Entrepreneurship From Establishment to Growth

Entrepreneurship is a process involving a variety of economic and non-economic values through taking risks beyond those usually taken when starting a business. Being forward-thinking individuals, entrepreneurs seize business opportunities by focusing on potential future needs.

The process involves developing a specific business model, entering into the market, and scaling. The relevant efforts necessitate a legal and strategic framework throughout the process. As such, market entry, growth strategies and the timing for exiting a business are crucial considerations.

MARKET ENTRY

Market entry is a critical strategic step that requires early planning. The future of a business depends on the successful management of this process. In this context, it is important to identify certain aspects before entering the market.

Assessing an Idea: Every idea cannot be turned into a business; therefore, it is crucial to decide whether an idea has the potential of becoming a real business. Unoriginal ideas that have been the source of several other businesses should be dismissed. Indeed, it will be more challenging for a business idea to attract attention and stand out among similar ideas in an already existing market. However, at this stage, an entrepreneur should also think about why an idea has not been marketed before. After all, if an entrepreneur has previously failed to enter the market with the same idea, other entrepreneurs should reconsider whether the idea has any use.

Determining a Target Market: Before starting a business, the target market should be surveyed to identify the general demographics of the industry. While determining the target audience, an entrepreneur should take into account certain aspects such as ages, professions and economic statuses of customers. Thus, the entrepreneur will focus on the right market by way of identifying the target audience. The right target audience will recommend the product or service to each other, and the business will attract more customers. With the identification of the target audience, the target location and the target industries, the target market will be created, which will facilitate determining the business strategy.

Identifying Rivals: Determination of the target market goes hand in hand with the identification of rivals. After determining the target market, rivals in this market can also be identified. Similarly, when rivals are identified, their customers will give an idea about how to establish and explore a target market. Accordingly, the strengths and weaknesses of rivals in the market will also be identified. Consumers tend to continue using an already tried and tested product or service, rather than switching to a new one and leaving the tested one. However, if sufficient research is made to identify any deficiencies of rivals, specific aspects of the business can be put forward, which will help the business surpass others.

Finally, upon determining the path to be taken by the business, the entrepreneur should adapt to any changes in the future.

SCALING

The establishment phase is followed by the process of keeping the business alive. In this context, an entrepreneur should evaluate and plan the survival of the business as well as issues such as the timing and the extent of their company’s growth. Indeed, disproportionate growth can result in the bankruptcy of both new businesses and large enterprises.

New businesses require constant expenditure. Entrepreneurs dream of a time when their business will no longer require expenditure for usual operations and achieve a state of self-sufficiency. This phase is followed by exploring how far a business can go beyond self-sufficiency. At this stage, the business’ capacity for expansion is determined. While planning growth, various factors must be taken into consideration, including whether the business has sufficient financial resources and employment capacity for growth.

The key factor is scaling, which aims to achieve stable growth through the effective use of financial resources. In the context of scaling, the decision of growth requires making strategic analyses, comparing the cost of growth with the cost of capital, and coming up with a ratio according to the findings. Sustainable growth can be ensured if that decision is made by balancing costs and sales.

EXITING A BUSINESS

Even though entrepreneurs wish to keep their business after such efforts, entrepreneurship also requires knowing when to desert a sinking ship. The entrepreneur, who has financial and moral ties with a business, may have difficulty seeing its failure. However, business exit requires planning and strategy as much as the establishment phase. Indeed, a profitable exit may sometimes be impossible in businesses that are going down in the absence of their entrepreneurs. Therefore, the prerequisite for a business exit strategy is the self-sufficiency of the business. Otherwise, the only solution is liquidation. In this case, some profit may be possible if the business assets are sold.

Upon giving up on a business, selling is the most popular exit strategy. To this end, a business can be sold to a person or a company. A common practice is to allow the entrepreneur to keep their job for a while after the transfer to make the transition run smoothly.

Business exit is also possible through a merger. In this case, another company takes over the management, and exit occurs with the transfer of duties and responsibilities. However, in this method, cash might not be obtained, depending on the terms of the agreement.

When a business is not owned by a single person, transferring it to a partner can be an exit strategy as well. Thus, the organization will largely remain as it is, and the partner will already know about the operations, which will facilitate the transition process.

If the board of directors can maintain operations, an entrepreneur may exit a business gradually by offering their shares to public.

CONCLUSION

Entrepreneurship requires planning at each step. An entrepreneur should anticipate what lies ahead, from market entry to business exit. In this context, it is not enough to seize an opportunity and come up with a business idea. In fact, after the conception of a business idea, there is the process of putting it into action, which demands much more effort, investment and time. Therefore, a successful business venture involves actualizing the idea at the right place and time, fostering its growth, and abandoning it when necessary.