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Is There Sufficient Volume?
Beyond "Net Buyer Benefit" and "Margins" as components of Question B: Value, there is a third dimension that must be considered: Is volume sufficient?
Sufficient volume depends upon the absolute size (in dollars) of the margin in question compared to the objectives of the venturer. To illustrate, consider two extremes, with a pre-tax profit objective
of $5 million.
In the first case, the entrepreneurial discovery is a new type of paper clip that is tighter gripping, will never break, won't mark the paper, and is easier to use. Pre-tax margins per
unit on this new combination are $0.0025. This means that the venturer will meet his or her goal only after 2 billion of these are sold. Here sufficient volume is a very large number.
In the
second case, the entrepreneurial discovery is to find a buyer for a $100 million office tower, where the commission rate for the venturer/salesperson is five percent. This means that the venturer/salesperson
will meet his or her objectives in just one transaction. Here sufficient volume is attained on the first sale.
If the volume is insufficient, and you are evaluating a new venture, the answer to Question B:
Is it Valuable? is NO--which means DON'T GO ON until the low volume issue is resolved.
If you are operating a business, and the venture has insufficient volume, then find a way to generate the volume needed,
because the venture will not meet your venturing objectives--and as such will be a disappointment. Generally, the solution to volume problems is linked to Product Market Match and Net Buyer Benefit: It
is a MARKETING problem, especially a DISTRIBUTION one. If you don't know how to solve it, the solution is to obtain skilled help from marketing professionals WHO HAVE EXTENSIVE EXPERIENCE WITHIN YOUR TARGET
NICHE.
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