writing a business plan stage of entrepreneurial process

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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Stages of the Entrepreneurial Process: The Path to Success Unveiled

Embarking on an entrepreneurial journey is like setting sail on a vast, unpredictable sea. It’s thrilling, daunting, and utterly transformative. You’ve got a brilliant idea, a spark of genius, but what’s next? How do you turn that spark into a roaring fire?

Understanding the stages of the entrepreneurial process is crucial. It’s not just about having a groundbreaking idea; it’s about nurturing it through various phases until it blossoms into a successful venture. From ideation to scaling, each stage is a stepping stone towards achieving your dream. Let’s dive into what these stages entail and how you can navigate them with confidence and clarity.

Key Takeaways

When embarking on the entrepreneurial journey, Ideation stands out as the spark that ignites the fire. Imagine this stage as planting a seed that has the potential to grow into a towering tree. It’s where your passion for online business , startups, and side-hustles translates into an idea that could change your life.

At this phase, it’s crucial to let your creativity flow unrestricted. Jot down every idea, no matter how far-fetched it may seem. Remember, today’s silly thought could be tomorrow’s breakthrough. You’re not just looking for any idea; you’re on the hunt for a concept that resonates with your interests, strengths, and market needs.

To help whittle down your list, consider employing some proven strategies:

• Market Research: Understand what’s out there. Is there a gap your idea could fill? What’s the competition like?
• Feedback: Share your ideas with trusted peers or mentors. Fresh perspectives can shed light on aspects you might overlook.
• Prototype: If it’s feasible, develop a basic prototype or service outline. This can provide tangible insights into your idea’s potential.

Don’t rush this process. Ideation is much more than just coming up with ideas; it’s about refining them until you uncover something truly viable. Think of yourself as a gold miner sifting through dirt to find nuggets of gold. It’s not just about finding any gold; it’s about finding the piece that’s worth the most.

As you toggle between brainstorming and analysis, you’ll likely experience moments of doubt and exhilaration. Embrace these emotions—they’re part of the ride. Learn from failed concepts, and don’t get too attached to a single idea. The goal of ideation is to emerge with a concept that’s not just brilliant but also executable and potentially profitable.

Remember, the ideation stage is just the beginning. Your entrepreneurial spirit and willingness to experiment will be key components as you move forward. Every successful venture starts with an idea, but it’s your commitment and action that will ultimately bring it to life.

Market Research

After your idea is solidified, it’s time to dive deep into Market Research. This is where the rubber meets the road, and you’ll get a clear picture if your idea has the muscle to compete in the current marketplace. Market research is not just a suggestion; it’s a critical step in validating your idea and its potential success.

You might be thinking, “Where do I even start?” Don’t worry, it’s not as daunting as it sounds. Start with identifying your target audience . Who are they? What do they like? What problems do they face that your product or service can solve? These questions are the backbone of your research.

Next, let’s talk about competitor analysis . It’s essential to know who you’re up against. Look for direct and indirect competitors, and analyze their strengths and weaknesses. What are they doing right? More importantly, what gaps are they leaving unfilled? This is where your business can leap in and fill those gaps.

Don’t forget about trends in the industry. Staying updated with the latest trends can help you predict where the market is heading and adapt your product accordingly. It’s also crucial for understanding how to position your product in a way that’s appealing and relevant.

Here are some tools that can aid your market research:

• Surveys and Questionnaires : Great for getting direct feedback from your potential market.
• Google Trends : Helps you identify and analyze industry trends.
• Social Media : A goldmine for understanding consumer behavior and current interests.
• SEMrush or Ahrefs : Excellent for competitive analysis and seeing what keywords your competitors are ranking for.

Your market research will lay the groundwork for your entire business strategy. It’s about understanding the ecosystem you’re about to dive into. With thorough market research, you’ll be able to position your business in a way that not only meets the needs of your target market but also outshines your competitors. Remember, knowledge is power, especially in the world of entrepreneurship.

Business Planning

After diving deep into market research and armed with a refined idea, you’re now stepping into a critical phase—business planning. This stage is where your dreams start taking a tangible form. It’s not just about jotting down ideas on paper; it’s about laying a solid foundation for your business to grow upon.

Think of your business plan as a roadmap. It’s going to guide you through the treacherous terrain of entrepreneurship. Here’s the kicker: a well-crafted business plan can make the difference between just scraping by and achieving skyrocketing success. So, roll up your sleeves and let’s get into the nuts and bolts of it.

First up, you’ll need to outline your business model. How will your business make money? Whether it’s through direct sales, subscriptions, or a mix of revenue streams, clarity here is key. This is where your market research pays off. You already know your target audience and competitors. Now, it’s about positioning your product or service in a way that’s irresistible to your potential customers.

Next, consider your marketing and sales strategy. How will you reach your audience? What channels will you explore? Digital marketing, traditional advertising, or grassroots outreach? Remember, the goal is to not just reach your audience but to convert them into loyal customers.

Finances are up next. This section can be daunting but it’s vital. You’ll need to detail your startup costs, projected income, and expenses. Be realistic but optimistic —a tricky balance to strike. Tools like financial projection software can be a lifesaver here, helping you visualize your business’s financial future.

Human resources planning shouldn’t be overlooked. Even if you’re starting solo, planning for growth means considering future hiring. What roles will you need to fill and when? This forward-thinking ensures you’re not caught off guard as your business scales.

Remember, your business plan isn’t set in stone. It’s a living document that grows as you and your business do. Keep tweaking it, refining it, and above all, make it work for you. Your plan is the blueprint for your business’s success; make sure it’s detailed, clear, and ready to guide you all the way to the top.

Funding and Resources

After laboring over your business plan, you’re stepping into one of the most crucial stages: securing funding and gathering the necessary resources to bring your dream to life. This phase can seem daunting, but remember, every successful entrepreneur you look up to has navigated this path.

Funding your startup is about finding the right mix of sources to fuel your venture without overburdening it with debt. You’ve got several options:

• Bootstrapping : Using your savings or personal funds. It’s risky, but it keeps you in full control.
• Angel Investors : Wealthy individuals looking to invest in promising startups. They’re not just a source of money but also valuable mentors.
• Venture Capitalists (VCs) : Firms that invest in startups with high-growth potential. In exchange, they usually expect equity and a say in business decisions.
• Crowdfunding : Platforms like Kickstarter let you pitch directly to the public. This not only raises funds but also builds a community around your project.
• Small Business Loans : Banks or government-backed schemes offering loans tailored for startups.

Gathering Resources involves more than just financial capital. You’re also looking at:

• Human Resources : Hiring the right team is pivotal. Consider contractors or freelancers if you’re not ready for full-time employees.
• Physical Resources : Whether it’s office space or manufacturing equipment, get only what’s essential at the start.
• Digital Tools : From accounting software to project management tools, lean on technology to streamline operations and boost productivity.

Each step here requires thoughtful decision-making. You’re aiming to optimize your resources without stretching too thin. Remember, this is your venture’s foundation. Solidifying your funding and resources sets the stage for scaling and eventual success.

Execution and Launch

After meticulously crafting your business plan, securing your funding, and gathering all your resources, you’re now at the thrilling stage of Execution and Launch. This phase is where your ideas and plans spring to life. You’ve done the groundwork, and it’s time to open your doors, virtual or otherwise, to the world.

Launching your business is more than just turning on your website or opening your store’s doors. It involves a well-coordinated effort across all your business facets to ensure your product or service is received as successfully as possible. Remember, first impressions count, so you want to make sure yours is memorable.

Setting up Your Operations

Before your launch, double-check that every operational aspect of your business is in place and functioning. This includes:

• Your product or service is fully developed and ready for customers
• Your website, if applicable, is user-friendly and tested
• Your supply chain is secure and capable of handling your forecasted demand
• Your customer service channels are open and staffed

Marketing and Sales Strategy

You’ve already laid the groundwork for your marketing and sales strategy in your business planning stage. Now, it’s time to bring these plans into action. Run those ad campaigns you’ve designed, start posting on your business’s social media pages, and engage with your audience. You’re not just selling a product or service; you’re telling your brand’s story.

Consistency is key. Ensure your message across all platforms reflects your brand identity and values. This clear, cohesive brand voice will magnetize your target audience to you.

Monitoring and Adjusting

Once your business is up and running, your job is far from over. It’s crucial to monitor all aspects of your business closely and be prepared to make adjustments. Use data analytics tools to track your website’s performance, sale conversion rates, and customer engagement. Listening to feedback is also vital. Be agile and ready to tweak your approach based on real-time feedback and data.

Execution and launch mark the moment your dream transforms into reality. While it’s an exhilarating stage, it’s also laden with challenges and learning opportunities. Each day provides you with insights and experiences to fine-tune your journey towards success. Keep your eyes open and never stop striving for improvement.

After navigating the turbulent but rewarding waters of execution and launch, you’re likely to find your entrepreneurial journey at the doorstep of Scaling. Scaling is less about starting and more about expanding the reach of what you’ve already built. It’s a thrilling stage, signifying that your business isn’t just surviving; it’s ready to thrive.

At this point, you’ve got a product or service that your customers love, but you’re also aware that there’s a bigger audience out there. Scaling means preparing your business to handle more : more customers, more sales, and often, more products or services. It’s where your strategic efforts shift towards maximizing growth while maintaining or even improving efficiency.

