It is very important to understand the different phases of entrepreneurship where new entrepreneurs will find easier to flow through the roadmap of a business through different phases. These stages of entrepreneurship are actually different sections in a lifespan of any business.
Entrepreneurship can be done in any scale, small or big, alone or with a team, and even part time as a side hustle or as a freelancer, or even work from home. But the main thing that remains the same is the approach and phases or stages that an entrepreneur follows in building any business.
Different Phases of Entrepreneurship
The phases in lifespan of any business, is the reflection of the entrepreneurs approach and effectiveness. The current phase of any business shows its health and strength. The 7 phases of Entrepreneurship that most of the businesses follows are:
Phase #1. Ideation
This is the very first phase where the entrepreneur has not yet came up or finalized with the business idea. This is the very first ideation stage of any business idea where an entrepreneur is refining his idea to come up with a product or service that fills the gap, or serve a purpose, solves any problem or improve any old piece of product or technology, that is more easily acceptable and acclaimed by the masses. And that is also, scalable and profitable.
This idea should be critically examined and then validated by the entrepreneur before working on it and spending any resources.
If an entrepreneur fails to effectively bring out the refined version of his product, which ultimately catches nobody’s attention or having better alternatives already available in the market at better prices. So, the business idea should not only serve the purpose, but actually it should be profitable, viable, and easily scalable. This is what I mean by the green flag that every business idea must look for.
Phase #2. Planning
As the name suggest, this is also a stage where the business has not yet started. Just after getting all the green flags, the entrepreneur must start working on the idea:
- What should be the product design?
- How to produce it?
- What will be the expenses?
- How much funding will be needed?
- What will be the margins?
- What Niche market/segment should be targeted?
- Who will be the target audience?
These are some of the questions which should be answered precisely. This stage is very crucial, where you are required to build a business plan, that consists of all the necessary assumptions, targets, and directions, including vision and mission statements, SWOT analysis, your strategies and approaches, which creates a roadmap for the upcoming business.
This business plan helps you with estimating costs and profitability, and setting up measures to avoid downfalls and facing challenges. Mark Zuckerberg, founder META, once said that “One cannot come up with Ideas that are fully formed, but they will become more clear only when they start working on it. You just have to get started.”
Phase #3. Funding
When you create a business plan you will come to know about the requirements of resources like – Funds, Manpower, Machinery, Materials, etc. There are different ways an entrepreneur can fund his business the very first one is bootstrapping, using his own savings and personal funds to take the initial steps. And than most probably, some seed funding or borrowings can give that initial start to a business, and if the idea requires sufficient fund than you must be prepared for it.
You can have a co-founder, mainly from IIT or IIM, because that will help you in gaining attention by the investors. Many Angel investors and Investment companies look for committed qualified and sound contribution of co-founders. Also, having co-founders can build more wide network that can be used in every important phase of building a business.
Investments should be taken care of, before hand, because sometimes businesses end up having no funds at very crucial stages of a startup. There must be some liquid or scope of additional funds that you can pump in at time of urgencies or challenges.
Phase #4. Starting
This is the actual Launch or starting phase of a business where, you lay the building stones of a business. Some can start from their home or garage, and some can also afford a shop or a warehouse area. Here, you actually produce your product or a service for a test audience.
Than you prepare yourself to present the product to live audience, with readiness to hear the feedbacks and reviews. What the customer has to say, what they actually expect, what improvement they asking for, these all needs to be addressed with topmost priority. This is the phase where you will be creating awareness among your target audience, and so its not about sales but about promotion and creating awareness. Follow the roadmap and don’t make shortcuts.
Make sure, the product has been accepted and has ‘NO Bad Reviews’. At this stage you may find more relevant set of customer profiles as per their age groups and demographics. You can then refine your targeting for marketing campaigns. This will bring down your cost of marketing and improve your profitability.
Phase #5. Grooming
Once the business gets initial recognition, than the business stabilizes in terms of incoming sales and revenue, trusted customers or clients, and a reliable team. At this stage you start looking for cost reduction techniques and more easier ways and procedures to fulfil the production steps. You may need to hire employees, and invest in better technology and upgrade to more complicated systems.
This is how an entrepreneur can groom his/her business. Product qualities are much better than before, branding and packaging has been improvised, cash flow has been improved for easier transition from Grooming >>> Scaling Phase.
Phase #6. Scaling
Atleast, 60% of the businesses fail to reach this phase in their life span. It means out of 100 only 40 businesses make out to sustain the previous phases by beating the market competition and addressing their customers needs and demands, and getting ready by grooming their products, processes, and manpower.
The grooming stage is very essential, if you doesn’t make your legs stronger than it will limit your load bearing capacity. As simple as that!
Once your business is fully groomed, you are ready to scale your business. You have no idea, but this scaling step is more related to meetings with bigger clients, fulfilling large order sizes and adding more product ranges and service territories. This all comes with proper and careful decisioning and risk taking ability. Scaling is nothing but deciding, when and how much risk should be taken.
Phase #7. Exit
This is the very last stage of a business, and the business faces exit only in case of:
- Loss/Bankruptcy
- Sale/Transfer of Business
- Outdated Product/Technology
- Breach/Misuse of law
- Retirement
- Accidental/Disaster, like fire, flood, etc
These type of circumstances, requires preparedness with an exit strategy. This exit strategy is a short plan which consists of winding-up of business activities to end the business smoothly or transferring to new buyer in case of business sale or transfers.
The exit plan is very much essential for any business and therefore it is most of the time included in the business plan. It should be made with utmost care because this is what attracts investors, if they see minimum loss to the resources in case of business closure they feel safety for their investments.
Summary
Thus a business undergoes different stages during its perception to its maturity. A business can remain in any phase for indefinite time which depends on many other factors. Each phase of entrepreneurship demands for a different set of skills and strategies and resources.
The process of entrepreneurship begins with ideation where idea generation and refinement is done, which is followed by proper planning of business launch and implementation with a proper roadmap or a business plan. Later in this process, once the idea and plan has been finalized there comes the funding scene. Once you turned out the funding stone, than there is no obstacle in your way of starting up your business.
Now, this is the time where you need to work hard effortlessly and tirelessly, day and night to make it big. Once you implement and successfully launch your business, you make yourself grounded with more support so that no competition or challenge can hinder your success. This is what we called as grooming phase of business.
After grooming you start scaling the untapped potential of your business. This is what a successful business does and wants to stay for as long as possible. But there are circumstances which is not in our control and can take the life of your business. This where the exit phase comes into action, where the business actually prepare it self to shut down or for a transfer to a buyer.
