A business venture is a new business undertaking that an entrepreneur (or a team) launches in hopes of making a profit. It involves offering a product or service to meet a specific demand (or gap in the market). And just like any adventure, it comes with both potential rewards and risks.
A business venture involves putting time, money, and effort on the line with the expectation that if all goes well, you’ll satisfy a market need and reap financial return for your hard work. They can range from small startups to large corporations seeking expansion.
Ultimately, it is all about turning an idea or plan into a real business – turning it into reality.
Breaking down the term “Business Venture”
Let’s start by breaking down the term into its two component words – “business” and “venture.”
A business is a commercial enterprise that either sells products or provides services. It aims to make a profit and expand.
A venture is a risky or daring journey or undertaking. It is a new activity, usually in a business context, that involves risk or an uncertain outcome.
When we combine the two words, “business venture,” the meaning is a new business project or activity that is undertaken with the expectation of financial gain despite the inherent risks and uncertainties.
Business ventures aims to solve a problem or fulfill a need.
Every successful business venture starts with a spark. It has a fresh, novel idea or a unique spin on something familiar. It’s important to note that business ventures don’t need to reinvent the wheel. What they do need to offer is something valuable and distinct. For example, look at Airbnb’s twist on traditional accommodations or a local food truck introducing fusion flavors.
Risk-taking is another essential ingredient. Success isn’t guaranteed. Entrepreneurs embarking on a new business venture invest their time, money, and energy, fully aware that risk is part of the process. Whether it pays off or not, is an uncertainty that they are willing to risk.
Business ventures can appear in various shapes and sizes, from local businesses, online startups, to service providers. The key factor isn’t the size or industry, but the willingness to innovate and pursue growth.
How can risk be minimized?
First, start small and validate early. A lot of businesses start out by testing a concept without going overboard with spending — keeping expenses to a minimum. For example, Zappos started by listing images of shoes online and only began buying them (stocking inventory) only after a sale was made. The result? Validated proof that people would buy shoes on the internet, no big losses if the idea flopped, and eventual acquisition by Amazon for over a billion.
Secondly, shift gears as needed. Slack began as a gaming company, but that wasn’t working out. Slack saw a better opportunity in their team’s internal messaging tool, so they changed direction. The tool has now skyrocketed in popularity and eventually sold for billions.
And lastly, spread out the risk. Selling multiple products or selling to varied markets can save a business if one sector drops (it’s good not to keep all your eggs in one basket). Keeping some funds saved or having lines of credit helps too. These steps ensure a company is ready when unexpected setbacks happen.
Funding Methods
There are a number of different ways for a business venture to secure funding. We’ll go over three of the main avenues:
- Bootstrapping: Some companies rely on personal savings and profits for growth. Mailchimp is a good example. It grew from a small project into a multi-billion-dollar enterprise before being bought by Intuit. By focusing on paying customers first, the founders stayed in full control and built a successful brand.
- Venture Capital: Startups aiming to grow very fast may opt for VC funding. Airbnb is a classic case: after early struggles, big investors stepped in with cash, guidance, and introductions. The company then expanded its home-sharing platform worldwide, eventually going public at a multi-billion-dollar valuation.
- Crowdfunding: Platforms like Kickstarter let many people chip in small amounts. Oculus VR used this approach, securing over two million dollars initially. The helped them land even more financing and later a buyout by Facebook for two billion dollars. Others like Pebble Time also managed to achieve success through online backers.
Why launch a Business Venture?
What are the advantages you can get if you are going to launch your own business?
Be your own boss: If it is your own business, you have the freedom to make your own decisions and do something you really want to do.
Financial gain: If your venture is successful and turns a profit, you get to keep the proceeds.
Solve problems: Some businesses are started because the founder identifies a problem to be solved for customers.
Make a difference: Your business can make the world a better place and contribute to good causes, create jobs, etc.
Personal development: Running a business can be a significant motivator to learn and develop new skills.
Innovation: You get to turn ideas into reality and be part of the innovation process in your industry.
Network expansion: Your new venture helps you to meet and collaborate with like-minded individuals – increasing your network.
Types of Business Ventures
There are all types of business ventures. Here are few of them:
Small businesses: These include local businesses such as shops, restaurants, boutique shops, grocers, gyms, and beauty salons that sustain the communities.
Startups: They are based on a specific concept and seek to expand quickly, especially with the help of technology. The term startup’ is usually used to refer to businesses, especially in the tech industry, that are expected to develop and expand at a fast rate.
Social enterprises: Such companies seek to address social or environmental issues and earn profits at the same time. They include fair trade retailers, green tech companies, and educational technology firms.
Franchises: These businesses operate under the brand and business model of an established company.
Online businesses: These companies operate mainly on the Internet, hence the name. Examples include e-commerce stores selling products directly to consumers, online courses, consultations, and software solutions.