• Infrastructure : Your technology and logistics systems need to be robust enough to handle increased loads. Whether it’s beefing up your website’s hosting or optimizing your supply chain, ensuring your infrastructure can support growth is non-negotiable.
• Team Expansion : As your business grows, so does the need for a larger team. Hiring the right people, not just in terms of skill but also fit with the company culture, becomes critical. Remember, your team is the backbone of your operations; their growth is synonymous with your business’s growth.
• Funding : Scaling often requires significant investment. Whether it’s through profits reinvested into the business or external funding sources like venture capital, ensuring you have the financial resources to support expansion is key.
• Market Expansion : Entering new markets can be a powerful accelerator for growth. This could mean geographical expansion or targeting new customer segments within your existing market. It’s about finding new territories where your product or service can solve problems.

Each of these considerations comes with its own set of challenges but remember, scaling is a testament to your success so far. It’s a stage where the potential for growth is immense, and with the right strategies, you can turn your startup into a significant player in your industry. Keep leveraging data analytics, customer feedback, and industry trends to guide your scaling efforts.

Embarking on the entrepreneurial journey is no small feat. You’ve learned that it’s not just about having a groundbreaking idea but nurturing it through various stages until it blossoms into a successful venture. From the initial spark of ideation to the rigorous demands of scaling, each phase is crucial and requires your unwavering dedication and creativity.

Remember, the journey doesn’t end with a successful launch. It’s about continuous improvement, learning from challenges, and seizing every opportunity to grow. Keep refining your strategies, stay attuned to your customers’ needs, and never lose sight of your entrepreneurial dream. Here’s to turning your vision into reality and beyond!

Frequently Asked Questions

What are the stages of the entrepreneurial process.

The entrepreneurial process includes several stages: ideation, market research, business planning, securing funding and gathering resources, execution and launch, and scaling. Each stage plays a critical role in transforming an idea into a successful venture.

Why is understanding the entrepreneurial stages important?

Understanding the entrepreneurial stages is crucial because it helps entrepreneurs navigate the process of starting and growing a business. It ensures they are well-prepared for each phase, making the journey towards achieving their dream more structured and less daunting.

How can entrepreneurs refine their ideas during the ideation stage?

Entrepreneurs can refine their ideas through market research, gathering feedback, and prototyping. These strategies help in whittling down ideas, uncovering viable concepts, and ensuring the idea meets market needs and consumer preferences.

What is the significance of market research?

Market research is vital as it validates the business idea and its potential success. It involves identifying the target audience, analyzing competitors, and staying updated with industry trends, which aids in making informed decisions and refining the business strategy.

What should a business plan include?

A business plan should outline the business model, marketing and sales strategies, finances, and planned human resources. It serves as a roadmap for the business and should be continuously updated as the business grows.

What are the options for funding a startup?

Options for funding a startup include bootstrapping, seeking investments from angel investors or venture capitalists, crowdfunding, and applying for small business loans. Each option has its advantages and conditions, making it crucial to choose the right fit for the business.

How can entrepreneurs successfully execute and launch their business?

Successful execution and launch require a well-coordinated effort across all business facets, such as product development, website functionality, supply chain, and customer service. It also involves implementing the marketing strategy and maintaining a consistent brand voice.

What does scaling involve?

Scaling involves expanding the reach, handling more customers and sales, and possibly offering more products or services. It requires a robust infrastructure, team expansion, additional funding, and market expansion strategies, guided by data analytics and customer feedback.

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7 Entrepreneurial Process

Task Summary:

Lesson 3.1.1: The Entrepreneurial Process: Part 1

Lesson 3.1.2: The Entrepreneurial Process: Part 2

Lesson 3.1.3: Entrepreneurial Planning: Part 1

Lesson 3.1.4: Entrepreneurial Planning: Part 2

Lesson 3.1.5: Entrepreneurial Planning: Part 3

Activity 3.1.1: SDG Simulation

Unit 3 Assignment: Your Plan of Action

Learning Outcomes:

• Identify exciting entrepreneurial opportunities
• Evaluate exciting entrepreneurial opportunities
• Model the entrepreneurial process for the exciting entrepreneurial opportunities
• Create entrepreneurial planning documents

Successful entrepreneurship occurs when creative individuals bring together a new way of meeting needs and or wants. This is accomplished through a patterned process, one that mobilizes and directs resources to deliver a specific product or service to those in a way that is financially viable. While these could be 100% business ideas, they could also be concepts that are based in the spirit of altruism or non-profit. For innovative ideas that are strictly business concepts. sustainability can (and should) be embedded in the design of a product and operations by applying the criteria of reaching toward benign (or at least considerably safer) energy and material use, a reduced resource footprint, and elimination of inequitable social impacts due to the venture’s operations, including its supply-chain impacts.

Entrepreneurial innovation combined with sustainability principles can be broken down into the following four key elements, each of which requires analysis. Each one needs to be analyzed separately, and then the constellation of factors must fit together into a coherent whole. These four elements are as follows:

• Opportunity
• Entrepreneur/team

Successful ventures are characterized by coherence or “fit” across and throughout these steps. The interests and skills of the entrepreneur must fit with the product design and offering; the team’s qualifications should match the required knowledge needed to launch the venture. There needs to be a financially viable demand (enough people at a financially viable price) for the product or service, and of course, early adopters (those willing to purchase) have to be identified. Finally, sufficient resources, including financial resources (e.g., operating capital), office space, equipment, production facilities, components, materials, and expertise, must be identified and brought to bear. Each piece is discussed in more detail in the sections that follow.

Identify, Analyze, and Plan the Opportunity

As discussed in the last section, Opportunity Recognition is the active, cognitive process (or processes) through which individuals conclude that they have identified the potential to create something new that has the potential to generate economic value and that is not currently being exploited or developed and is viewed as desirable in the society in which it occurs (i.e. its development is consistent with existing legal and moral conditions). (Baron, 2004b, p. 52) Because opportunity recognition is a cognitive process, according to Baron (2004b), people can learn to be more effective at recognizing opportunities by changing the way they think about opportunities and how to recognize them.

The opportunity is a chance to satisfy the needs and desires of a certain group of people while generating returns that enable you to continue to operate and to build your organization over time. Many different conditions in society can create opportunities for new goods and services. As a prospective entrepreneur, the key questions are as follows:

• What is a need that is not being met?
• What are the conditions that have created an opportunity for my idea?
• Why do people want and need something new at this point in time?
• What are the factors that have opened up the opportunity?
• Will the opportunity be enduring, or is it a window that is open today but likely to close tomorrow?
• If you perceive an unmet need, can you deliver what the customer wants while generating durable margins and profits?
• How can I take on this venture while supporting the Sustainable Development Goals?

Opportunity conditions arise from a variety of sources. At a broad societal level, they are present as the result of forces such as shifting demographics, changes in knowledge and understanding due to scientific advances, a rebalancing or imbalance of political winds, or changing attitudes and norms that give rise to new needs. Certain demographic shifts and pollution challenges create SDG opportunities. When you combine enhanced public focus on health and wellness, advanced water treatment methods, clean combustion technologies, renewable “clean” energy sources, conversion of used packaging into new asset streams, benign chemical compounds for industrial processes, and local and sustainability has grown organic food, you begin to see the wide range of opportunities that exist due to macrotrends.

Identify, Analyze, and Plan the Market

What are you offering/doing/selling/contributing? New ventures offer solutions to people’s problems. This concept requires you to not only examine the item or service description but also further understand the group of people whose unmet needs you are meeting (often called market analysis). In any entrepreneurial innovation circumstance you must ask the following questions:

• What is the solution for which you want someone to pay?
• Is it a service or product, or some combination?
• To whom are you selling it? Is the buyer the actual user? Who makes the purchase decision?
• What is the customer’s problem and how does your service or product address it?

Understanding what you are selling is not as obvious as it might sound. When you sell an electric vehicle you are not just selling transportation. The buyer is buying a package of attributes that might include cutting-edge technology, lower operating costs, and perhaps the satisfaction of being part of a solution to health, environmental, and energy security problems.

Identify, Analyze, and Plan the Entrepreneur & Entrepreneurial Team

The opportunity and the entrepreneur must be intertwined in a way that optimizes the probability for success. People often become entrepreneurs when they see an opportunity. They are compelled to start something to find out whether they can convert that opportunity into an ongoing source of fulfillment and potential financial gain. That means that, ideally, the entrepreneur’s life experience, education, skills, work exposure, and network of contacts align well with the opportunity. We have covered this in previous sections, so if you need to refer back to consider the role of the entrepreneur’s skills, abilities, and cognition.

Entrepreneurs sometimes act alone, but this can only take us so far. A good entrepreneurial plan, an interesting product idea, and a promising opportunity are all positive, but in the end it is the ability of the entrepreneur to attract a team, get a product out, and provide it to customers is the thing that counts.

Typically there is an individual who initially drives the process through his or her ability to mobilize resources and sometimes through sheer force of will, hard work, and determination to succeed. In challenging times it is the entrepreneur’s vision and leadership abilities that can carry the day.

Ultimately, led by the entrepreneur, a team forms. As the organization grows, the team becomes the key factor. The entrepreneur’s skills, education, capabilities, and weaknesses must be augmented and complemented by the competencies of the team members they bring to the project. The following are important questions to ask:

• Does the team as a unit have the background, skills, and understanding of the opportunity to overcome obstacles?
• Can the team act as a collaborative unit with strong decision-making ability under fluid conditions?
• Can the team deal with conflict and disagreement as a normal and healthy aspect of working through complex decisions under ambiguity?

