Tag Archives: enterprise education

9 Stages of Enterprise Creation

The way we start businesses is changing and through academic research, additional knowledge, skills and tools, the process and issues around growing businesses have profoundly changed Entrepreneurship in the last twenty years.  This article develops a new 9 Stages of Enterprise Creation model which is based on today entrepreneurial mindset and the business community ecosystem which molds entrepreneurs and allows their ventures grow.

The first three stages of the Enterprise Creation stages which emerged are: Discovery, Modeling, and Startup which form the new venture formation stages. The next three Existence , Survival and Success develop the business into a sustainable business entity. The last three stages: Adaption, Independence and Exit provide the entrepreneurship pathways for the entrepreneur.  These final elements complete the entrepreneurship model by focusing on the success of the business, how the entrepreneur progresses beyond the business, their separation into different entities and the entrepreneurs eventual exit. The 9 Stages of Enterprise Creation are set out below:

Stage 1 – Discovery

This first stage of the 9 Stages of Enterprise Creation  is centred around the focal competency of Opportunity recognition, creation and evaluation. These are the processes by which entrepreneurs identify and evaluate potential new business opportunities. An opportunity by definition is a favorable set of circumstances which creates a need for a new product, business, or service. Opportunity recognition is the process by which the entrepreneur comes up with a prospective idea for a new venture. Evaluating the opportunity takes research, exploration, and understanding of current needs, demands, and trends from consumers and others. The process of researching and surveying allows the product or service idea to develop, so that it can be modelled.

Stage 2 – Modeling

The second stage is about developing the business logic to create a business model. This is split into three parts and starts by setting out a Strategy, formulating a business model and setting the business processes to achieve the strategy . These form the key elements for the plan to start the business and, are an integral piece of submitting any proposal for an entrepreneurial or intrapreneurial business. The model should be underpinned by the resources available and those which may still need to be secured. Resource allocation and availability are extremely important to startups because sustainability and profit (not loss) depend on proper planning and understanding of the internal and external environments.

Stage 3 – Startup

The fourth stage is starting the enterprise. Once the resources detailed in the business plan are mobilised the entrepreneurial process can be effected and implementation can take place. In this stage the business may be trading or begin to research or develop a product. The aim of this stage is to have the processes in place so that the business can have a scalable, repeatable and profitable business focused on distinct customers within an identified market.

Stage 4 – Existence

At this stage the business has two core focuses; to gain enough customers to create a profitable business and, at the same time establishing production or product quality. The majority of businesses fail at this stage due, in part, to either one or both of these factors. At this stage the organisation is a simple one, the entrepreneur does everything and directly supervises subordinates, who should be of at least average competence. Systems and formal planning are minimal to nonexistent. The company’s strategy is simply to remain alive  which requires the focal competency of tolerance of uncertainty, risk and failure

Stage 5 – Survival

At this stage the business should be a viable entity in terms of cash flow and resources, it has enough customers and satisfies them sufficiently with its products or services to gain repeat sales. The organisation is still simple. The company may have a limited number of employees supervised by a junior manager or supervisor. Neither of them makes major decisions independently, but instead carries out the rather well-defined orders of the entrepreneur. Formal planning is, at best, cash forecasting. The major goal is still survival, and the entrepreneur is still synonymous with the business. The entrepreneur starts to implement ideas through leadership and management which provides opportunities to scale.

Stage 6 – Success

Entrepreneurs at this point of the 9 Stages of Enterprise Creation have a number of options: capitalise on the company’s accomplishments, expand or, keep the company stable and profitable. The entrepreneur has a number of ways to capitalise, from exit to taking a ‘founders dividend’ from the business. If the entrepreneur want to expand  then the core tasks are to make sure the basic organisation stays profitable so that it will not outrun its source of cash and, to develop managers to meet the needs of the growing organisation. Through the entrepreneurs leadership all managers within the business should now identify with the company’s future opportunities rather than its current condition demonstrating a success to its stakeholders.

Stage 7 – Adaptation

Businesses which reach this stage normally have a number of factors pushing them to adapt, these are normally grounded in changes either to the micro or macro environments. Businesses at this stage will normally be entering a phase of rapid change and will have to have secured the required finances to develop. At this point key management is in place with a set of operational systems. Operational and strategic planning are now a key focus. The organisation is decentralised and, at least in part, divisionalised. The key managers must be very competent to handle a growing and complex business environment. The systems, strained by growth, are becoming more refined and extensive. Both operational and strategic planning are being done and involve specific managers. The entrepreneur and the business have become reasonably separate, yet the company is still dominated by both the entrepreneur’s presence and stock control.

