Category Archives: 9 stages

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9 Stages of Enterprise Creation: Stage 5 – Survival

November 20, 2023 David

Introduction to 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 entrepreneur at this stage needs to be learning through experience on a daily basis. 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 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 provide opportunities to scale.

Survival Stage Compendium

In the survival stage of a business lifecycle, the primary focus shifts towards sustaining operations and achieving a consistent cash flow, which will ensure the enterprise stays afloat. This stage is critical as it defines a thin line between the success and failure of a business. Various academic frameworks and real-world examples across the globe elucidate the survival stage’s significance and strategies to navigate it effectively.

Academic Frameworks:
- According to Churchill and Lewis (1983), the survival stage necessitates generating sufficient revenue to cover expenses and beginning to attain a return on investments. The business model should be viable, with a clear market demand for the products or services offered (Churchill & Lewis, 1983).
- Small businesses often face challenges in managing resources, competition, and market dynamics. Academic discourse suggests implementing robust financial management practices, developing a loyal customer base, and adapting to market changes as pivotal survival strategies (Kuratko, D. F., Hornsby, J. S., & Covin, J. G., 2014).
Global Examples:
- United States: Small businesses contribute significantly to the economy, yet they face a high failure rate, especially within the first five years. For instance, strategies like cost control, customer retention, and market differentiation have been key to survival for many small enterprises.
- Australia: The survival of small enterprises is a concern, given the competitive market environment. Businesses adopting innovative practices and government-supported initiatives have shown a higher survival rate (Department of Industry, Innovation and Science, Australia, 2018).
- United Kingdom: According to a report by the Office for National Statistics, small businesses that adopted digital technologies and engaged in e-commerce demonstrated a higher survival rate compared to those that did not.

The survival stage underscores the importance of financial stability, market adaptation, and innovation in ensuring business continuity. The insights from academic frameworks and real-world examples provide a holistic understanding of the survival stage, thereby assisting entrepreneurs in navigating the challenges and opportunities inherent in this critical phase of business development.

References:

Churchill, N. C., & Lewis, V. L. (1983). The five stages of small business growth. Harvard Business Review, 61(3), 30-50.
Kuratko, D. F., Hornsby, J. S., & Covin, J. G. (2014). Corporate Innovation: The Antecedents, Dimensions, and Outcomes of Entrepreneurial Orientation. European Management Journal, 32(6), 852-864.
Department of Industry, Innovation and Science, Australia. (2018). Small Business Sector Report.

Entrepreneur Tips

The Survival stage in the business lifecycle is crucial as it requires a firm to not only sustain operations but also to work towards achieving consistent cash flow. Here are five tips to help entrepreneurs navigate through this stage:

Financial Management:
- Maintain a strict budget and monitor your expenses meticulously. Effective financial management is key to survival. Utilize financial planning tools and consult with financial advisors to ensure you’re on the right track.
Customer Retention:
- It’s often more cost-effective to retain existing customers than to acquire new ones. Focus on building strong relationships with your current customers, understand their needs, and work to exceed their expectations.
Operational Efficiency:
- Streamlining operations to improve efficiency can help to reduce costs and improve service delivery. Assess your business processes, identify bottlenecks, and implement solutions to optimize operational efficiency.
Market Adaptability:
- The market is constantly evolving; hence it’s crucial to stay updated with market trends and be ready to pivot your business model if necessary. Being adaptable to market changes can help in sustaining your business during tough times.
Innovation and Continuous Improvement:
- Encourage a culture of innovation within your organization. Look for ways to improve your products or services, and be open to feedback from customers and employees. Continuous improvement can lead to better market positioning and customer satisfaction.

Following these tips, along with a disciplined and resilient approach, can significantly aid entrepreneurs in navigating the challenges inherent in the Survival stage of the business lifecycle.

9 Stages of Enterprise Creation: Stage 4 – Existence

November 13, 2023 David

Introduction to 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. 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 (Markowska, 2011) which requires the focal competency of tolerance of uncertainty, risk and failure as for example, new opportunities, process risks and cash flow issues present themselves.