If an organization has been established and the team has not yet been formed, these questions will be useful to help you understand what configuration of people might compose an effective team to carry the business through its early evolutionary stages.

Identify, Analyze, and Plan the Resources

Successful entrepreneurial processes require entrepreneurs and teams to mobilize a wide array of resources quickly and efficiently. All innovative and entrepreneurial ventures combine specific resources such as capital, talent and know-how (e.g., accountants, lawyers), equipment, and production facilities. Breaking down an opportunity’s required resources into components can clarify what is needed and when it is needed. Although resource needs change during the early growth stages of an opportunity, at each stage the entrepreneur should be clear about the priority resources that enable or inhibit moving to the next stage of growth. What kinds of resources are needed? The following list provides guidance:

• Capital. What financial resources, in what form (e.g., equity, debt, family loans, angel capital, venture capital), are needed at the first stage? This requires an understanding of cash flow needs, break-even time frames, and other details. Even non-profits need to make money to stay afloat. Back-of-the-envelope estimates must be converted to pro forma income statements to understand financial needs.
• Know-how. Record keeping and accounting and legal process and advice are essential resources that must be considered at the start of every venture. Access to experts is important, especially in the early stages of making an opportunity happen. New opportunities require legal incorporation, financial record keeping, and rudimentary systems and resources to provide for these expenses need to be considered.
• Facilities, equipment, and transport. Does the venture need office space, production facilities, special equipment, or transportation? At the early stage of analysis, ownership of these resources does not need to be determined. The resource requirement, however, must be identified.

The Overall Process

The process of entrepreneurship melds these pieces together in processes that unfold over weeks and months, and eventually years if the business is successful. Breaking down the process into categories and components helps you understand the pieces and how they fit together. What we find in retrospect with successful launches is a cohesive fit among the parts. The entrepreneur’s skills and education match what the start-up needs. The opportunity can be optimally explored with the team and resources that are identified and mobilized. The resources must be brought to bear to launch the opportunity with an entry strategy that delivers the value-driven concept in a way that solves customers’ problems.

With all of these things in mind, documenting answers to the questions above, and the analysis undertaken to answer them is contained in an entrepreneurial plan. This is a document that you would use to plan out the details for the elements outlined above. Making sure you identify, analyze, and plan these elements is a great starting point, and to make sure this is all done really well, have a look at the principles below.

Entrepreneurial Plan Communication Principles

As Hindle and Mainprize (2006) note, business plan writers must strive to communicate their expectations about the nature of an uncertain future. However, the liabilities of newness make communicating the expected future of new opportunities difficult (more so than for existing organizations).  They outline five communications principles:

• Translation of your vision of the venture and how it will perform into a format compatible with the expectations of the readers
• you have identified and understood the key success factors and risks
• the projected market is large and you expect good market penetration
• you have a strategy for commercialization, profitability, and market domination
• you can establish and protect a proprietary and competitive position
• Anchoring key events in the plan with specific financial and quantitative values
• your major plan objectives are in the form of financial targets
• you have addressed the dual need for planning and flexibility
• you understand the hazards of neglecting linkages between certain events
• you understand the importance of quantitative values (rather than just chronological dates)
• Nothing lasts forever—things can change to impact the opportunity: tastes, preferences, technological innovation, competitive landscape
• the new combination upon which venture is built
• the magnitude of the opportunity or market size
• market growth trends
• venture’s value from the market (% of market share proposed or market share value in dollars)
• Four key aspects describing context within which new opportunity is intended to function (internal and external environment)
• how the context will help or hinder the proposal
• how the context may change and affect the organization and the range of flexibility or response that is built into the venture
• what management can or will do in the event the context turns unfavorable
• what management can do to affect the context in a positive way
• A brief and clear statement of how an idea actually becomes a business that creates value
• Who pays, how much, and how often?
• The activities the company must perform to produce its product, deliver it to its customers, and earn revenue
• And be able to defend assertions that the venture is attractive and sustainable and has a competitive edge

Entrepreneurial Plan Credibility Principles

Entrepreneurial plan writers must strive to project credibility (Hindle & Mainprize, 2006), so there must be a match between what the entrepreneurship team (resource seekers) needs and what the resource providers expect based on their criteria. A take it or leave it approach (i.e. financial forecasts set in concrete) by the entrepreneurship team has a high likelihood of failure in terms of securing resources. Hindle and Mainprize (2006) outline five principles to help entrepreneurs project credibility:

• Without the right team, nothing else matters.
• What do they know?
• Who do they know?
• How well are they known?
• sub-strategies
• ad-hoc programs
• specific tactical action plans
• Claiming an insuperable lead or a proprietary market position is naïve.
• Anticipate several moves in advance
• View the future as a movie vs. snapshot
• Key assumptions related to market size, penetration rates, and timing issues of market context outlined in the entrepreneurial plan should link directly to the financial statements.
• Income and cash flow statements must be preceded by operational statements setting forth the primary planning assumptions about market sizes, sales, productivity, and basis for the revenue estimate.
• If the main purpose is to enact a harvest, then the entrepreneurial plan must create a value-adding deal structure to attract investors.
• Common things: viability, profit potential, downside risk, likely life-cycle time, potential areas for dispute or improvement

General Entrepreneurial Plan Guidelines

Many entrepreneurs must have a plan to achieve their goals. The following are some basic guidelines for entrepreneurial plan development.

• A standard format helps the reader understand that the entrepreneur has thought everything through and that the returns justify the risk.
• Binding the document ensures that readers can easily go through it without it falling apart.
• everything is completely integrated: the written part must say exactly the same thing as the financial part
• all financial statements are completely linked and valid (make sure all balance sheets validly balance)
• the document is well-formatted (layout makes the document easy to read and comprehend—including all diagrams, charts, statements, and other additions)
• everything is correct (there are NO spelling, grammar, sentence structure, referencing, or calculation errors)
• It is usually unnecessary—and even damaging—to state the same thing more than once. To avoid unnecessarily duplicating information, you should combine sections and reduce or eliminate duplication as much as possible.
• all the necessary information is included to enable readers to understand everything in your document
• For example, if your plan says something like “there is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units,” a reader is left completely confused. Does this mean there is a total shortage of 100,000 units, but competitors are filling this gap by producing 25,000 per year (in which case there will only be a shortage for four years)? Or, is there an annual shortage of 100,000 units with only 25,000 being produced each year, in which case the total shortage is very high and is growing each year? You must always provide the complete perspective by indicating the appropriate time frame, currency, size, or another measurement.
• if you use a percentage figure, you indicate to what it refers, otherwise, the figure is completely useless to a reader.
• This can be solved by indicating up-front in the document the currency in which all values will be quoted. Another option is to indicate each time which currency is being used, and sometimes you might want to indicate the value in more than one currency. Of course, you will need to assess the exchange rate risk to which you will be exposed and describe this in your document.
• If a statement is included that presents something as a fact when this fact is not generally known, always indicate the source. Unsupported statements damage credibility
• Be specific. An entrepreneurial plan is simply not of value if it uses vague references to high demand, carefully set prices, and another weak phrasing. It must show hard numbers (properly referenced, of course), actual prices, and real data acquired through proper research. This is the only way to ensure your plan is considered credible.

The purpose of this assignment is to connect all of the dots that you have been learning about and engaging with over the past unit when it comes to the entrepreneurial planning process. Watch this video on developing a process map . You are going to develop your own process map outlining the steps you need to take to develop a robust and well-thought-out entrepreneurial plan. Have a look at the Unit 4 Assignment: Entrepreneurial Plan for more information on what you’re going to be building.

The submission should be methodical and outline the process you will go through (i.e. what steps you will complete), and the information sources you will need to fill in the gaps and fill out your plan. Your submission should include a process map diagram, and be about 250 words, which is one page double spaced, or it could be done as an infographic, or a two-three minute presentation. If you are doing this as part of a formal course and have a different approach that you would like to take for developing this assignment, please check with your instructor.

Text Attributions

The content related to how it all starts and the process steps was taken from “ Sustainability, Innovation, and Entrepreneurship” by LibreTexts (2020) CC BY-NC-SA

The content related to the opportunity identification cognition and the entrepreneurial plan was taken from “ Entrepreneurship and Innovation Toolkit, 3rd Edition ” by L. Swanson (2017) CC BY-SA

Baron, R. A. (2004b). Opportunity recognition: Insights from a cognitive perspective. In J. E. Butler (Ed.), Opportunity identification and entrepreneurial behavior (pp. 47-73). Greenwich, Conn.: Information Age Pub

Hindle, K., & Mainprize, B. (2006). A systematic approach to writing and rating entrepreneurial business plans. The Journal of Private Equity, 9 (3), 7-23.

Introduction to Entrepreneurship Copyright © 2021 by Katherine Carpenter is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License , except where otherwise noted.

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How to Prepare and Write the Perfect Business Plan for Your Company Here's how to write a business plan that will formalize your company's goals and optimize your organization.

By Matthew McCreary • May 5, 2021

Are you preparing to start your own business but uncertain about how to get started? A business plan ought to be one of the first steps in your entrepreneurial journey because it will organize the ideas that have been spinning around in your brain and prepare you to seek funding, partners and more.

What is a business plan?

A business plan is a detailed document that outlines a company's goals and how the business, well, plans to achieve those goals over the next three or more years. It helps define expected profits and challenges, providing a road map that will help you avoid bumps in the road.

