and time among others (Robson, Wijbenga and Parker, 2009). Creativity allows entrepreneurs to be able to take advantage of new venture opportunities and differentiate their business idea from the competitors. Before starting a business, an entrepreneur is expected to evaluate and analyze venture opportunities in order to ensure that the new business will be successful (Robson, Wijbenga and Parker, 2009). One way of doing so is the use of elevator pitch. Elevator pitch can be defined as a short description that assists in explaining the purpose of a new venture to a person who has never heard of it before (Leschke, 2013). This paper will discuss if elevator pitch is the best way to evaluate and analyze the effectiveness of a new venture opportunity. When starting a business, an entrepreneur often recognizes the opportunities, gather resources necessary for the opportunities and drive them to completion. Starting a new venture is not easy (Heinonen and Poikkijoki, 2006). When analyzing venture opportunities, it is important to analyze the industry and the market. This is an important method as it is able to predict the potential of a market and industry sector. It will also enable an entrepreneur understand the industry life cycle. Industries as well as products often move through a number of cycles including birth, growth, competition, shakeout and maturity and decline (Heinonen and Poikkijoki, 2006). This predicts the maturity of the industry one wants to venture into. Another way to analyze venture opportunity is by use of primary customer profile. Customer profile information is essential in generating marketing strategy in future and they include age, income level, education, buying habits and physical location of customers (Robson, Wijbenga and Parker, 2009). According to Heinonen and Poikkijoki (2006), the core concept of new ventures is entrepreneurship which entails the exploration, creation and exploitation of the environment. Exploitation of the environment relies heavily on observing market potential and discrepancies. The environment is said to be an important factor that shapes the resource opportunities for new ventures (Pincus, 2007). For instance, industry growth is said to having a paramount relationship with the growth and expansion of new venture. Industry growth level represents the extent to which resources are available for new ventures. Industry growth is an environmental factor that should be analyzes in order to determine new venture opportunities. Pincus (2007) suggests that entrepreneur often look for circumstances where enhanced market and industry growth can reduce the effects of adverse competition. Venture opportunities can also be established by evaluating sources for resourcing new ventures. Resources required by a new venture may be used in areas such as warranting the products, logistics and supply chain management, quality improvement and programs, production process and inventory management. As mentioned earlier, elevator pitch can sometimes be used by entrepreneurs to evaluate new venture opportunities (Leschke, 2013). Elevator pitch is said to capture the ability of any entrepreneur to have his venture concept down so effectively and briefly that he could walk into an investor in a hypothetical elevator and communicate about his business for successfully before the elevator reaches the last floor. There are a number of content that should be included in the elevator pitch (Leschke, 2013). They include the problem, the solution, the market where products and services are sold, the competition, the revenue model, the finances, the operations, and the team. An effective elevator pitch explains the sources of revenue for a new venture and how products or services are produced or delivered to the employees (Leschke, 2013). In addition, it highlights the challenges that the new venture is trying to solve or the need that is being fulfilled. An elevator pitch often closes strongly by mentioning the important elements of the new venture and reinstating the problem being solved and the solution being used (Leschke, 2013). An elevator pitch quickly and effectively define a process, an operation, a product or service, competition, value propositions among other important elements of a business venture (Leschke, 2013). Evaluation of business opportunities may involve organizational structure which comes about by identifying the best fit by giving the existing contextual factors, design factors as well as structural factors (Heinonen and Poikkijoki, 2006). The contextual factors include environment, technology and market. Furthermore, the design factors involve the structure and models of the business. Also, structural factors play huge role in an organizational structure and it involves the complexity and the formalization of the entrepreneurial venture (Heinonen and Poikkijoki, 2006). In addition there are various building blocks of an entrepreneurial organization. They include: group by activity, group by output, group by customer, liaison roles, cross-unit groups, integrators and matrix structures to name a few. Additionally, during the design of the business, the initial process involves designing a process map or a flow chart that follows up on how different information is traversed within the business (Heinonen and Poikkijoki, 2006). These mapping activities results in making better and well informed decisions that assist in identifying the number of individuals to recruit, the number if equipment to buy, the kind of facility to function in and lastly, the kind of organizational structure to use. Furthermore, identifying a suitable business site is very important in this process (Heinonen and Poikkijoki, 2006). Decisions