LIFE CYCLE OF AN ENTREPRENEURIAL VENTURE

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Stages development cycle

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LIFE CYCLE OF AN ENTREPRENEURIAL VENTURE:

LIFE CYCLE OF AN ENTREPRENEURIAL VENTURE Aparna H IMK Kollam

ENTREPRENEUR:

ENTREPRENEUR The term entrepreneur has been derive from the French word “ entreprenere ” means to undertake a business venture. “ Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both their advantage.” Niccolo Machiavelli

ENTREPRENEURSHIP:

ENTREPRENEURSHIP It is the process of creating something new, with value, by devoting the necessary time and effort, assuming the accompanying financial, psychic, and social risk, and receiving the resulting rewards monetary and personal satisfaction and independence

THE NEW VENTURE creation process :

THE NEW VENTURE creation process The environment is the most comprehensive component in the venture creation process. It includes all the factors that affect the decision to start a business, for example, government regulation, competitiveness, and life cycle stage.

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Within specific industries and in specific geographic regions, environmental variables and the degree of their impact will differ. The new venture process begins with an idea for a product, service, or business.

Key Issues about the Venture Cycle:

Key Issues about the Venture Cycle There are static and dynamic forces which need a special attention of the entrepreneur Entrepreneur needs to manage for changes and not changes The growth stage of the venture is more sophisticated with competition and dilemmas At a certain stage, you need to decide whether to do more innovation or allow decline

Life cycle of an entrepreneurial venture:

Life cycle of an entrepreneurial venture Life cycle of entrepreneurial firms Birth stage Breakthrough stage Maturity stage Each stage poses different managerial challenges and requires different managerial competencies.

Stages in the life cycle of an entrepreneurial firm:

Stages in the life cycle of an entrepreneurial firm

The Five Stages of a Business’s Life Cycle:

The Five Stages of a Business’s Life Cycle There are five key stages (just typical) New Venture Development Start-up Activities Growth of the Venture Stabilization Innovation or Decline

New Venture Development :

New Venture Development Creativity and assessment Resource base analysis Networking including vertical marketing Vision, Mission, Objectives, Strategies & Tactics

Start-up Stage:

Start-up Stage Formal Business plan Searching for capital (Analyze the risks) Marketing research Developing a working team Identifying any core competencies for Competitive Advantage

Growth Stage:

Growth Stage Any modification on he operating strategy Positioning and re-positioning Knowing more details about he competitors (Survival of the fittest)

Stabilization Stage:

Stabilization Stage Increased competition High bargaining power of customers Saturation of the market The entrepreneur needs to think where will the business be in the near future It is a stage preceding a great dilemma: to innovate or exit the business

Innovation or Decline:

Innovation or Decline Without innovation the clear option is ‘death’ Possibility of acquiring or being acquired Might design new products for new markets (Diversification)

A Venture’s Typical Life Cycle:

A Venture’s Typical Life Cycle Innovation Decline

Limitations of Life Cycle Models:

Limitations of Life Cycle Models Growth is rarely as smooth as the curve of the graph suggests. It is more likely to represent spikes of growth and contraction rather than rounded peaks. For example many small businesses have relatively few customers, so that the addition of one new significant client will lead to a sudden growth spurt. Conversely, the loss of one large client can significantly shrink the size of the business.

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The transition from one stage to another does not necessarily take place in the order predicted by the model. Economic or trade cycles outside the control of the firm may contribute substantially to the growth or decline of an enterprise at any time irrespective of the stage of development. The economic downturn of 2008/9 forced a large number of businesses to decline in size, whatever stage in their development they had reached.

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The contention that the transition from one stage to the next is triggered by a particular kind of crisis has not been tested through empirical research. The development of an enterprise is likely to be subject to many different internal and external variables so that isolating one primary cause for the evolution of a firm from one stage to another is an over simplification of a very complex process.

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Many enterprises reach a stable size and never make the transition out of this phase. Once they have developed a business to a stage of survival, life-style entrepreneurs will have little motivation to grow it further. Some take deliberate steps to avoid growth which they see as threatening the very independence they sought when they created the enterprise

Conclusion :

Conclusion “ALL STAGES ARE STRATEGIC POINTS OF THE VENTURE HENCE A NEED FOR SPECIFIC STRATEGIES FOR EVERY STAGE!”

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