Stever Robbins writes in an Entrepreneur article titled, "Why You Must Have a Business Plan," that a business plan "is a tool for understanding how your business is put together…. Writing out your business plan forces you to review everything at once: your value proposition, marketing assumptions, operations plan, financial plan and staffing plan." But, a business plan is about more than just reviewing the past state of your business or even what your business looks like today.

Robbins writes that a well-written business plan will help you drive the future by "laying out targets in all major areas: sales, expense items, hiring positions and financing goals. Once laid out, the targets become performance goals."

The business plan can help your company attract talent and funding, because when prospects ask about your business, you already have an articulated overview to offer them. How they react can allow you to quickly understand how others see your business and pivot if necessary.

What should you do before you write your business plan?

It might sound redundant, but you actually need to plan your business plan. Business plans can be complicated, and you'll be held accountable for the goals you set. For example, if you plan to open five locations of your business within the first two years, your investors might get angry if you only manage to open two.

That's why it's essential that, before writing your business plan, you spend some time determining exactly which objectives are essential to your business. If you're struggling to come up with a list of goals on your own, Entrepreneur article "Plan Your Business Plan" offers some questions you can ask yourself to spark some inspiration.

How determined am I to see this venture succeed?

Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?

What's going to happen to me if this venture doesn't work out?

If it does succeed, how many employees will this company eventually have?

What will be the business's annual revenue in a year? What about in five years?

What will be the company's market share in that amount of time?

Will the business have a niche market, or will it sell a broad spectrum of goods and services?

What are my plans for geographic expansion? Should it be local or national? Can it be global?

Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?

If I delegate, what sorts of tasks will I share? Will it be sales, technical work or something else?

How comfortable am I taking direction from others? Can I work with partners or investors who demand input into the company's management?

Is the business going to remain independent and privately owned, or will it eventually be acquired or go public?

It's also essential to consider your financial goals. Your business might not require a massive financial commitment upfront, but it probably will if you're envisioning rapid growth. Unless you're making your product or service from scratch, you'll have to pay your suppliers before your customers can pay you, and as "Plan Your Business Plan" points out, "this cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford."

How much financing will you need to start your business? What will you be willing to accept? If you're desperate for that first influx of cash, you might be tempted to accept any offer, but doing so might force you to either surrender too much control or ask investors for a number that's not quite right for either side.

These eight questions can help you determine a few financial aspects of your planning stages:

What initial investment will the business require?

How much control of the business are you willing to relinquish to investors?

When will the business turn a profit?

When can investors, including you, expect a return on investment?

What are the business's projected profits over time?

Will you be able to devote yourself full-time to the business?

What kind of salary or profit distribution can you expect to take home?

What are the chances the business will fail, and what will happen if it does?

You should also consider who, primarily, is going to be reading your business plan, and how you plan to use it. Is it a means of raising money or attracting employees? Will suppliers see it?

Lastly, you need to assess the likelihood of whether you actually have the time and resources to see your plan through. It might hurt to realize the assumptions you've made so far don't actually make a successful business, but it's best to know early on, before you make further commitments.

Related: Need a Business Plan Template? Here Is Apple's 1981 Plan for the Mac.

How to Write a Business Plan

Once you've worked out all the questions above and you know exactly what goals you have for your business plan, the next step is to actually write the darn thing. A typical business plan runs 15 to 20 pages but can be longer or shorter, depending on the complexity of the business and the needs of your venture. Regardless of whether you intend to use the business plan for self-evaluation or to seek a seven-figure investment, it should include nine key components, many of which are outlined in Entrepreneur 's introduction to business plans:

1. Title page and contents

Presentation is important, and a business plan should be presented in a binder with a cover that lists the business's name, the principals' names and other relevant information like a working address, phone number, email and web address and date. Write the information in a font that's easy to read and include it on the title page inside, too. Add in the company logo and a table of contents that follows the executive summary.

2. Executive summary

Think of the executive summary as the SparkNotes version of your business plan . It should tell the reader in as few words as possible what your business wants and why. The executive summary should address these nine things:

The business idea and why it is necessary. (What problem does it solve?)

How much will it cost, and how much financing are you seeking?

What will the return be to the investor? Over what length of time?

What is the perceived risk level?

Where does your idea fit into the marketplace?

What is the management team?

What are the product and competitive strategies?

What is your marketing plan?

What is your exit strategy?

When writing the executive summary, remember that it should be somewhere between one-half page to a full page. Anything longer, and you risk losing your reader's attention before they can dig into your business plan. Try to answer each of the questions above in two or three sentences, and you'll wind up with an executive summary that's about the right length.

Related: First Steps: Writing the Executive Summary of Your Business Plan

3. Business description

You can fill anywhere from a few paragraphs to a few pages when writing your business description, but try again to keep it short, with the understanding that more sections will follow. The business description typically starts with a short explanation of your chosen industry, including its present outlook and future possibilities. Use data and sources (with proper footnotes) to explain the markets the industry offers, along with the developments that will affect your business. That way, everyone who reads the business description, particularly investors, will see that they can trust the various information contained within your business plan.

When you pivot to speaking of your business, start with its structure. How does your business work? Is it retail, service-oriented or wholesale? Is the business new or established? Is the company a sole proprietorship, partnership or corporation? Who are the principals and who are your customers? What do the distribution channels look like, and how can you support sales?

Next, break down your business's offerings. Are you selling a physical product, SaaS or a service? Explain it in a way that a reader knows what you're planning to sell and how it differentiates itself from the competition (investors call this a Unique Selling Proposition, or USP, and it's important that you find yours). Whether it's a trade secret or a patent, you should be specific about your competitive advantage and why your business is going to be profitable. If you plan to use your business plan for fundraising, you can use the business description section to explain why new investments will help make the business even more profitable.

This, like everything else, can be brief, but you can tell the reader about your business's efficiency or workflow. You can write about other key people within the business or cite industry experts' support of your idea, as well as your base of operations and reasons for starting in the first place.

4. Market strategies

Paint a picture about your market by remembering the four Ps: product, price, place and promotion.

Start this section by defining the market's size, structure and sales potential. What are the market's growth prospects? What do the demographics and trends look like right now?

Next, outline the frequency at which your product or service will be purchased by the target market and the potential annual purchase. What market share can you possibly expect to win? Try to be realistic here, and keep in mind that even a number like 25% might be a dominant share.

Next, break down your business's plan for positioning, which relates to the market niche your product or service can fill. Who is your target market, how will you reach them and what are they buying from you? Who are your competitors, and what is your USP?

The positioning statement within your business plan should be short and to the point, but make sure you answer each of those questions before you move on to, perhaps, the most difficult and important aspect of your market strategy: pricing.

In fact, settling on a price for your product or service is one of the most important decisions you have to make in the entire business plan. Pricing will directly determine essential aspects of your business, like profit margin and sales volume. It will influence all sorts of areas, too, from marketing to target consumer.

There are two primary ways to determine your price: The first is to look inward, adding up the costs of offering your product or service, and then adding in a profit margin to find your number. The second is called competitive pricing, and it involves research into how your competitors will either price their products or services now or in the future. The difficult aspect of this second pricing method is that it often sets a ceiling on pricing, which, in turn, could force you to adjust your costs.

Then, pivot the market strategies section toward your distribution process and how it relates to your competitors' channels. How, exactly, are you going to get your offerings from one place to the next? Walk the reader step by step through your process. Do you want to use the same strategy or something else that might give you an advantage?

Last, explain your promotion strategy. How are you going to communicate with your potential customers? This part should talk about not only marketing or advertising, but also packaging, public relations and sales promotions.

Related: Creating a Winning Startup Business Plan

5. Competitive analysis

The next section in your business plan should be the competitive analysis, which helps explain the differences between you and your competitors … and how you can keep it that way. If you can start with an honest evaluation of your competitors' strengths and weaknesses within the marketplace, you can also provide the reader with clear analysis about your advantage and the barriers that either already exist or can be developed to keep your business ahead of the pack. Are there weaknesses within the marketplace, and if so, how can you exploit them?

Remember to consider both your direct competition and your indirect competition, with both a short-term and long-term view.

6. Design and development plan

If you plan to sell a product, it's smart to add a design and development section to your business plan. This part should help your readers understand the background of that product. How have the production, marketing and company developed over time? What is your developmental budget?

For the sake of organization, consider these three aspects of the design and development plan:

Product development

Market development

Organizational development

Start by establishing your development goals, which should logically follow your evaluation of the market and your competition. Make these goals feasible and quantifiable, and be sure to establish timelines that allow your readers to see your vision. The goals should address both technical and marketing aspects.

Once the reader has a clear idea of your development goals, explain the procedures you'll develop to reach them. How will you allocate your resources, and who is in charge of accomplishing each goal?

The Entrepreneur guide to design and development plans offers this example on the steps of producing a recipe for a premium lager beer:

Gather ingredients.

Determine optimum malting process.

Gauge mashing temperature.

Boil wort and evaluate which hops provide the best flavor.

Determine yeast amounts and fermentation period.

Determine aging period.

Carbonate the beer.

Decide whether or not to pasteurize the beer.

Make sure to also talk about scheduling. What checkpoints will the product need to pass to reach a customer? Establish timeframes for each step of the process. Create a chart with a column for each task, how long that task will take and when the task will start and end.

