Venture Opportunity Screening Analysis

NOTE: Please delete any text in italics before using this template for your analysis. The
bulleted questions are there to guide you to answer the question. Replace the question
with a onetwo sentence answer.
The first step in identifying a suitable business opportunity is to outline your concept! begin to
define the scope of your business! and to e"aluate the "iability each of the principal parts of your
prospecti"e business. #n order to do this effecti"ely! you must first understand the dynamics that
are affecting the industry and mar$etplace in which you will compete. The %enture Opportunity
&creening 'nalysis pro"ides the reader with a dispassionate "iew of the industry.
(. #ndustry O"er"iew
). Product*&er"ice +eli"ery
,. -ar$etplace 'nalysis
.. -ar$eting +ynamics
/. +istribution and &ales +ynamics
0. 1inancial Estimates
2. Opportunity &creening 'nalysis
3. 4onclusions
The attached wor$sheets will help to guide you through this initial loo$ at the industry where you
will start your business. #n this initial stage! understand that you are not de"eloping your
business plan! but are gaining a better understanding of the industry where your business
will compete. 5se ob6ecti"e research to answer all of the questions and complete all of the
wor$sheets. #n subsequent steps! you will be in"estigating and de"eloping these issues in
depth as you create the business plan for your new "enture.
Industry Name: _______________________________________________________
Student Name: ______________________________________________________
_____________________________________________________________________
Course: ______________________________________________________________
Section: _________________________
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1. Industry Analysis
The #ndustry 'nalysis section dispassionately describes and outlines the industry in
which you will compete. 7hen finished with this section! you and your readers should
understand the dynamics! problems! and opportunities dri"ing your industry.
What is the industry that addresses this market?
NAICS Code
Market Capitalization
Groth !ate
Num"er o# $ompetitors
!elati%e size o# $ompetitors
What trends are important in this industry?
o So$io$ultural trends?
o &emographi$ trends?
o 'e$hnology trends?
o ($onomi$ trends?
o Geopoliti$al trends?
)o does this industry segment the market?
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2. Product/Serice !eliery
The Product and &er"ices section is a detailed description of the products and*or ser"ices
currently being sold in the industry. 8ou should not assume that the reader is familiar with
these products*ser"ices! so be sure to explain and describe them carefully.
What e+a$tly are the types o# produ$ts or ser%i$es "eing o##ered in the industry?
What aren,t they? Care#ully des$ri"e-
What is uni.ue a"out these produ$ts/ser%i$es?
What are their key #eatures and "ene#its?
&o the industry $ompetitors "ene#it #rom any proprietary rights to the
produ$ts/ser%i$es 0#or e+ample1 te$hnology1 patents1 $opyrights1 trade se$rets1
et$-2?
What di##erentiates the $ompetitors1 and hat are the similarities?
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". #ar$etplace Analysis
The -ar$etplace 'nalysis section dispassionately describes and outlines the
mar$etplace in which you will compete. 7hen finished with this section! you and your
readers should understand the dynamics! problems! and opportunities dri"ing your
mar$etplace.
What is the market that the industry $urrently ser%es?
)o large is it?
What is its groth potential?
What moti%ates $ustomer pur$hase de$isions?
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%. #ar$eting !ynamics
The -ar$eting &trategy section of your plan will ma$e or brea$ the prospects for your
"enture. #n the -ar$eting &trategy section! show how you are going to fit into your
mar$etplace. 7hat are unmet needs in the mar$etplace and how are you going to fill
them9 :ow will you differentiate your product or ser"ice from your competitors9 7hat
unique features! benefits! or capabilities will you bring to the mar$etplace9 7ho are your
customers9
Who are the target $ustomers o# the marketpla$e?
What pro"lems are "eing sol%ed #or them?
What are their pro#iles?
What moti%ates their "uying de$isions?
What are the strengths o# the produ$ts/ser%i$es $urrently "eing o##ered?
Weaknesses?
Who are the key $ompetitors?
)o do they di##erentiate their produ$ts or ser%i$es?
)o are the produ$ts or ser%i$es $urrently pri$ed?
What are gross re%enues per unit sold?
What are anti$ipated annual sales?
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&. !istri'ution ( Sales !ynamics
:ow does the mar$et reach its customers9 :ow does the mar$et close the sale with its
customers9 Remember! ;Nothing happens until the sale is made.;
What distri"ution $hannels does the marketpla$e $urrently use 0e-g-1 dire$t sales1
mail-order1 holesalers1 et$-2?
