Essentials of Entrepreneurship: A Practical Approach

The entrepreneur must attract stakeholders to the venture. The following diagram depicts the relationship between the entrepreneur and the stakeholders:

The entrepreneur must attract customers who are willing to purchase his/her products or services. Given that the business is new and does not have a track record, there is some risk to customers that decide to purchase from the entrepreneur.

Suppliers may be concerned whether the entrepreneur can pay for items purchased by the entrepreneur to make products. Often suppliers may force new companies to pay "cash-on-delivery" for materials until the entrepreneur has developed a good payment history.

Of course, the entrepreneur must hire employees to help make the company grow and succeed. Finding employees willing to take the risk of working for a new company may not be easy. Often, new employees will expect to receive some equity in the company by being provided shares or stock options.

In most situations, the entrepreneur will need to raise funds at some point in the venture. Sometimes the entrepreneur may need the funds to start the company. In other situations, funds may be needed at a later date. There is always a risk in making an investment in a startup. Most of the time, people consider investing in startups much more risky than investing in a company with an existing track record.

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