Next, consider the costs of developing your product, breaking down the costs of these aspects:

General and administrative (G&A) costs

Marketing and sales

Professional services, like lawyers or accountants

Miscellaneous costs

Necessary equipment

The next section should be about the personnel you either have or plan to hire for that development. If you already have the right person in place, this part should be easy. If not, then this part of the business plan can help you create a detailed description of exactly what you need. This process can also help you formalize the hierarchy of your team's positions so that everyone knows their roles and responsibilities.

Finish the development and design section of your business plan by addressing the risks in developing the product and how you're going to address those risks. Could there be technical difficulties? Are you having trouble finding the right person to lead the development? Does your financial situation limit your ability to develop the product? Being honest about your problems and solutions can help answer some of your readers' questions before they ask them.

Related: The Essential Guide to Writing a Business Plan

7. Operations and management plan

Want to learn everything you'll ever need to know about the operations and management section of your business plan, and read a real, actual web article from 1997? Check out our guide titled, "Writing A Business Plan: Operations And Management."

Here, we'll more briefly summarize the two areas that need to be covered within your operations and management plan: the organizational structure is first, and the capital requirement for the operation are second.

The organizational structure detailed within your business plan will establish the basis for your operating expenses, which will provide essential information for the next part of the business plan: your financial statements. Investors will look closely at the financial statements, so it's important to start with a solid foundation and a realistic framework. You can start by dividing your organizational structure into these four sections:

Marketing and sales (including customer relations and service)

Production (including quality assurance)

Research and development

Administration

After you've broken down the organization's operations within your business plan, you can look at the expenses, or overhead. Divide them into fixed expenses, which typically remain constant, and variable, which will change according to the volume of business. Here are some of the examples of overhead expenses:

Maintenance and repair

Equipment leases

Advertising and promotion

Packaging and shipping

Payroll taxes and benefits

Uncollectible receivables

Professional services

Loan payments

Depreciation

Having difficulty calculating what some of those expenses might be for your business? Try using the simple formulas in "Writing A Business Plan: Operations And Management."

8. Financial factors

The last piece of the business plan that you definitely need to have covers the business's finances. Specifically, three financial statements will form the backbone of your business plan: the income statement, the cash-flow statement and balance sheet . Let's go through them one by one.

The income statement explains how the business can make money in a simple way. It draws on financial models already developed and discussed throughout the business plan (revenue, expenses, capital and cost of goods) and combines those numbers with when sales are made and when expenses are incurred. When the reader finishes going through your income statement, they should understand how much money your company makes or loses by subtracting your costs from your revenue, showing either a loss or a profit. If you like, you or a CPA can add a very short analysis at the end to emphasize some important aspects of the statement.

Second is the cash-flow statement, which explains how much cash your business needs to meet its obligations, as well as when you're going to need it and how you're going to get it. This section shows a profit or loss at the end of each month or year that rolls over to the next time period, which can create a cycle. If your business plan shows that you're consistently operating at a loss that gets bigger as time goes on, this can be a major red flag for both you and potential investors. This part of the business plan should be prepared monthly during your first year in business, quarterly in your second year and annually after that.

Our guide on cash-flow statements includes 17 items you'll need to add to your cash-flow statement.

Cash. Cash on hand in the business.

Cash sales . Income from sales paid for by cash.

Receivables. Income from collecting money owed to the business due to sales.

Other income. The liquidation of assets, interest on extended loans or income from investments are examples.

Total income. The sum of the four items above (total cash, cash sales, receivables, other income).

Material/merchandise . This will depend on the structure of your business. If you're manufacturing, this will include your raw materials. If you're in retail, count your inventory of merchandise. If you offer a service, consider which supplies are necessary.

Direct labor . What sort of labor do you need to make your product or complete your service?

Overhead . This includes both the variable expenses and fixed expenses for business operations.

Marketing/sales . All salaries, commissions and other direct costs associated with the marketing and sales departments.

Research and development . Specifically, the labor expenses required for research and development.

General and administrative expenses. Like the research and development costs, this centers on the labor for G&A functions of the business.

Taxes . This excludes payroll taxes but includes everything else.

Capital. Required capital for necessary equipment.

Loan payments. The total of all payments made to reduce any long-term debts.

Total expenses. The sum of items six through 14 (material/merchandise, direct labor, overhead, marketing/sales, research and development, general and administrative expenses, taxes, capital and loan payments).

Cash flow. Subtract total expenses from total income. This is how much cash will roll over to the next period.

Cumulative cash flow . Subtract the previous period's cash flow from your current cash flow.

Just like with the income statement, it's a good idea to briefly summarize the figures at the end. Again, consulting with a CPA is probably a good idea.

The last financial statement is the balance sheet. A balance sheet is, as our encyclopedia says, "a financial statement that lists the assets, liabilities and equity of a company at a specific point in time and is used to calculate the net worth of a business." If you've already started the business, use the balance sheet from your last reporting period. If the business plan you wrote is for a business you hope to start, do your best to project your assets and liabilities over time. If you want to earn investors, you'll also need to include a personal financial statement. Then, as with the other two sections, add a short analysis that hits the main points.

9. Supporting documents

If you have other documents that your readers need to see, like important contracts, letters of reference, a copy of your lease or legal documents, you should add them in this section.

Related: 7 Steps to a Perfectly Written Business Plan

What do I do with my business plan after I've written it?

The simplest reason to create a business plan is to help people unfamiliar with your business understand it quickly. While the most obvious use for a document like this is for financing purposes, a business plan can also help you attract talented employees — and, if you share the business plan internally, help your existing employees understand their roles.

But it's also important to do for your own edification, too. It's like the old saying goes, "The best way to learn something is to teach it." Writing down your plans, your goals and the state of your finances helps clarify the thoughts in your own mind. From there, you can more easily lead your business because you'll know whether the business is reaching the checkpoints you set out to begin with. You'll be able to foresee difficulties before they pop up and be able to pivot quickly.

That's why you should continue to update your business plan when the conditions change, either within your business (you might be entering a new period or undergoing a change in management) or within your market (like a new competitor popping up). The key is to keep your business plan ready so that you don't have to get it ready when opportunity strikes.

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The 5 Stages of Entrepreneurship

Published: January 25, 2023

Entrepreneurship isn’t for the faint-hearted. Of course, the thrills of creating an effective business, working on your own terms, and enjoying financial freedom are rewarding. However, turning your idea into a profitable business is no simple task.

There will be hurdles to overcome. However, depending on your business idea, it may take months or years to scale these challenges and reach the finish line. Sadly, most entrepreneurs never see success. Nearly 75% of startups fail, according to Harvard Business Review . 

The good news: Your business doesn’t have to be another casualty. In this post, you’ll learn the five stages of entrepreneurship and the common pitfalls you should avoid in each. You’ll also see real-life examples of entrepreneurs at each stage. 

What are the five stages of entrepreneurship?

The “Five Stages of Entrepreneurship” is a simple framework that helps new founders to understand the entrepreneurship journey. The stages include ideation, planning, execution, scaling, and hypergrowth.

The Five Stages of Entrepreneurship

Starting a business can seem like a daunting task. That’s especially true if you start the process without a roadmap. 

The Five Stages of Entrepreneurship divide the startup journey into more manageable chunks. Each stage of your entrepreneurial enterprise will come with unique challenges. You’ll also need to complete certain foundational steps to set your business up for success. 

Below, we explore the five stages of entrepreneurship and the common challenges to expect at each stage.

Stage 1: Ideation

Ideation is the first stage of every entrepreneurial journey. The goal here is to identify and validate a profitable business idea.

Here are three common ways entrepreneurs develop ideas: 

• Considering what they’re passionate about. For a role model, turn to Nike Co-founder Phil Knight . His interest in shoes and sports strongly influenced his decision to start the athletic shoe company.
• Identifying a problem in an existing market. This is how the idea for Uber came about. Travis Kalanick and Garrett Camp were returning from a LeWeb, an annual tech conference. It was a cold winter night, and unfortunately, they couldn’t get a cab. So they asked themselves, “What if you could request a ride from your phone?” The rest is history.
• Focusing on niche markets . A niche market is a small, underserved segment of a large and established market. Jacamo, for instance, is a clothing retail company targeting larger (and taller) men who typically struggle to find large-sized, fashionable clothes.

After an initial brainstorming session, you’ll need to narrow your scope and focus on one idea. We’ll explain how you can validate concepts below. 

Idea Validation

Ensuring the viability of your idea is essential. When you confirm the market need for your product, you avoid the risk of pouring your resources into a business idea that’s a dud.

Most entrepreneurs skip this crucial step. They assume there’s a market for their product without validating their hypothesis. The result? They build a product that no one wants, causing their businesses to die in infancy. 

A CB Insights Report reveals this is one major reason businesses fail. Don’t make the same mistake. If you’re unsure of a market’s potential for your idea, think twice before committing resources to it.

How to Validate Your Business Idea

One way to validate your idea is to evaluate the performance of similar businesses. A perfect example is Chanty. 

Chanty is a communication and team collaboration app that went head-to-head with companies like Slack. When Chanty came on the scene, Slack was already dominating the market and raking in millions of dollars in revenue. This proved to Dmytro Okunyev, Chanty’s Founder, that they could get a slice of the market. 

You can also validate your ideas during discussions with trusted peers. As David Darmanin , Founder of Hotjar, says, “Step one of validating an idea is reaching out to your personal networks and gauge response. This differs from approaching friends and family who will always want to be nice to you.” 