that are made with regard to site choice always begin at the macro level. They include choosing the area, state and community based on their economic and financial incentives. In addition, population demographics also need to be considered in business site location (Heinonen and Poikkijoki, 2006). Where an individual is starting a business from start or is buying an existing one, he or she is required to take some steps in evaluating the new venture's potentials and the ability to succeed. According to Heinonen and Poikkijoki (2006), the investigation and evaluation should be thorough in order to be able to review opportunities as well as threats for informed decision to be made (Leschke, 2013). Another important factor for evaluating new venture opportunity is the skillset required and creativity and ability to validate. If the skills required for the start of a new venture is available, the execution risks will be low. Appropriate skillsets may entail ability to execute required work, capital required to develop such skillsets and adequate number of employees with these skillsets. Creativity for an entrepreneur is very important (Leschke, 2013). Creativity is the making of meaningful steps and entails critical skills necessary for creating and generating opportunity in a business environment. It is a significant quality that an entrepreneur should have in order for a new venture to be successful (Leschke, 2013). In addition, evaluating new venture opportunities may involve identification of business processes (Robson, Wijbenga and Parker, 2009). It is important for an entrepreneur to design the process map that will describe how information and data flow in the business. Mapping of business process is important as it leads to better decisions in terms of the number of employees to hire, type of organizational structure, equipment to buy and type of facility effective for working (Robson, Wijbenga and Parker, 2009). Moreover, an effective evaluation of a new venture opportunity entails a risk assessment. Clear appraisal and evaluation of risk inherent can assist an entrepreneur prepare for potential problems and decides if the risks are worth coming up with new business (Robson, Wijbenga and Parker, 2009). There are a number of factors that should be considered in the risk assessment such as competition level, government policy, economic and political factors. Another factor considered when evaluating venture opportunity is sustainable competitive edge. It is very challenging for a business to have a competitive edge that last for a long time (Robson, Wijbenga and Parker, 2009). For a company to be competitive, it should have dynamic resources and capabilities. There is an argument whether elevator pitch is the best method of evaluating venture opportunities. Elevator pitch is a kind of a business model that describe in short yet comprehensively the rationale of how business ventures create, deliver as well as captures value (Pincus, 2007). Elevator pitch does not capture everything about a business, it only communicates clear, short and sufficient information that has the ability to compare and contrast competing approaches (Leschke, 2013). The dimensions and contents of elevator pitch entail business decision enablers that sufficiently and effectively highlight how a business enterprise can approach a business opportunity. This provides a framework for evaluating alternative approaches (Pincus, 2007). Therefore, it is right to conclude that elevator pitch is an important tool in evaluating venture opportunities especially when a business plan is yet to be prepared. Elevator pitch can evaluate several business opportunities making it essential to companies especially those in fast moving markets (Pincus, 2007). To sum up, elevator pitch is defined as a short description that helps in giving clear explanations of the purpose of a new venture to an individual who has never heard about it before. An entrepreneur needs to identify the opportunities available as well as necessary resources and then drive them to completion. In addition, the core concept of new venture involves entrepreneurship that entails exploration, creation as well as exploitation of the environment. The resources needed by a new venture are used in areas such as warranting the products, logistics and supply chain management, quality improvement and programs, production process and inventory management. Organizational structure comes about by identifying the best fit by giving the existing contextual factors, design factors as well as structural factors. Furthermore, the building blocks of an entrepreneurial organization includes: group by activity, group by output, group by customer, liaison roles, cross-unit groups, integrators and matrix structures. Therefore, elevator pitch is considered the best method because it describes in short yet comprehensively the rationale of how business ventures creates and also because it has the capability to assess numerous business opportunities therefore very necessary to companies. References Heinonen, J and Poikkijoki, S. A 2006, ‘An entrepreneurial directed approach to entrepreneurship education: mission impossible?’ Journal of Management Development, Vol 25, pp. 80–94. Leschke, J 2013, Business Model Mapping: A New Tool to Encourage Entrepreneurial Activity and Accelerate New Venture Creation. Journal of Marketing Development and Competitiveness, vol. 7, no. 1, pp. 18-26. Pincus, A 2007, "The Perfect (Elevator) Pitch", Business Week. Robson, P. J. A., Wijbenga, F and Parker, S 2009, ‘Entrepreneurship and policy: challenges and directions for future research’. International Small Business Journal, vol. 27, no. 5, pp. 531-535. Read More