Existence Stage Compendium

The Existence stage is often considered to be more getting to the survival stage, focusing on establishing a foothold in the market and ensuring the continuation of the business. However, it can be argued that the process of discovering a valid business idea extends into this stage as the initial concept encounters the realities of the market. The following pointers elucidate the nuanced process of idea validation in the Existence stage, buttressed with academic references and global examples:

Market Interaction and Feedback Loop:
- Continuous interaction with the market is crucial. Entrepreneurs in this stage should pay keen attention to customer feedback and market responses to refine the business idea and model accordingly. For instance, Airbnb pivoted from a service offering air mattresses to a global platform for unique accommodations based on market feedback (Ries, 2011).
Financial Sustainability:
- The Existence stage challenges entrepreneurs to achieve financial sustainability. This necessitates a balance between operational costs and revenue generation. For instance, Spotify had to meticulously craft its freemium model to ensure financial viability while growing its user base (Cohan, 2019).
Competitive Analysis and Positioning:
- Understanding the competitive landscape and aptly positioning the business is indispensable. This entails a thorough analysis of competitors’ strengths, weaknesses, and strategies. For instance, the rise of Slack as a communication platform was in part due to its clear positioning against email and existing communication tools (Lunden, 2019).
Regulatory Compliance and Ethical Considerations:
- Adhering to regulatory requirements and ethical standards is paramount. Businesses like Uber and Airbnb faced significant regulatory hurdles in various global markets which necessitated a refinement of their business models (Sundararajan, 2016).
Iterative Learning and Adaptation:
- The Existence stage demands a culture of iterative learning and adaptation. Entrepreneurs should embrace a learning-oriented approach, where failures and challenges are viewed as opportunities for refinement. For example, the Lean Startup methodology emphasizes iterative learning through a build-measure-learn feedback loop (Ries, 2011).

The process of discovering a valid business idea is an ongoing endeavor extending well into the Existence stage. Entrepreneurs need to engage in a constant dialogue with the market, remain financially prudent, understand the competitive landscape, adhere to regulatory frameworks, and foster a culture of iterative learning to ensure the relevance and viability of their business idea.

References:

Cohan, P. (2019). How Spotify’s ‘Freemium’ Model Helped It To A $29 Billion Valuation. Forbes.
Lunden, I. (2019). How Slack’s founders turned a failed video game into a multibillion-dollar startup. TechCrunch.
Ries, E. (2011). The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Crown Business.
Sundararajan, A. (2016). The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT Press.

Entrepreneur Tips

Here are five tips to assist entrepreneurs as they navigate through the Existence stage of their venture:

Maintain Financial Discipline:
- It’s crucial to keep a tight rein on finances to ensure the business remains viable. Create and adhere to a budget, monitor cash flow meticulously, and be cautious with expenditures. Exploring different revenue streams and maintaining a lean operation can also contribute to financial stability.
Engage with Customers:
- Customer feedback is invaluable at this stage. Engage with your customers to understand their needs, preferences, and experiences with your products or services. This feedback can inform necessary adjustments to better meet market demand and build a loyal customer base.
Adapt to Market Realities:
- Be prepared to pivot your business model based on market feedback and changing conditions. Stay attuned to market trends, competitor activities, and any regulatory changes that might impact your business. A willingness to adapt will serve your venture well.
Focus on Core Competencies:
- Concentrate on what your business does best and what differentiates you from competitors. It may be tempting to diversify, but maintaining a sharp focus on your core competencies can enhance your position in the market and ensure that resources are utilized most effectively.
Invest in a Supportive Network:
- Building a network of supportive mentors, industry peers, and advisors can provide invaluable insights and guidance. Don’t hesitate to seek advice and learn from the experiences of others who have navigated through this challenging stage.

By maintaining financial discipline, engaging with customers, adapting to market realities, focusing on core competencies, and investing in a supportive network, entrepreneurs can better navigate the challenges inherent in the Existence stage and position their venture for future growth and success.

9 Stages of Enterprise Creation: Stage 3 – Startup

November 6, 2023 David

Introduction to Stage 3 – Startup

The third 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, requiring the competency of identify and approach target markets. 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.

Startup Stage Compendium

In the process of business ideation, the startup stage is crucial as it embodies the transition from conceptualization to actualization. Drawing from both academic insights and real-world examples, the following discussion elucidates the process and significance of this stage.

