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A commercial venture is a start-up business that aims to make a profit by fulfilling a need in the market. It is usually backed by investors and requires a formal business plan. The business may go public or remain private.
A commercial venture is a start-up business that is formed with the expectation and plan that financial gain will ensue. Many refer to this type of business as a small business, as it usually starts with an idea that starts with a small amount of capital or finances. Most business ventures are backed by one or more investors in the hope that the business will be profitable.
Generally speaking, a commercial enterprise arises from the need for something that is missing in the current market. This need can be a service or product that consumers demand or need to fulfill a particular purpose. Once the need is identified, the venture can be started by a smart investor or small business that has the resources and time to develop and commercialize the new commodity on the open market.
A commercial venture will most likely be funded initially by an investor, who is often the small business owner or the originator of the idea. Once the business is established, other investors can get involved by providing support and venture capital to finance further development and raise awareness of the business with the intention of sharing more profit from all investors. In this scenario, the organization is actually a shared business venture, as more than one party is involved in the process.
When starting a business venture, it is recommended that a formal business plan be drawn up in order to outline the company’s purpose and mission 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 in the event of business failure. Many new business ventures fail within the first year or three of inception, so it is essential to include a plan to dissolve the business if necessary to reduce financial losses.
A small business may also choose to go public after a certain period of growth, allowing investors in additional venture capital firms, in the form of public shareholders, to become involved in the success of the entire company. Alternatively, the small business may choose to remain a private enterprise in order to maintain control over the decisions that impact their day-to-day operations and directions.
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