You can contact your network via email, social media, and many online communities. Done right, you can get free and unbiased advice that’ll help you iterate on your business idea quickly.

The lean start-up methodology also provides a comprehensive approach to testing business ideas. To learn more about the lean start-up, read this book by entrepreneur Eric Ries .

Stage 2: Planning

Just as architects need building plans to construct a new building, entrepreneurs need business plans to create successful businesses.

Developing a business plan helps you estimate costs, identify risks, and set up risk mitigation measures. A written business plan is even more essential if you’re seeking investors in your company. Potential investors want to see the extent to which you envisioned your business. 

For this reason, put lots of thought into your plan, create a document that’s thorough, and consider your long-term goals. 

Note that you don’t need to write a 37-page business plan or have a 15-year forecast before you begin building your business. As Mark Zuckerberg said , “Ideas don’t come out fully formed. They only become clearer as you work on them. You just have to get started.” 

So if you don’t have a five-year vision of your business yet, don’t let that stop you from taking the first few steps while you flesh out the big picture.

Stage 3: Execution

Like a plane stuck on a runway, many budding entrepreneurs often generate some momentum, but they never lift off. As a result, many innovative ideas never become a reality. 

The fact is, ideas are a dime a dozen, but execution is rare. To succeed, you’ll need to become adept at putting a plan into action.

At least once per day, I hear a great business idea (often web3). But then I tell people -- Excellent, you have a great idea... now you have to execute on it! Most people fail at this stage, and can't turn a great idea into great execution -- which is what really matters — Brian D. Evans (@BrianDEvans) May 16, 2022

Starting a business is risky and scary. And that feeling of uncertainty — the fear of failure and of making mistakes is one of the major reasons entrepreneurs hesitate to execute. 

If you’ve identified and planned out your big idea, you’re probably filled with the excitement of “what could be” and the fear of “what if it doesn’t work?” simultaneously. 

You’re not alone. Founders like Dmytro Okunyev had these mixed emotions, too. 

I wasn’t very certain that my idea would work, but step by step, small win by small win, I gained that confidence. Now we are in the ivy league of communication platforms. #chanty #software #marketing — Dmytro Okunyev (@dmytrookunyev) February 12, 2021

Today, Chanty is thriving because Dmytro mustered the courage to move forward with his plans despite the uncertainties. 

So, recognize that your plan isn’t foolproof. You will make mistakes. But just as you can’t paddle a boat tied to the dock, you can’t steer your business toward your vision until you launch and tackle your mistakes head-on.

As Mark Zuckerberg explains : “Don't even bother trying to avoid mistakes because you're going to make tons of mistakes… The important thing is actually LEARNING QUICKLY from whatever mistakes you make and not giving up.”

Moving too slow or too fast is dangerous. So caution is necessary either way. Develop a good sense of when to act fast, get rid of your desire for perfection, and know when to slow down.

Will Rogers, a popular American vaudeville performer, puts it more humorously: “Even if you’re on the right track, you’ll get run over if you just sit there.”

The bottom line: business is trial and error. Make peace with the fact that you’ll make mistakes. Take small calculated bets. Learn from the resulting failures and move forward. 

If you believe in your idea, you’ve tested it, the timing feels right, and you have assembled your team , then launch!

Stage 4: Scaling

At this point, you’ve successfully launched your business, you’ve achieved product-market fit , and sales are steady — but your business hasn’t reached the heights you imagined. You desire to expand faster. 

So you face an important question: “Should you bring in external investors and give up equity or bootstrap your business, i.e. self-fund through personal savings, debt, or customer funding?”

Founders of successful companies often bootstrap in their early days, but eventually, they accept outside investment. However, outliers like Spanx bootstrapped their way to a unicorn valuation after founder Sara Blakely started the undergarment company using only $5,000 of her personal savings.

Bootstrapping relies on a lot of sweat equity. This can mean taking on more stress than an investor-funded company. Blakely, for instance, learned to write her own patent from reading books so she could save $3,000 in legal fees. 

Bootstrapping has a huge but sometimes overlooked upside. Besides giving you full control of your business, the lack of capital forces you to find smart ways to grow your company.

Heavy funding covers up problems that ought to be obvious to the founders. Paradoxically, this sometimes leads to start-up death. On the flip side, accelerated growth is one major benefit that investor-backed start-ups enjoy. GitHub , an internet hosting service for software development, is an example of a business that scaled fast , thanks to external funding. 

Tom Preston-Werner, Chris Wanstrath, and PJ Hyett founded GitHub in 2008 and funded it for four years. In 2012, they got their first VC investment of $100 million and raised another $250 million in 2015. By October 2018, their annual recurring revenue was between $200-$300 million. Microsoft bought GitHub for $7.5 billion in the same year.

Whether your bootstrap or get investor backing, three factors are crucial for scaling your business quickly:

• Building effective systems. A system is a structure that fuels the smooth running of your business without your presence or supervision. These systems clearly outline how your company operates.
• Learning to lead. Learn to sell a vision to your team. You must be able to inspire others to act. This way, you leverage other people’s talents and experience to achieve results. Alone, you can only go so far.
• Track your profitability. It’s not unheard of to find a business with $50 million in revenue but $200k in profit. That’s why you shouldn’t focus on growing sales alone. Instead, obsessively track your margins and brainstorm ways to increase them.

To learn more about how to build systems, read:

• The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It
• Built to Sell: Creating a Business That Can Thrive Without You 

Stage 5: Hypergrowth

Hypergrowth is a season of rapid and exponential growth that companies experience as they scale. Specifically, an organization experiences hypergrowth when its Compound Annual Growth Rate (CAGR) exceeds 40% and remains so for at least a year, according to the World Economic Forum . 

For context, “normal growth” companies have a CAGR of 20%. “Rapid growth” companies have a CAGR of 20% to 40%. Some companies that have achieved hypergrowth include Amazon, Slack, Stripe, Zoom, Uber, and Bolt.

Achieving hypergrowth is desirable but challenging. One common setback is the risk of employee burnout from overwork. A prolonged period of unprofitability is another prevalent challenge. 

Amazon, for instance, was unprofitable for its first 20 years . It became profitable only in the mid-2010s. If investors had pulled out or stopped injecting cash into Amazon, its collapse would have been inevitable.

However, “Jeff had earned so much faith from his shareholders that investors [were] willing to patiently wait for the day when he decides to slow his expansion and cultivate healthy profits,” writes Brad Stone in his acclaimed book, The Everything Store.

This pattern of pursuing hypergrowth at the expense of short-term profitability is the norm with high-growth businesses. As of 2019, 64% of unicorns that IPO-ed since 2010 are unprofitable, according to TechCrunch . But investors don’t seem to care.

To enter this phase of exponential growth, focus on the following three factors.

1. Product Innovation

Hypergrowth is demand-driven. So unless you build a product that customers love, you’ll never get there. Harsh, but true. 

Customer-centricity is an obsession for (all) hypergrowth businesses, not just a “core value” they hang on the walls. They constantly leverage empathy, data, and customer feedback to build the best products. 

2. Agile and Scalable Systems

What got you to $10 million in ARR won’t get you to $900 million. The systems that run small businesses efficiently will not support your hypergrowth. 

Uber had to overhaul its driver onboarding process multiple times to support its hypergrowth. Until 2013, intending drivers had to go to a local office to complete some paperwork. Then they morphed into an online application process that allowed drivers to sign up without visiting a local office. 

And when they began international expansion , the company had to design another process to accommodate the differences in regulations across host countries.

3. A Core Team

Hypergrowth is driven by hyper-effort. That’s why long work hours are common in hypergrowth companies. It’s a hard grind. And if you don’t have a team that shares your passion and believes in your mission, you’re not going far.

Whatever you do, don’t try to achieve hypergrowth too fast. Companies attempting to scale prematurely often push their operational capabilities to the limit, increase their stress levels, and hurt their business reputation. 

To learn more about hypergrowth, read:

• Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies

The bottom line is this: if you have an idea for a product that helps people solve a problem, don’t ignore it. Test it. Iterate until you get product-market fit. Combine that with a thoughtfully planned business strategy, a dedicated team, and a group of experienced mentors, and your business could become an enormous success story.

The process of growth will be demanding and painful. And sometimes, the people closest to you won’t share your vision. Nike’s controversial ad offers advice on what to do when people scorn you.

As Steve Jobs said, “The people who are crazy enough to think they can change the world are the ones who do.”

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The Entrepreneurial Process

Of course, there are many ways to organize the effort of planning, launching and building a venture. But there are a set of fundamentals that must be covered in any approach. We offer the following as a way to break down the basic activities necessary.

It is useful to break the entrepreneurial process into five phases: idea generation, opportunity evaluation, planning, company formation/launch and growth. These phases are summarized in this table, and the Opportunity Evaluation and Planning steps are expanded in greater detail below.

Although it is natural to think of the early steps as occurring sequentially, they are actually proceeding in parallel. Even as you begin your evaluation, you are forming at least a hypothesis of a business strategy. As you test the hypothesis, you are beginning to execute the first steps of your marketing plan (and possibly also your sales plan). We separate these ideas for convenience in description but it is worth keeping in mind that these are ongoing aspects of your management of the business. In the growth phases, you continue to refine you basic idea, re-evaluate the opportunity and revise your plan.

To take this analysis one level deeper, we can break down each of these phases as follows.