Early User Interaction: Interacting with early users is a critical aspect of the startup stage. A study highlights how early users’ preferences can significantly influence a startup’s innovation direction, implying the necessity of understanding and aligning with market needs from the outset¹.
Market Validation: At this juncture, entrepreneurs engage in market validation to ascertain the viability and demand for their business idea. For instance, Dropbox employed a simple video to gauge market interest, which resulted in a significant spike in beta sign-ups.
Minimum Viable Product (MVP): Developing an MVP is a quintessential step, allowing entrepreneurs to test their ideas with real users without incurring excessive costs. Notable examples include Airbnb’s initial platform or Zappos’ approach of photographing shoes from a local store to validate online demand.
Feedback Loop: Establishing a feedback loop with early adopters helps in refining the business idea based on actual market responses. This iterative process is vital for continuous improvement and alignment with market demands.
Pivoting: If necessary, pivoting is an avenue startups may explore to realign their business model or product offering based on learned insights. Notable examples include Twitter’s evolution from a podcasting platform to a microblogging site, and PayPal’s shift from money transfer on Palm Pilots to a web-based money transfer service.
Building a Team: Assembling a team with complementary skills is essential for executing the business idea effectively. A diverse team can significantly contribute to problem-solving and innovation.
Financial Management: Prudent financial management is essential to sustain operations, achieve milestones and attract further investment. Bootstrapping, crowd-funding, and seeking angel investors or venture capital are common practices at this stage.
Legal Compliance and Protection: Ensuring legal compliance and protecting intellectual property are crucial to safeguard the startup from potential legal disputes and other pitfalls.
Networking and Partnerships: Building a network of industry connections and forming strategic partnerships can expedite market entry and provide valuable resources and support.
Learning and Adaptation: Continuous learning and adaptation to market dynamics are indispensable for sustaining growth and navigating challenges inherent in the startup journey.

Global examples like Dropbox, Airbnb, Zappos, Twitter, and PayPal exemplify how various facets of the startup stage are instrumental in refining and validating a business idea towards achieving market fit and sustainable growth. Through a blend of market validation, user engagement, feedback iteration, and sometimes pivoting, startups can significantly enhance their prospects of success and long-term viability in the competitive business landscape.

Entrepreneur Tips

Navigating through the startup stage requires a mix of preparation, flexibility, and a willingness to learn from both successes and failures. Here are five tips to aid entrepreneurs in successfully maneuvering through this stage:

Engage with Users Early and Often:
- Start interacting with potential customers from day one. Use their feedback to refine your business idea, ensuring it aligns with market needs and preferences.
Develop a Minimum Viable Product (MVP):
- Create an MVP to test your business hypothesis with real users in a cost-effective manner. This step will help you gather valuable insights, and begin establishing a market presence without a significant upfront investment.
Be Prepared to Pivot:
- Stay open to the possibility of pivoting if initial feedback or market response suggests a different direction might be more fruitful. Pivoting can be a game-changer, as seen with successful companies like Twitter and PayPal.
Assemble a Complementary Team:
- Build a team with a diverse set of skills and experiences. A well-rounded team can significantly enhance problem-solving, creativity, and execution capabilities which are crucial during the startup phase.
Maintain Financial Prudence:
- Manage finances wisely to sustain operations and achieve crucial milestones. Explore various funding options like bootstrapping, crowdfunding, or seeking investments from angel investors or venture capitalists, but ensure to maintain a lean operation to extend your runway.

These tips are structured to promote a lean approach, customer-centric mentality, and a conducive team environment, all of which are pivotal in navigating the intricacies and challenges inherent in the startup stage. By adhering to these guidelines, entrepreneurs can enhance their ability to validate their business idea effectively, adapt to market dynamics, and set a solid foundation for subsequent growth and success.

9 Stages of Enterprise Creation: Stage 2 – Modeling

October 30, 2023 David

Introduction to 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 (Miles et al., 1978; Teece, 2010). 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 venture (Harjai, 2012). 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 at this stage because sustainability and profit (not loss) depend on proper planning derived from a detailed understanding of the internal and external environments. The focal competencies required here are financial and economic literacy, which provides the ability to model, plan and develop the processes within the business and self-discipline and personal organisation which is required to move through this early stage of nascent entrepreneurship.

Modeling Stage Compendium

The process of modeling a valid business idea in the entrepreneurial journey is a crucial step that follows the initial discovery stage. Here, entrepreneurs translate insights garnered from market research and feedback into a viable business model. This stage entails a systematic approach that requires both creative and analytical thinking.

