Essentials of Entrepreneurship: A Practical Approach

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The Entrepreneurial Process

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When an individual starts a new company, there are stages through which the entrepreneur progresses. The stages include: Opportunity, Launch, Growth, and Harvest.  The entrepreneurial process is illustrated in Figure 1-4.

Opportunity
The first decision an entrepreneur must make is whether to start a new business or purchase an existing one. This text assumes the reader wants to initiate a new business but many of the same concepts apply to buying an existing business.

The entrepreneur must have an idea. Initially, the individual may be thinking about several new venture ideas. In the process of identifying the prospects, the entrepreneur must decide whether he/she wants to enter a commodity, proprietary, service or technology business. After the opportunities are defined, the entrepreneur must analyze them and decide which one to pursue.

Launch
Once the entrepreneur has decided what business to start, he/she must next attract stakeholder such as customers, employees, investors, and suppliers. The entrepreneur must also prepare a business plan. The business plan will be useful in operating the company and raising funds for the venture and is such an important part of the entrepreneurial process that we have written this entire book around it. The entrepreneur must determine the legal form for the company; that is, one must decide whether the company will be a sole proprietorship, partnership, corporation, limited liability company or some other type of legal entity. It is important for the entrepreneur to consult a competent attorney and certified public accountant to determine the best form of legal organization for the entrepreneur. Various taxation issues will have to be considered as part of this decision. Finally, the entrepreneur must decide how to finance the new venture

Growth and Harvest
Once the entrepreneur has launched the company, then the individual must operate the company. Assuming the new venture is successful, the entrepreneur must develop plans to grow the company. At some point in time, the entrepreneur will want to exit the business. The individual may decide to take the company public or sell the venture. The entrepreneur may decide that the company will continue to operate successfully without much effort and he/she may just keep the company because it is a “cash cow.” Hopefully, although it often happens, the entrepreneur will avoid liquidation or bankruptcy as the “harvest” of one’s endeavor.

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