Opportunity Evaluation

I t is helpful to think of the evaluation step as continually asking the question of whether the opportunity is worth investing in. You are actually constructing and then continually revising an “investment prospectus.”

• Is there a sufficiently attractive market opportunity ?
• Is your proposed solution feasible, both from a market perspective and a technology perspective?
• Can we compete (over a sufficiently interesting time horizon): is there sustainable competitive advantage ?
• Do we have a team that can effectively capitalize of this opportunity?
• What is the risk / reward profile of this opportunity, and does it justify the investment of time and money?

 If you can answer all of these questions affirmatively, then you have persuaded yourself that this opportunity is worth investing in. This is the first step toward being able to convince others, whether they be prospective customers, employees, partners or providers of capital.

These ideas are developed in the Opportunity Evaluation section

There are four main areas of strategy: determination of the target customer set, business model, position and objectives. These are described briefly below and in more depth in the sections devoted to these topics.

Target customers

The target customer is the set of potential buyers who are your focus as you design your company’s solution. The more you know about them, the better off you are. Your characterization should be both qualitative and quantitative . You should investigate any alternatives the customer has for solving or working around the problem or need that you are targeting. You should understand the buying process in detail, including who are the decision makers and who influences the decision.

Business Model

The business model is your theory about how you will make money. It involves a definition of a solution to the customer’s need, an hypothesis about how and how much the customer will pay for that solution. If there are any assumptions required for your theory to be true (such as the existence of complementary product or services, or the customer’s willingness to change business processes) these should also be articulated.

“Position” refers both to how your company is differentiated from any competitors and also how it relates to other companies in the value chain. This is an opportunity to define, at a fundamental level, what your company will do and what it will not do.

An element of position is your company’s vision : how it wants to be known or thought of. A compelling vision is necessary to inspire investors, recruit and motivate employees, and to excite customers and partners.

Milestones / Objectives

As a first step toward creating your operating plan, you should create a set of high level objectives for your business. This should include:

• Key milestones (prototype, product, customer, partnerships,etc.)
• Share or penetration into your chosen market

A clear articulation of objectives will allow you to set priorities for your venture, which will be critical as you face the many tough decisions that any entrepreneur must face.

These ideas are developed in the Strategy Development section

Operating plan

Your operating plan is where you spell out all of the things that you plan to do and what they will yield for your business. The activities will cover all areas of the business: marketing, selling, engineering, etc. These activities should yield products by a certain date, possibly partners, customers, etc. These activities will drive the financial performance of the company.

Your operating plan will be a combination of plans , i.e., these people working on this topic for this period of time will produce result X, and forecasts or projections , i.e. predictions about what results will occur. The primary and most important forecast concerns revenue, but predictions about costs of materials and other things may be important as well. The operating plan is the core of your business, and you should make it as good as you can – your plans should be as thorough as possible and your forecasts should be based on the best and most complete evidence you can compile.

Begin with your strategy and break down what needs to be accomplished to achieve your objectives – this is the basis of your plan. The more detailed and fine grained analysis you can develop, the more accurate and reliable your plan will be.

Financing plan

This includes the capital needs of the company, the timing of those needs and the desired/expected sources of that capital.

Planning process

Here are a few important principles:

• The actual budget, staffing plans, etc. are then driven by estimates of what it takes to accomplish the tasks in the required timeframe.
• Build a plan that captures everything ( so that you are not hurt by surprises or unexpected expenses)
• Revenue: detailed bottom up plan, based on best information about customer groupings, conversion rates, sales activity, …
• Expenses: usually people driven – build in realistic hiring timetables, training, learning curve, benefits, travel, etc.
• Program expenses: mostly marketing – must support the plan and estimates should be equally comprehensive
• The plan must close – all pieces tie together.

The plan becomes more manageable when you break it down into major functional areas. The traditional breakdown is as follows, but you don’t have to be bound by this except in so far as you should follow Generally Accepted Accounting Practice.

• Research and development
• People management
• Processes & infrastructure

You should monitor your budget carefully and continually, and make adjustments as needed. A more detailed description of the process of building an operating plan may be found at: Operating Plan Development Process

Execution is organized by the core functional areas of the company

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8 Stages of the Entrepreneurial Process

When starting a new venture or business, there is a sequential process that you can follow to help you stay on course. This process can be broken down into eight stages, starting with discovery and ending with implementation.   

Much of the entrepreneurial process is focused on developing a product or service and planning how to successfully introduce it into the marketplace. To do this successfully, you need strong leadership in place. Leadership is particularly central to Stage Four: Strategic Planning, in which the vision for the venture is established.

Academic studies of entrepreneurship have identified the execution of a new venture's business plan as crucial to success—and it's quite possible for an innovative entrepreneurial idea to fail because of the mishandling of Stage Eight: Implementing. Check out our latest infographic to learn more about the eight stages in the entrepreneurial process.

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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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The Entrepreneurial World

• First Online: 17 August 2018

Cite this chapter

• Samuel Dinnar 4 &
• Lawrence Susskind 5  

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Every successful entrepreneurial effort starts with an idea and moves through some series of typical stages—from seed to (hopefully) exit. At each stage, founders must engage a galaxy of different actors, including partners, funders, technical staff, suppliers, and customers. How these negotiations are handled will determine whether a venture succeeds or fails. Indeed, many start-ups make it only through one or two stages before failing, and many more find their journey less predictable and eventually shut down. Throughout the entrepreneurial process, relationships must be forged and maintained in parallel to the founder internally developing their own entrepreneurial self. Negotiation is shown to be a vitally important entrepreneurial skill, one that is required for the many described interactions that most entrepreneurs must be able to handle from founding the company to the many milestones that are involved in raising money, hiring, procurement, licensing, servicing customers, selling, and deciding on strategy. Many entrepreneurial relationships are long-term and involve negotiating many agreements, contracts, and milestones.

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Dinnar, S., Susskind, L. (2019). The Entrepreneurial World. In: Entrepreneurial Negotiation. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92543-1_2

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5 Stages of Process of Entrepreneurship

• Post author: Anuj Kumar
• Post published: 1 September 2023
• Post category: Entrepreneurship
• Post comments: 0 Comments

Table of Contents

• 1.1 Stage 1: Preliminary steps
• 1.2 Stage 2: Decision-Making Steps
• 1.3 Stage 3: Planning Steps
• 1.4 Stage 4: Implementation Steps
• 1.5 Stage 5: Managerial Steps
• 2.1 What are the 7 stages of the process of entrepreneurship?

Process of Entrepreneurship

The entrepreneurial process is a step-by-step method that every entrepreneur needs to follow for setting up an enterprise. There are five steps in the process of entrepreneurship :

Stage 1: Preliminary steps

Stage 2: decision-making steps, stage 3: planning steps, stage 4: implementation steps, stage 5: managerial steps.

These are the initial steps that entrepreneurs need to follow for establishing a firm. At the very first stage, the to-be entrepreneurs should show their ability to make a decision that is going to affect the company.

It would be right to say the birth of an entrepreneur takes place at this stage. This is a significant stage as an entrepreneur searches for a business opportunity at this stage and collects data/information from all available sources.

These are the steps related to the decision-making of entrepreneurs. Entrepreneurs make efficient decisions on the basis of the lessons learned by them or as per their instinct or examples of other successful entrepreneurs.

In this step, the entrepreneur is generally seen consulting with the District Industrial Centre (DIC) and Micro, Small and Medium Enterprises (MSME). Some of the major decisions taken at this stage are as follows:

• Decisions concerning the acquisition of permission, recognition, and application.
• Decisions related to the acquisition of funds from banks or financial institutions.
• Decisions related to the development of a Preliminary Project Report (PPR).
• Decisions about the acquisition and arrangement of land, building, machinery, plant, raw material, labor, fuel, water supply, energy, filtration, etc.

Effective decisions that are adaptable and comfortable for the business enterprise, must consider all stakeholders and organizations who are directly or indirectly linked to the success of entrepreneurship.

This stage is also a vital step of the entrepreneurial process as planning is considered an assumption or prediction of business needs and requirements to arrive at some anticipated outcome in the future.

It makes it possible to review the available options and choose the best strategy to run the business by bringing down expenses and maximizing profit. Some of the substantial planning steps include the following:

• Making plans for infrastructure such as plants and buildings.
• Taking permission and recognition from any reputed authority or government authority as needed.
• Requesting to concerned authorities for environmental clearance.
• Applying for licensing and purchasing of government-managed land if required.
• Requesting and applying to concerned authorities for electric connection and water supply.
• Making plans by considering the final feasibility, technical feasibility, and operational feasibility.
• Studying the PPR and preparing Detailed Project Report (DPR) Getting approval and release of loan and/or capital investment .
• Acquiring machinery and planning for installation.

This stage of the entrepreneurial process refers to the execution of the plan. It is the action taken by entrepreneurs to implement the plan so that the plans are put into action. Some vital steps that help in understanding how actions in planning steps are groomed into implementation steps are given as follows:

• Acquiring land, setting up buildings, and purchasing raw materials.
• Installing plant and machinery, and recruiting and selecting human resources.
• Getting permission and reorganization letters, and receiving capital investment.
• Initiating operation and production process.
• Arranging the fuel, electricity, and water supply requirements for business.
• Obtaining permission and assistance from authorities for the arrangement of infrastructural development, ie., road, hospital, school, and residence.

Implementation steps bring the plan into action so it is the most important and difficult step. It is only during implementation that the actual challenges come and are figured out to generate something of real value.