Business Model Canvas: Utilizing tools like the Business Model Canvas can be invaluable in this stage. It allows entrepreneurs to visually map out key aspects of their business idea including value proposition, customer segments, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure (Osterwalder & Pigneur, 2010).
Value Proposition: A cornerstone of the modeling stage is articulating a clear value proposition that addresses a real problem or need in the market. For instance, Airbnb identified a unique value proposition by providing affordable lodging options for travelers while enabling homeowners to earn extra income.
Market Segmentation and Targeting: Identifying and understanding your target customer segments is pivotal. For example, Tesla initially targeted the high-end market segment with its Roadster and Model S, before expanding to the mass market with the Model 3.
Competitor Analysis: Conducting a thorough competitor analysis to understand the competitive landscape and positioning your business idea uniquely is essential. Analyzing competitors’ strengths, weaknesses, and strategies can provide insights to differentiate your business.
Financial Modeling: Creating a financial model that projects revenue, costs, and profitability is crucial for evaluating the feasibility of the business idea. It also assists in securing funding, as seen with many tech startups like Uber and Lyft who leveraged financial models to attract investors.
Feedback Loops: Establishing feedback loops with potential customers, mentors, and industry experts to refine the business model is beneficial. For instance, Dropbox used a beta waiting list to gather user feedback before officially launching.
Regulatory and Compliance Awareness: Being aware of the regulatory and compliance requirements in the chosen market helps in avoiding legal pitfalls. For example, fintech startups like Revolut and Transferwise have to navigate complex financial regulations.
Pilot Testing: Conducting pilot tests or launching a Minimum Viable Product (MVP) to validate the business model with real customers is a practical step. For example, Amazon began as an online bookstore to validate the online retail model before expanding into other product categories.

In conclusion, the modeling stage is about synthesizing market insights into a structured business model, while continuously seeking validation and refinement through feedback and real-world testing. Through a systematic and iterative approach, entrepreneurs can solidify their business idea, positioning it for success in the subsequent stages of the entrepreneurial journey.

Entrepreneur Tips

For this stage I can offer the following advice.

Utilize Business Modeling Tools: Employ tools like the Business Model Canvas or Lean Canvas to visually map out and understand the different components of your business idea. These tools can help in organizing your thoughts, identifying gaps, and communicating your business model to others.
Develop a Strong Value Proposition: Ensure that your business idea addresses a real need or problem in the market. It’s crucial to articulate a clear value proposition that highlights the unique benefits and features of your product or service.
Engage in Continuous Market Research: Keep engaging with your target market through surveys, interviews, and other forms of market research to gather insights that can help refine your business model. Stay updated on market trends, consumer preferences, and competitor strategies.
Build and Test a Minimum Viable Product (MVP): Create a simplified version of your product or service to test your business model with real customers. An MVP can provide valuable feedback and help in identifying areas of improvement before a full-scale launch.
Seek Mentorship and Expert Advice: Engage with mentors, industry experts, and potential investors who can provide constructive feedback and guidance. Their experiences and insights can be invaluable in refining your business model and preparing for the next stages of the entrepreneurial journey.

These tips emphasize a systematic, iterative, and feedback-driven approach to refining and validating your business model during the modeling stage, which is essential for laying a strong foundation for your entrepreneurial venture.

9 Stages of Enterprise Creation: Stage 1 – Discovery

October 23, 2023 David

Introduction to Stage 1 – Discovery

This stage is centred around the focal competency of Opportunity recognition, creation and evaluation QAA(2012) and Bacigalupo, et al., (2016). These are the processes by which entrepreneur identifies and evaluates 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 (Barringer & Ireland, 2010; Ardichvili 2003; Shane & Venkataraman, 2007). Opportunity recognition therefore is the process through which the entrepreneur perceives, develops and formalises a prospective idea for a new venture. The evaluation of the opportunity takes research, exploration, and an 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 modeled.

Discovery Stage Compendium

The first stage in the entrepreneurial journey, as delineated in the provided academic excerpt, is the Discovery phase, which is fundamental to unveiling a viable business idea. Central to this phase is the focal competency of “Opportunity recognition, creation, and evaluation” (QAA, 2012; Bacigalupo et al., 2016). This process entails the entrepreneur identifying, scrutinizing, and formulating a prospective notion for a new venture. Various scholars have asserted that an opportunity, by definition, is a set of favorable circumstances that catalyzes the necessity for a new product, business, or service (Barringer & Ireland, 2010; Ardichvili, 2003; Shane & Venkataraman, 2007).

