NEW BUSINESS VENTURES

/by

What is a new business venture?

A new business venture is a new entity created to make a profit by a corporation, where there is a significant degree of uncertainty about the outcome and a high degree of risk of loss or failure. It is often started as a way to expand into new markets or to develop new products or services. New business ventures can be risky, but they also have the potential to be very rewarding.

Why do people start new ventures?

Corporate Explorers and entrepreneurs start new ventures to pursue a passion, and/or to improve the income potential of their company or themselves. They are typically started by individuals who have a greater tolerance for uncertainty and risk.

Read more: A Conversation with Andy Binns About the Corporate Explorer >> 

How is a new venture different from the core business?

New ventures pursue customers or markets outside of the core portfolio. There is a higher degree of uncertainty around the desirability, feasibility, and viability of the solutions proposed by the venture, and the core business may lack the capabilities or capacity to take the solution to market.

What are some types of new business ventures that corporations can create?

Some common types of new business ventures are new product development, market expansion, acquisitions, and joint ventures. No matter what type of new business venture a corporation is considering, to increase the chances of success it is important to do the research and have a solid business plan and strategy for scaling the new venture.

Why are new ventures important for a corporation’s growth strategy?

Steve Blank said, “A big company is a permanent organization designed to execute a repeatable, scalable business model,” (think cash cow). As cash cows mature and dry up, new ventures become mission-critical to help incumbents diversify their revenues, thus replacing lost revenues and providing new sources of growth.

Some of the benefits of new business ventures for corporations can be:

  • Increased revenue: New business ventures can generate new revenue for corporations. This can help to grow the company and to create new jobs.
  • Improved market share: New business ventures can help corporations to increase their market share. This can lead to higher profits and a stronger competitive position.
  • New product development: New business ventures can help corporations to develop new products and services. This can help the company to stay ahead of the competition and to meet the needs of customers.
  • Market expansion: New business ventures can help corporations to expand into new markets. This can lead to new opportunities and to increased revenue.

What are some of the risks of new business ventures for corporations?

New business ventures can be a risky but rewarding proposition for corporations. Here are some of the risks of new ventures:

  • Financial risk: New business ventures can be risky. They can require a significant investment of time, money, and resources. There is always the possibility that the venture will fail.
  • Opportunity cost: New business ventures can take away resources from existing businesses. This can lead to lower profits and a weaker competitive position if not skillfully navigated.
  • Distraction: New business ventures can be a distraction from the core business.
  • Culture clash: New business ventures can create a culture clash between the core business and the explore business.
  • Regulatory risk: New business ventures can be subject to new regulations. This can increase the cost of doing business and can lead to delays.

 

Related Terms: