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What Is a Business Venture?

Establishing a business plan outlines the mission and purpose of a business venture.
Most business ventures are created from a need for a product or service, such as a grocery delivery business in a market where one does not exist.
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  • Written By: Tess C. Taylor
  • Edited By: Bronwyn Harris
  • Last Modified Date: 25 August 2014
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A business venture is a start-up enterprise that is formed with the expectation and plan that a financial gain will result. Many refer to this type of business as a small business, since it normally starts out with an idea that begins with a small amount of capital or finances. Most business ventures are backed by one or more investors with the hope that the business will be profitable.

In general, a business venture is born out of a need for something lacking in the current market. This need can be a service or product that consumers are asking for or need to serve a particular purpose. Once the need is identified, the venture can be started by a smart investor or small business person that has the resources and time to develop and market the new commodity on the open market.

A business venture will most likely be funded initially by an investor, which is often the small business owner or the originator of the idea. Once the business is created, other investors may get involved by providing support and venture capital to fund further development and increase awareness of the venture with the intention of a higher profit being shared by all investors. In this scenario, the organization is actually a shared business venture, in that more than one party is involved in the process.

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In the beginning of a business venture, it is recommended that a formal business plan be written in order to outline the purpose and mission of the business for the future. An effective business plan will also include a measurable process for identifying additional business capital, increasing profitability and drafting an escape plan should the business fail. Many new business ventures fail within the first one to three years of inception, so it’s vital to include a plan to dissolve the business if needed to reduce financial loss.

A small business may also choose to become a public after a certain period of growth allowing additional business venture investors, in the form of public stock holders, to become involved in the success of the company as a whole. Alternatively, the small business may choose to remain a private venture in order to retain control over decisions that impact their daily operations and direction.

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Discuss this Article

kini13
Post 11

We haven't started on a business plan, but we went straight to the building of our farmhouse, so now I need to create a business plan to avoid silly loss.

anon311408
Post 9

Business ventures fail for a wide range of reasons, but mostly, it's because your goal is simply unrealistic.

anon228779
Post 5

Thanks for such a helpful article.

Spokane
Post 2

@BuzzKill- New businesses fail for a few different reasons. According to AllBusiness.com, new business ventures fail because of reasons like over expansion, underestimating the competition, a bad location, poor execution or an inadequate plan.

Over expansion means the business tried to grow too big too fast and they couldn't keep up with the increasing costs to increase in size.

If a new business is offering a similar product as a competing company, the new company may be underestimating the public's demand for a new company when there is already an established one, offering the same product.

A good business idea can easily crumble if the business is located in a bad part of town, or located where there is very little foot traffic.

Sometimes businesses fail simply because it was a bad idea or the business owner simply doesn't have a head for business.

BuzzKill
Post 1

Why do new business ventures fail?

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