The process of opportunity recognition is multifaceted and necessitates a keen understanding of market dynamics, consumer needs, and emerging trends. Entrepreneurs engage in rigorous research, exploration, and analysis to refine and substantiate their initial ideas. This phase is crucial as it lays the foundation for the subsequent entrepreneurial journey.

Examples of successful opportunity recognition and the development of viable business ideas can be observed globally. For instance, in the United States, the inception of Airbnb emerged from a recognized opportunity by its founders to provide affordable lodging alternatives during periods of significant local events. Similarly, in Asia, the launch of Grab, a ride-hailing service, came from the identified necessity for reliable and convenient transportation services in various Southeast Asian countries.

Moreover, various methodologies and frameworks have been proposed to aid in the effective discovery of business opportunities. These include environmental scanning, SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), and Design Thinking, which emphasize empathy and iterative testing to understand consumer needs and problems deeply.

The academic discourse also alludes to the importance of evaluating the discovered opportunities to ensure they are viable and worth pursuing. This evaluation often involves assessing the market size, competition, financial feasibility, and the alignment of the opportunity with the entrepreneur’s skills and resources.

It’s pertinent that the process of discovering and evaluating business opportunities is not rushed, as the initial idea refinement and validation can significantly impact the venture’s subsequent stages. The global entrepreneurial landscape is replete with examples that underline the centrality of a well-navigated Discovery stage, ultimately contributing to the venture’s sustainability and growth in the competitive market arena.

In summation, the Discovery stage is a cornerstone in the entrepreneurial process, assisting entrepreneurs in unveiling and honing business ideas that are not only innovative but also resonant with market needs and consumer demands. Through rigorous opportunity recognition and evaluation, entrepreneurs set the stage for the iterative and experiential journey that characterizes the entrepreneurial endeavor.

Entrepreneur Tips

Navigating through the Discovery stage is crucial for entrepreneurs as it sets the groundwork for the venture. Here are five tips to aid entrepreneurs in successfully traversing this initial phase:

Market Research:
- Conduct thorough market research to understand the current market trends, consumer needs, and the competitive landscape. Utilize tools like SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to identify and evaluate potential opportunities.
Network and Engage:
- Network with other entrepreneurs, potential customers, and industry experts to gain insights and feedback on your initial ideas. Engaging with a diverse range of individuals can provide different perspectives that may help refine your business idea.
Iterative Testing and Validation:
- Employ a lean startup approach by building a Minimum Viable Product (MVP) or service to test your business idea in the real market. Gather feedback and make necessary adjustments to ensure that the idea meets the market needs.
Educational Upgradation:
- Continuously educate yourself on the industry you are venturing into. Attend workshops, seminars, and courses that can provide you with the necessary knowledge and skills to better understand and evaluate business opportunities.
Maintain a Learning Mindset:
- The Discovery stage is a learning process. Maintain a growth mindset and be open to feedback and adjustments. Learn from failures and successes alike, and be willing to pivot your business idea based on the learnings and market feedback.

These tips advocate for a proactive, open, and iterative approach towards the Discovery stage, emphasizing the importance of market understanding, networking, validation, education, and a learning-oriented mindset to unveil and refine a viable business idea.

Dr David Bozward

Category Archives: 9 stages

9 Stages of Enterprise Creation: Stage 5 – Survival

Introduction to Stage 5 – Survival

Survival Stage Compendium

References:

Entrepreneur Tips

Further Reading

9 Stages of Enterprise Creation: Stage 4 – Existence

Introduction to Stage 4 – Existence

Existence Stage Compendium

References:

Entrepreneur Tips

Further Reading

9 Stages of Enterprise Creation: Stage 3 – Startup

Introduction to Stage 3 – Startup

Startup Stage Compendium

Entrepreneur Tips

Further Reading

9 Stages of Enterprise Creation: Stage 2 – Modeling

Introduction to Stage 2 – Modeling

Modeling Stage Compendium

Entrepreneur Tips

Further Reading

9 Stages of Enterprise Creation: Stage 1 – Discovery

Introduction to Stage 1 – Discovery

Discovery Stage Compendium

Entrepreneur Tips

Further Reading

Talking About Entrepreneurship