)o does the marketpla$e $urrently $ommuni$ate ith $ustomers 0e-g-1 ad%ertising1
promotions1 et$-2?
)o does the marketpla$e $urrently sell its produ$ts or ser%i$es?
Who does the selling 0internal sales people1 manu#a$turing representati%es1 et$-2?
What are the $osts asso$iated ith this sales strategy?
Whi$h $osts are #i+ed?
Whi$h are %aria"le?
Page - 6
). *inancial +stimates
The Pro 1orma 1inancial Estimates should illustrate what the a"erage competitor should
expect within the industry and mar$etplace that you ha"e defined. 1or purposes of this
analysis! set both "ariable and fixed costs to equal /<= of 4O>&.
Summarize estimates made in pre%ious se$tions7
A- Annual unit sales7 8888888888
9- Pri$e per unit7 8888888888
C- :aria"le $ost per unit 0produ$tion and sales27 8888888888
&- ;i+ed $osts 0admin1 produ$tion1 and sales27 8888888888
(- <ne-time start-up $osts= 0e.pmt1 mktg1 legal1 et$-27 8888888888
;- Working $apital r.d= 0re$ei%a"les1 in%entory1 et$-27 8888888888
Cal$ulate estimated annual gross re%enues and in$ome7
G- (stimated annual re%enues 0A+927 8888888888
)- (stimated annual %aria"le $osts 0A+C27 8888888888
I- (stimated annual $ontri"ution margin 0G-)-&27 8888888888
Cal$ulate "reak-e%en #igures7
>- Contri"ution margin per unit 09-C27 8888888888
?- Annual "reak-e%en .uantity 0&/>27 8888888888
@- !atio o# "reak-e%en to e+pe$ted .uantities 0?/A27 8888888888
(stimate the money you ill initially need to start your "usiness7
M- 'otal up-#ront #unds re.uired 0(A;27 8888888888
N- Additional units to $o%er up-#ront #unds 0M/>27 8888888888
<- 9reak-e%en .uantity ith up-#ront #unds 0?AN27 8888888888
Cal$ulate #inan$ial per#orman$e #igures7
P- Pay"a$k period #or startup #unds 0M/I27 8888888888
B- Annual return on start-up in%estment 0I/M27 8888888888
! :aria"le $ost to pri$e ratio 0C/927 8888888888
S- Contri"ution margin ratio 0I/G27 8888888888
= - Start-up and Working Capital $osts should "e $al$ulated using the Start-Cp Cal$ulator
on my e"site- Atta$h the $ompleted $al$ulator as an appendi+ to this do$ument-
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7. Venture Opportunity Screening (VOS) Analysis
#n this final section! you will e"aluate the all of the information from the pre"ious
sections to determine the probability that a new "enture will succeed in the industry
and mar$etplace that you ha"e analy?ed. The specific criteria for ran$ing the new
"enture using the %O& #ndicator will be pro"ided in class.
:<S Indi$ator
*actor Categories ,ig- Aerage .o/
Industry/mar$et
Market Size Potential
:enture Groth !ate
Market Share 0year
three2
(ntry "arriers
Pricing/Pro0ita'ility
Gross margins
A#ter-ta+ margins
Asset intensity
!eturn on assets
*inancial/,arest
Cash #lo "reake%en
!ates o# return
IP< potential
;ounders $ontrol
#anagement 1eam
(+perien$e/(+pertise
;un$tional areas
;le+i"ility/Adapta"ility
(ntrepreneurial #o$us
1otal Points 'y ran$ing
Oerall total points 2O1P3
Aerage core 2O1P/1)3
)ighE3F A%erageE*F @oE1
Page - G
8. Conclusions
&o these results look attra$ti%e enough to pro$eed ith the de%elopment
o# a ne %enture in this industry?
)o $an e impro%e the pro"a"ility o# su$$ess o# a ne %enture in this
industry?
I# e ere to start a ne %enture in this industry1 hat size 0s$ale2 and
s$ope 0"readth o# produ$t o##erings2 ould ha%e the greatest pro"a"ility
o# su$$ess?
What other in#ormation do e need in order to make an e##e$ti%e de$ision
to pro$eed ith a ne %enture in this industry1 or to $hoose another
industry #or analysis?
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