Assessing Business Start-ups

Finicial Planning

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  • Created by: Hannah
  • Created on: 03-05-11 09:12

Things you need to know

  • the objectives that entrepreneurs may pursue when establishing businesses
  •  how to assess the strengths and weaknesses of a business plan
  • the reasons why business start ups can be risky
  • the major reasons why start up businesses fail.
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Reasons for starting a business

  • To be your own boss (29%)
  • Develop a hobby (15.3%)
  • To make money (14.5%)
  • Saw a gap in the market (11.9%)
  • Career development (11.5%)
  • Hard to find a job (10%)
  • Family Tradition (5.4%)
  • Other (2.4%)
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Entrepreneurs' Objectives

It is possible to judge the success of a business start up against its objectives.

Possible objectives include:

  • to have greater control over your life
  • to develop an idea
  • to maximise profits
  • to benefit the community
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Aims & Objectives

  • Where do you want to be in the future, what is your goal?
  • What are your objectives - how will you measure that you achieve your goal?
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Business Objectives

The most effective business objectives meet the following criteria:

  • S - Specific
  • M - Measurable
  • A - Agreed
  • R - Realistic
  • T - Time-based
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Assessing the Strengths and Weaknesses of a Busine

  • Is there a demand for this product?  This is probably the most fundamental issue in assessing a business plan.
  • What is the competition?  How powerful is it?
  • Has the business planned its cash flow management?   For most new businesses cash flow is a critical issue.
  • What is the experience of the entrepreneur? Successful entrepreneurs have learned much from previous and unsuccessful attempts at starting a business.
  • Will it make a profit?  Although not all businesses set out with the objective of making a profit, this is an important objective for most enterprises.   
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Why Business Start Ups Can Be Risky – e.g.

Lack of Business and Management Skills

  • Sales
  • Procurement
  • Finance
  • Marketing
  • Administration
  • HR Management
  • Distribution
  • Legislation
  • Production
  • IT
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Why Business Start Ups Can Be Risky – e.g.


  • May be limited knowledge to forecast accurately.
  • Raising the capital is hard.
  • Cash flow problems can easily occur.
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Why Business Start Ups Can Be Risky – e.g.


  • Inaccurate research can lead to misleading information
  • Consumer inertia
  • Small marketing budgets
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Why Start Up Businesses Fail

  • Poor management. Many analysts believe this is the prime reason for the failure of a business.
  • Financial problems. These include failure to pay taxes, overspending or cash flow mismanagement.
  • Lack of demand. A start up business might find that its sales are substantially lower than it had forecast.
  • External shocks. Small and newly established businesses are particularly vulnerable to unexpected external events such as dramatic rises in oil prices.   
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