Stage 8 – Independence

A business at this stage should now has the advantages of size, financial resources, market share and managerial talent. Innovation and Intrapreneurship  are now key factors in keeping the business in market position. The organisation has the staff and financial resources to engage in detailed operational and strategic planning. The management is decentralised, adequately staffed, and experienced. Business systems are extensive and well developed. The entrepreneur and the business are quite separate, both financially and operationally.

Stage 9 – Exit

The last of the Enterprise Creation stages is focused on exiting the business and making their separation permanent. An exit strategy will give the entrepreneur a way to reduce or eliminate their stake in the business and, if the business is successful, make a substantial profit. This stage removes the entrepreneur from primary ownership and decision-making structure of the business. Common types of exit strategies include Initial Public Offerings (IPO), strategic acquisitions and management buyouts. The organisation at this stage is generally profitable, has a definable set of resources with a clear and realistic strategy to continue. The CEO and founder(s) are separate.

 

9 stages of Enterprise Creation
9 stages of Enterprise Creation

The full paper which develops the 9 Stages of Enterprise Creation:  Bozward, David and Rogers-Draycott, Matthew Charles (2017) Developing a Staged Competency Based Approach to Enterprise Creation. Proceedings of the International Conference for Entrepreneurship, Innovation and Regional Development. ISSN 2411-5320, can be found at http://eprints.worc.ac.uk/5377/

A true Entrepreneur never fails, just learns

In the recent months, I have been thinking about the journey we take as entrepreneurs. This is not always a logical one and it has many twists and turns but as a lecturer I know it’s important to present a structured approach with a limited set of options. But as a realist, I also know the path to true enlightenment may be through the pit of delusion.

The message that failure is a good thing is one which many people are now talking about, yet I find our education system still thinks in a binary way, you either pass or fail and this can only be done at defined points, normally set by your age.

Our Examination system teaches us from a young age that there is only one right answer and many wrong ones. This then provides society with a view of you, typically a grade from A* to U. We sit and judge you from afar, if too many get high marks then the exams were easy, if too little get high mark then the youth of today are spending too much time on their Xbox. The hard fact for many young people is that the grade is final and they be able to change it, even if they get better at that subject. You never get the opportunity to learn from your mistakes or gain a higher grade.

Yet Entrepreneurship is about the path your take and the reactions to the decisions and not the decisions themselves.

Everyone is expected to take the wrong turn at some point and the important thing is how you get back on track. How do you learn from the situation? How do you react to your mistake? How do you reflect on the situation and opportunities surrounding you at this point?

Let me explain this in terms of driving from London to Paris. If you made one wrong turn at any point, then as long as you recognized this fact and acted on this information to rectify it, you would still arrive in Paris. It may or not take longer or extra time. yet our education system would have failed you and asked you to never drive this route again.

I always explain starting a successful business as having to make one hundred right decisions. Out of how many I do know know. Over what time I do now t know. I don’t know what feedback loop will be in place. When will I know that I have done it?

We all agree that these decisions will need to be made and that some of them will be shown to be wrong. (Either the right decision at the wrong moment or the wrong decision at the right moment) This is not a fail, just another opportunity to learn, rethink the plan and evaluate your surroundings.

Our secondary education system needs to develop an opportunity to reflect on the learning and allow the learner to build this into their learning plan moving forward.

Your path is your own and only on your reflection can you mark yourself.

Enterprise in the Community

Entrepreneurship doesn’t happen in isolation. Think about it, its true. So why do Universities think they can create entrepreneurs without developing a sustainable community around them. So what is best practice from universes in the UK?

Network of Entrepreneurs – Open the doors and get all who start and own businesses to bring their networks into the university and also get those startups to go out into the network of local entrepreneurs. This open door policy helps reduce costs but also helps foster stronger links between those starting a business and those who have strong businesses.

Mentors – The vast majority of entrepreneurs will mentor a student or graduate who is looking to start a business. However you should be provide training, support and knowledge enhancement for these mentors. How and what is mentoring, when should I do it and what should a say, how far can I go in forcing them to do something? Once you set the ground rules and provide clear guidance they are a great resource. Its about giving before taking.

Local Customer – A lot of startups think global sales without seeing that just outside the university there are thousand of customers. The fact is the global and local customer are the same distance from them, about a million miles. By bringing local customers to the university and the startups you build a customer base who will provide feedback, cash and support to these startup business.

Fail Safe – The majority of startups will fail within the first 2 years and the landing pad for this ride should be prepared. Allowing them to understanding the learnings from the business and develop a real knowledge base which can be applied to the next star up will help create better businesses in the future.

Connected Events – Co-sponsored events which student, entrepreneurs and business professional attend from around the city ensure that students get to understand the wider context of entrepreneurship and able to pitch and network with potential investors.

