Risk Reduction Planning™
There are several fundamental, and largely unresolved questions about risk in entrepreneurship that the entire business venturing community, and Novatempo® in particular, have been pondering for a long time. Some of these long debated questions are:
- Is entrepreneurship an activity that can be learned and taught?
- Why do start-ups experience such a high risk of failure? What can we do to improve the outcome of new ventures?
- Can the failure rate be mitigated through careful planning? What is involved in that planning?
- Is the business plan a credible tool for planning a business? Is the business plan equally applicable to all types of ventures?
- Is there a methodology to develop optimized business planning that can be systematized and broadly taught?
Risk Reduction Plan™
Answers to these questions may probe central to improving the productivity of the new venture creation processes.
Risk Reduction Plan™
Novatempo® has asked some of the same questions to hundreds of entrepreneurs, looked at their performance relative to each other and carefully listened to their answers and advise.
The product of this 10 year long effort undertaken by Novatempo® is a revised methodology for planning, designing and executing new high risk ventures.
Novatempo’s Risk Reduction Planning™ is a novel method for systematically maximizing the ratio between attainable reward and the amount of risk undertaken in risky ventures to deliver said reward.
The new methodology relies on heuristic knowledge derived from experience and training, and from skillful utilization of sound scientific and technological practices. It is not a simple method, however experience and discipline make possible systematically applying the method to develop action plans that are effective in, either delivering a path to success, or establishing clear milestones for curtailing losses in a decisive manner.
We have applied Novatempo’s Risk Reduction Planning™ method to the process of visualizing, planning and executing new high risk business ventures. Evidence of success and soundness is beginning to accumulate as experience results in higher levels of understanding and systematization.
Risk Reduction Planning™ is not a conventional business planning method, although a good Risk Reduction Plan™ increasingly resembles a good business plan as a high risk venture progresses through growing sales towards positive cash flow and accumulation of profits; the central performance metrics that define any viable business.
A well executed Risk Reduction Plan™ paves the way from the initial technical and business uncertainties, through strong business metrics consolidation, to much reduced levels of risk, and thus towards a high multiplier liquidity event.
What does a Risk Reduction Plan™ entails?
- A Risk Reduction Plan™ closely models the valuation of the venture at a given time as a function of the execution steps taken to reach that point.
- A Risk Reduction Plan™ makes minimal assumptions about unknown variables and volatile estimates.
- A Risk Reduction Plan™ focuses on defining milestones, quantifying resources and estimating valuation as a function of the actions taken by the entrepreneurs.
- A Risk Reduction Plan™ focuses on defining a path through validating milestones and always focused on minimizing the ratio between capital at risk and business valuation at any given point in time.
How does Novatempo® develop and apply a Risk Reduction Plan™ in any high risk business or technology venture?
During a Risk Reduction Planning™ engagement, our team of experienced business and technical professionals, jointly with the management team of the venture and its early stage investors; produces a Risk Reduction Plan™ that defines explicit steps to be executed, the timing of the milestones to be reached and the resources required to carry out each step. It is an intense team effort that relies on experience and heuristics, and that demands accessing deep levels of knowledge of the technology involved, of the business space targeted, of the state of venture capital community and of the human capital available.
Every action included in the Risk Reduction Plan™ represents a highly prioritized and non-sequential set of milestones to be validated. Each milestone of the Risk Reduction Plan™ reduces the risk going forward and maximizes the valuation of the venture up to that point in time. However, valuation in a high risk developmental company is highly subjective; and as a result, the experience contributed by our consultants plays a major role establishing sound estimates for timing, for costing and for even choosing the optimal risk reducing path, that is the sequence of specific steps defining the plan.
Our consultants utilize their experience across ventures and business spaces to develop a realistic and balanced Risk Reduction Plan™ to better guide your venture through an often surprising path of actions that maximize value and reduce risk; and that, in any new high risk venture vastly differs from the conventional Early Stage Business Plan.
We strongly believe that the Risk Reduction Plan™ should replace the Business Plan for the case of high risk technology ventures, thus profoundly impacting the seed, angel and venture capital fund raising cycles; and greatly increasing the productivity of entrepreneurial undertakings and of the associated capital deployment processes.
Where can I learn more details of Novatempo’s Risk Reduction Planning™ methodology?
We teach periodically an introductory workshop to our pioneering Risk Reduction Plan™ methodology.
For Further Information.
Direct your inquires for Risk Reduction Planning™ consulting services and related matters using this form.
