Evaluating the Business

Idea

Dr. Asif Mahmood

asif.mahmood@umt.edu.pk

University of Management and Technology,

School of Textile and Design
Prerequisites of a Start-up Business

Idea

Personal
Resources
Attributes

START-UP

Knowledge
Marketing
of
Strategy
Customers

Knowledge
of
Competitors
 Personal Attributes

 Stamina

 Commitment and dedication

 Ability to bounce back

 Motivation to excel

 Opportunity perception

 Tolerance of risk, ambiguity and uncertainty

 Knowing Your Customers

• Are your customers going to be?

• Are they located?

• Do they decide to buy your product or service?

• Do they “need” your product or service?

• Will you find them or they find you?

• Is your product or service worth?

• Do they have the resources to pay for it?

 Knowing Your Competitors
Barriers to entry

Porter’s Economies of scale

Product differentiation
Capital requirements
5 forces Legal agreements
Switch costs

Power of suppliers Competitive rivalry Power of buyers

Concentration Number and size Numbers and
Extent of substitutes Industry growth concentration
Importance of supplier Extent of differentiation Extent of differentiation
Extent of differentiation Capacity increments Switch costs
Forward integration Exit barriers Margin they earn
Backward integration
Threat of substitutes
Changing technology
Changing market
Changing tastes
Switch costs
Extent of differentiation
Generic market strategies
 Resources

Bank

Suppliers Landlords

Customers Employers
 Capital

Human Financial
Capital Capital

Social
Capital