Just there are no absolute answers on how to succeed

in business, there are no absolute answer how to

develop a successful new venture.
There are no undisputed “models” of
entrepreneurship, but there are similarities among the
leading ones that suggest a paradigm, a general pattern
of how to progress from an abstract idea to achieving
sustained sales.
This chapter provides a paradigm in which the
sequence of activities starts the initial idea with an
established enterprise positioned for growth.
The model, or paradigm, encompasses a feasibility plan.
This is a pragmatic business plan reflecting the
philosophy that entrepreneurs should do the planning
necessary to ensure the feasibility of a venture
without becoming overwhelmed in the process. The
planning outline presented here is a foundation for more
detail.
THE FOUR-STAGE GROWTH MODEL
The four-stage growth model consist of categories of distinct
activities essential for a new venture to progress from an idea to a
substantial enterprise.
The four are;
1)Pre-start-up Stage
2)Start-up Stage
3)Early growth Stage
4)Later growth Stage
 Start-up Later growth
Pre-start-up stage Early growth stage
stage stage

The period during The initial period A period of often The evolution of a
which of business when rapid development venture into a large
entrepreneurs plan the entrepreneur and growth when company with active
competition in an
the venture and do must position the the venture may
established industry
the preliminary venture in a undergo major when professional
work of obtaining market and make changes in management may be
resources and necessary markets, finance more important than
getting organized adjustment to utilization entrepreneurial
prior to start-up assure survival spirit

(Resource collection) (Positioning in market) (Major change) (Need Professional

management)
Pre-start-up Stage (Resource collection)

During this initial phase, ideas evolve from a creative

process to the point of being consciously perceived as
commercial endeavors. Entrepreneurs have already
begun to believe that their ideas are feasible, and they
become fascinated by visions of their enterprises.
Entrepreneurship is simply a manner of “finding a gap and
filling it”.
More smart entrepreneurs will begin by asking
questions about the actual potential of their products or
services.
 They will try to answer questions about production,
operations, markets, competitors, costs, financing and
potential profits.
And they will try to resolve questions about their abilities
to start businesses.
Depending on the complexity of the proposed enterprise,
the range of pre-start-up activities can be quite extensive,
but there are four activities common to all new
ventures.
Business concept What is the purpose of the venture?
defined What does the entrepreneur want to
accomplish with the business?

Product research: is the product or

Product-market study service feasible? Realistic?
Market research: Who will buy? Where
are they? What niche? What competitors
exists?

Financial projections: What cash is needed?

How will income be generated? What expenses
Financial planning are expected? What is invested? Borrowed?
What is needed to meet operating
requirements?

Pre-start-up Getting ready to start: The entrepreneur must

implementation find resources, purchase beginning inventory,
hire those needed at start-up, and obtain,
permits, leases, facilities, and equipment.
Start-up Stage (Positioning in market)
The start-up stage is the initial period of business.
For companies with products or services to sell, it is the first
attack into revenue-generating activity.
The start-up stage has no definite time frame, and there are no
models to describe what a business does during this stage;
however, there are two benchmark considerations.
 First, entrepreneurs want to meet operating objectives, such
as satisfying revenue and cost targets.
Second, they want to position the venture for long-term
growth.
Start-up operating objectives:
Sales : Sales
S volume, sales mix as feasibility plan
Revenue : Cash
C flow, operating margin as projection
Growth : Inventory,
I materials and human resource
Position : Solidify
S long-term market strategy during start-up
Positioning the Enterprise:
Every successful business starts with a preconceived business idea. As noted
earlier, this includes a concept of the product or service, markets, and growth
potential. Entrepreneurs often find, however, that reality is quite different from
what was planned. Two considerations are important. First, the business must
survive in the short run, and second, the business must be positioned to achieve
long term objectives.
Early Growth Stage (Major change)
Once the venture is positioned, successful enterprises
will experience a stage of early growth.
 This is a period of powerful monitoring, and growth
can occur at different rates along a long range, ranging
from slow growth through incrementally higher sales to
explosive growth through major changes in consumer
demand.
This significant is illustrated in this figure
 Very Slow Perceived Comfort Zone Very
Rapid

Incremental
Sales increase growth is within a Sales increase
slowly because of comfort zone of rapidly as new
the nature of the the venture’s products gain wide
product or the resources and acceptance in new
limited market owner’s profit markets
objectives

Range of Early Growth

Later Growth Stage (Need Professional management)
If the enterprise proves successful in the early
growth stage and has energy, it can find itself in
competition with larger companies. This is the later
growth stage, when the rate of growth may be
slower and the industry has attracted competitors.
Companies reaching this stage often “go public” with
stock offerings.
Family fortunes turn into corporate equity positions, private

investors convert their holdings into publicity traded securities,

and management teams replace the entrepreneurial team.
 In many example, founders lose the personal identity they had

with their firms, and if they are not ready to adapt to corporate
management, they leave (or are ousted).
Those who do adapt enjoy the benefits of corporate

management and the profits of being major stockholders.

 Understanding The Four-Stage Growth Paradigm
Sequential stages of new venture development represent intervals
that focus on different sets of circumstances. During the pre-start-
up stage, the focus is on product, service, and market planning.
The start-up stage requires entrepreneurs to focus on
implementation and early positioning. During the early growth
stage, they are concerned with rapid change in sales and
resources. And during the later growth stage they must make a
successful conversion from personally managed enterprises to
professionally managed companies. ======