Evaluate Every New Business Opportunity Page

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Every business opportunity that comes along for your consideration should be reviewed from several different perspectives before you decide to invest both your time and money. This review should be considered regardless of whether the idea is a large or a small opportunity. Corporations do this every day with every new business they look at to satisfy themselves that they are investing their resources the most efficiently. This article will review some of the criteria you may want to consider before taking the leap into your new business opportunity.

The evaluation of a new endeavor regardless of what it is should consider the following criteria. Economic, strategic fit with your company, resources required, payback compared to other opportunities and in the case of small businesses, does your family support your initiatives. We will examine each of these in a bit more detail.

Every business opportunity should be evaluated from return on investment perspective. Business owners will invest both their time and their money into the business. The question you want to answer is whether you will receive net profit after all expenses are paid that will amount to more than you could get from other types of investments. This involves estimating sales revenues, the cost to generate sales, operations expenses to run the company, produce your product and support your product to your customers. Depending on your business opportunity this can be a complex analysis, but certainly worth it in the long run. If there are other opportunities that will be more profitable, perhaps you will want to invest in those instead.

Next, owners should evaluate the strategic fit of this opportunity with their existing business and with themselves. If you have an existing operation, will the new addition compliment existing products and services or will it effectively be a totally new operation. Does it take your business in the direction that you want your company to go in? If this is a new idea for you to consider, does it fit with what you the business owner like to do? These are important questions, since there is no sense investing in something that in a year or two you wished that you had not invested because you dislike the work.

Resources are always a large part of the decision to proceed with a new business opportunity. Resources consist of people you need to run the business, money to operate your business, buy supplies and pay salaries. In addition you have to be able to find skilled people and either raw materials or finished goods that fit your business profile. Sometimes these resources are just not available.

Lastly, every good management team is supported by family members or by a board of directors or by mentors that will assist in the new venture. It is important that you have the support of these people. They must understand the business concept and potential and be willing to support you in your endeavors. Sometimes even detractors should be listened to, since they may have thought of something that you did not consider.

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This page was updated on Nov 2009 and is Copyright © 2003 by Global Com Consulting Inc.