Abstract:
An investigation of nine business ventures ranging from potential start up concerns to those that were in operation for one year or less, has revealed that entrepreneurs are not conducting adequate research into new business ventures nor are they identifying the risks associated with the business that they wish to enter. This has been identified as one of the primary reasons that entrepreneurs failing to secure start up finances from financial institutions at the start up phase of new business ventures or the reason for their business failing within the first year of its operation. It is proposed that entrepreneurs employ the Risk Assurance Model at the start up phase of the business venture to assist them in identifying, controlling or mitigating the risks usually associated with the start up of a new business venture. The Risk Assurance Model could be linked to the construction of a house based on Voehl's (1992) House of quality. The foundation of the house represents the commitment displayed by the entrepreneur to the business venture. The floor slab of the "house" represents the research that the entrepreneur has to conduct at the start up phase of the business. The pillars of the "house" (namely, the organisation structure, marketing, operations/logistics and the leadership/management) are obtained from the research conducted of the entrepreneur. The lintel of the "house" represents the finance requirements and the roof of the "house" represents the customers. By going through all the phases of the Risk Assurance Model, the entrepreneur will reduce or minimise the risk of business failure within the first year and also serve to enhance the chance of obtaining start up finance from a leading institution.