The trinty structure for an entrepreneurship centre

Last week I attended GCEC 2014 and was able to spend time with practitioners of Enterprise and Entrepreneurship. It was a very worthwhile experience, especially when so many of them were from the USA which have a much more advanced culture of enterprise.

It became clear to me that there are three elements for a successful entrepreneurship centre within a University:

Entrepreneurship Research

Everyone knows if you start a business in Silicon Valley its great for technology businesses and the eco-system, network and financial institutions are set up to start, grow and IPO these businesses. This is a one place and the rest us don’t live there or want to start a high tech high growth business. This eco-system DOES NOT exist in any other part of the world. Cambridge also has its own eco-system. So we would expect each location, cluster and university to have a set of features that facilitate the growth of certain businesses? We would expect the university to have researched these and further more be able to articulate this through its research papers, education programmes and practical support for startups and growth businesses.

Enterprise & Entrepreneur Education

The core business of a university is education. We are experiencing great changes in the higher education environment and universities need to react in real time to the needs of their students and business community. The majority of universities in the UK get more revenue from CPD training than research grants. This is why local business is so important to them, as it provides a great sustainable revenue stream and also the opportunity to understand their local business needs, which helps feed the research. It also brings educators from cross disciplines together which is needed to build robust community focused institutions.

Enterprise Practice

The development of students into entrepreneurs and the development of entrepreneurs to leaders of high growth businesses is the most important part of the trinity. It enables the university to substantiate its research in the ‘real world’ environment and provide a practical outlet for the costly education resources. Moreover, it provides the feedback loop which all research and educators need to contextualize the theory.

I know some universities in the UK have some of these parts, but there is not one University in the UK, which ensures these three parts work together for the common development of the university and its community.

Looking forward to hear from those that think they do!!!

Leadership of Enterprising Groups

A large number of the attributes of a Non-Profit Organisation (NPO) can be directly applied and are applicable to the Peer Led Student Enterprise Groups (PLEG). Organizational theory review also shows a higher degree of complexity for non-profit organisations when compared to profit oriented businesses.

As for Mizell (2005) and Lubar (2005) emphasize the quality of management as key to volunteer retention as well as volunteer support. This is nonetheless emphasizing the fact that one of the key responsibility of the non-profit organisation is to factor in volunteers’ potential constraints and be proactive about them. Through this research they found that most of the volunteers expected the manager to practice participating leadership. It was highlighted that the management team of non-profits organizations should think about their leadership style, in order to have the volunteers feel more productive and that they belong to the organization.

According to Trachtenberg (2006), the key importance of values and belief for non-profit organisation is attracting quality volunteers is one of the most important objectives of the NPO; however, it is a task that is often overlooked or performed poorly by NPO managers and administrators Farmer & Fedor (1999). Volunteerism cannot be separated from the motives, values, and beliefs of the volunteer (Wilson, 2000). The three most important strategies that can be drawn from the research include (1) recruiting volunteers based on their interests, qualifications, and how well they fit with the organization; (2) offering training to support the learning and skills development of volunteers, and; (3) acknowledging directly to volunteers the vital role they play in the success of the organization as well as the contributions that they make in generating the capital needed to meet its mission and its goals.

Despite the growing contribution of the nonprofits to global economies, nonprofits operate in an increasingly competitive environment. Along the same line, Jay (2010) highlights non-profit sustainability necessity but throw an interesting light on the changing non-profit environment and the related risk associated. Nonprofit literature over the last few decades reflects attempts to examine the competitive environment in which NPOs operate and impact their functioning. Several researchers have used the Porter’s five forces model to capture the competitive intensity in the immediate environment. Whilst the parallels to Porter are striking, the system of relationships proposed for NPOs has not been subjected to empirical testing.

They observe that this trend towards marketization may pose risks for civil society because nonprofits may lose sight of their social Mission. Also, governments and entrepreneurial business initiatives nested within the NPO have provided other important sources of finance for NPOs. Substantial volatility across all these diverse revenue streams forces NPOs to become adept at multiple stakeholder management.

A NPO must ensure a flow of resources in order to sustain itself which is typically through earned income, governmental support and private donations. Researchers contributing to this stream of literature have suggested several strategies that can be adopted by NPOs to gain financial substantiality: commercially generated revenues (Lundström et al 1997); application of business principles to fundraising ; employing relationship marketing ; identity-based donations (focusing on the salience of the donors’ identity within the relationship) ; and within and cross sector strategic alliances . In addition to revenue enhancing strategies, researchers have suggested a number of strategies to reduce costs: increased volunteerism and its productivity and soliciting in-kind donations.