Essentials of Entrepreneurship: A Practical Approach
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General Entrepreneurship
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Business Evaluation Scoring Technique
Entrepreneurs often have more ideas than they can pursue. It is useful for entrepreneurs to have some method for evaluating a group of ideas to decide which ones to actually pursue further.
One technique, developed by Edward E. Williams, that is useful for evaluating venture ideas is the Business Evaluation Scoring Technique (BEST).
The procedure considers the various "window of opportunity" factors related to a new venture. The entrepreneur needs to answer the following specific questions about the window of opportunity.
- Is the business really differentiated?
- Does it have growth potential?
- Will it require capital?
- Can financing be secured?
- Does it suit the individual's entrepreneurial profile?
After answering these questions, the entrepreneur needs to give a score to each factor. The scoring is done on a 1-5 scale with 1 being low and 5 being high. The scores for each factor are then summed. The possible total score for an idea is from 5 to 25. Note that for the "Will it require capital" factor, a low dollar capital requirement receives a higher values than if there is a high dollar capital requirement.
The following conclusions about continuing to analyze the idea for a possible venture are summarized in the following table:
| Total Score | Description | Action |
| 20-25 | Excellent prospects | Must try |
| 15-19 | Very good prospects | Should try |
| 11-14 | Reasonable prospects | Try if nothing else available |
| 10 and under | Poor prospects | Avoid this loser |
While this approach is not perfect, it is a good way to sort through a group of ideas.
Some example results from analyzing some ventures ideas and the results of the ventures appear below.
| Idea | Factor Score | Execution |
| Apartment in in NJ | 2, 3, 1, 5, 2 = 13 | Good (2 X $) |
| Furniture rental | 3, 2, 3, 2, 2 = 12 | Poor (complete loss) |
| Engineering company | 1, 2, 4, 1, 3 = 11 | Poor (complete loss) |
| Tank car leasing | 1, 2, 1, 5, 2 = 11 | Fair to date (15% ROI) |
| Consulting company | 4, 2, 5, 1, 3 = 15 | Good (low investment) |
| Trust company | 4, 4, 1, 3, 4 = 16 | Excellent (10 X $) |
| Venture capital company | 2, 5, 1, 5, 4 = 17 | Very good (4 X $) |
| Internet foods company | 3, 4, 2, 4, 5 = 18 | Excellent (entrepreneur sold it with a good return |
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