Entrepreneurs play various roles such as initiator, planner, organizer, and employer. Apart from this, entrepreneurs also do managerial duties which are also very important for them as well as for the organisation. Some of the vital managerial duties that every entrepreneur should take care of are as follows:

• Framing market policy and strategy.
• Arranging promotion of products or services.
• Deciding pricing policy.
• Managing retailers and wholesalers.
• Benchmarking the profit margin.
• Managing marketing strategy.
• Managing advertisement of products or services.
• Managing distribution system for efficient distribution.
• Managing warehouse.

FAQs Section

What are the 7 stages of the process of entrepreneurship.

The 7 stages of the process of entrepreneurship are: 1. Stage 1: Preliminary steps 2. Stage 2: Decision-Making Steps 3. Stage 3: Planning Steps 4. Stage 4: Implementation Steps 5. Stage 5: Managerial Steps.

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5 Important Features of Entrepreneurship | Explained

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📖 4 Entrepreneurial Process Stages [Model]

• Carlos Barraza
• October 23, 2018
• Business Planning , Entrepreneurship

The  entrepreneurial culture  and spirit is on those who decide to take one step ahead to achieve success. It is a long-term process, that visionaires will have to keep on working to transform their environment. There are several models created by academics, that shows what is the entrepreneurial process about.

Entrepreneurial process definition

The entrepreneurial development of a person goes beyond education, which requires various factors to take place this complex process. I added the definition of  William Bygrave , a professor at Babson College, about the entrepreneurial process.

The entrepreneurial process is a set of stages and events that follow one another. These entrepreneurial process stages are: the idea or conception of the business, the event that triggers the operations, implementation and growth.  A critical factor that drive the development of the business at each stage as with most human behavior, entrepreneurial traits are shaped by personal attributes and environment.

The attitudes of the people are those who are shaping their own surroundings, if an entrepreneur looks for the characteristics of successful people, their chances of success increase, specially if they belong to an  entrepreneurial ecosystem .

Entrepreneurial process stages

In the rest of the article it can be found two models that reflect what the entrepreneurial process is. In this section I will mention the stages of the model of the University of Pretoria, trying to simplify main points that an entrepreneur should consider.

1. Idea generation

The entrepreneur begins to wonder why there is not available a product or service, why not improve certain things, how to generate income to cover their expenses, etc. Thousands of questions might rise, so them will help to identify opportunities to meet the market needs. In previous years, there where not enough amount of goods and services. It was a little bit easier to position a business, however now it requires a search for information and market analysis to see the possibility of success. It is possible that at this point in the entrepreneurial process, there are many people, since the generation of ideas can be much easier. However, the step towards a decision making is where many can stop and perhaps even abandon the idea from the starting a business.

2. Decision making and business planning

A critical point in the entrepreneurial process is deciding to start the project. Be active and stay motivated are the main factors for the entrepreneur to start landing his idea. Asking what resources are needed and where he will get them, is vital to generate at least one way forward for the entrepreneur. The development of the business plan will mark only a guide that can be used as reference.

3. Project creation

The project is conducted when the entrepreneur decides to seek and obtain resources. Getting financiation is difficult, and perhaps one of the main obstacles to start a business. When the entrepreneur begins to invest the resources and and begin operating, it is a point release of stress, as the entrepreneur will see the first steps of his company.

4. Management and control

After having pass through the first months of operation, the company will see if it decreases, maintains or increases in sales. The entrepreneur should strive to maintain revenue growth before worrying about having a nice office. Managing a business is not easy, but the experience that entrepreneurs acquire over time will surely ease the handling of all resources. Perhaps one could say that the entrepreneurial process ends here, but I think it is no longer an entrepreneur, and he becomes a full businessman or businesswoman.

The entrepreneurial process model of the University of Pretoria

Within the study and analysis of the University of Pretoria, they made its own model, which mixes different ideologies of different authors to adapt their entrepreneurial model. This model stands out more for its definition of stages and events throughout the process.

4 Entrepreneurial process events stages

Within the entrepreneurial process, there are different events that are generated along the process.

1. Innovation

It is the time when the entrepreneur generates the innovative idea, identifies the market opportunity, and look for information. Also, it begins to see the feasibility of ideas, the ability to get value from it and how to generate the development of the product or service.

2. Triggering event

This event is the gestation time of the project. The entrepreneur begins to motivate himself to start a business and to decide to proceed with. The business plan is created, as well as the identification of the resources required, the project risk, the source of the funds and how they would use them.

3. Implementation

This event includes the incorporation of resources and arm the project to launch their new business to the market. The strategy and business plan begin to develop day by day, and the use of resources are invested in favor of building a successful company. Marketing is vital in every company, especially for a start-up. Once you launch your business to the general public, you need to market your products or services to attract customers and generate more sales. Online marketing is a promotional technique with great promise, and SEO is the primary method to make a mark in today’s digital landscape. A surefire way to appeal to search engines is to tap the help of the appropriate SEO expert. Hiring an experienced SEO expert can help with keyword research and target the most relevant ones for your industry and audience, ensuring that your content ranks well for the terms potential customers are searching for. They can optimize your website's structure, meta tags, and content, enhancing its search engine visibility and user experience. SEO experts can guide your content strategy to create informative, engaging, and valuable content that attracts search engine traffic, keeps visitors engaged, and converts them into customers. They use various tools and analytics to monitor your website's performance, track keyword rankings, and make data-driven decisions to improve your online presence continuously. For instance, if you are a home service business, hiring an SEO company like Digital Shift can help you optimize your website to increase your search engine rankings, drive more web traffic, and establish a solid online presence. Aside from SEO, entrepreneurs can leverage other digital marketing strategies. Build a verified email list and send promotional emails or newsletters to nurture leads, retain customers, and drive sales. The same is true with pay-per-click (PPC) advertising. PPC allows businesses to display targeted ads and pay only for clicks. Affiliate marketing, influencer collaborations, and video marketing are additional strategies to expand reach and credibility. Remarketing, local SEO, and data analysis provide opportunities for further engagement and insights. By employing these diverse digital marketing strategies, entrepreneurs can create a comprehensive online presence and achieve their marketing objectives.

The ideal event for any entrepreneur is to see how their company is constantly growing. The activities of the previous event, ideally lead the business to a stage of maturity to maximize profitability for better benefits. Growth is the stage of the entrepreneurial process in which is reflected time and effort spent by the entrepreneur. At this time, to keep up the pace of the business growth, the entrepreneur must keep up his personal development to continue also his internal growth. This growth is eventually collaborative it there is an entrepreneurial ecosystem improvement that also aids the mutual work.

The entrepreneurial process model by Hisrich and Peters

One of the models on the entrepreneurial process is of Robert Hisrich, a professor at the Thunderbird School of Global Management and Michael P. Peters author of several books on entrepreneurship. This model establishes the various factors and events surrounding the entrepreneurial process.

Developing a business plan early on your entrepreneur path

It is generally advisable to write a business plan as early as possible step in the entrepreneurial process of starting a new venture.

A business plan is a written document that describes in detail how a business, usually a new one, is going to achieve its goals for entrepreneurial success.

Creative individuals bring together their ideas in such plan and develop a clear roadmap for moving forward.

It is also a good idea to update your business plan regularly as your business grows and changes, as it is a big picture of your idea and it can help you to be guided of what new products or services should be implementend when you are about to start and are already on the go.

Often, a business entrepreneurial plan is prepared for investors or as a way to get a small business loan by many entrepreneurs.

A business plan lays out a written plan from a marketing, financial and operational standpoint. 

The components of a business plan vary depending on the type of business, but generally, they should include an executive summary, a business description, a market analysis, a competitive analysis, a service or product line section, and a marketing and sales strategy.

Additionally, a business plan should include financial projections for the business, including a balance sheet, income statement, and cash flow statement.

In creating a business plan, you should also consider some of these tips:  

• Define your audience : Make sure you know your target market so you can tailor your content according to what’s relevant, helpful, and appropriate for them.   
• Establish a clear vision : It’s essential to have a clear vision or an image of where you want to be in the near future.   
• Conduct a business analysis : Doing this will help you find some crucial factors which aren’t initially considered in your business plan. You can also detect threats, discover market gaps, and maximize specific business opportunities.   
• Write plans with different time frames : This will let you know which plan can provide the most value to your target audience. Generally, a time frame can help your business attain goals and how you’ll do it over a certain amount of time.   

A business plan is essential before kickstarting your business. It serves as a beacon in order to stay productive and strive for the best practices to be profitable and competitive.

The Entrepreneurial Process Video Example

What is entrepreneurial process, what are the components of entrepreneurial process.

4 components in the entrepreneurial process are Idea generation, decision making and business planning, project creation and management and control.

Why entrepreneurship is a process?

Entrepreneurship is a process because there are different events that have to occur in order to develop a project.

As stated before, there are a set of events such as innovation, triggering event, implementation and growth.

To become an entrepreneur, different set of skills are develop under time, that is why along the entrepreneurial journey, he or she will learn along that path.

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The 5 Critical Stages You Will Go Through As An Entrepreneur

The entrepreneurial process is a major hurdle for every new and existing entrepreneur to overcome. From getting the right idea to eventually building a successful business or not, all steps, actions, and decisions made by every entrepreneur would have to be highly calculated in the smartest possible way.

Social media and generally the internet, makes the process seem all graceful and stress-free. With flashy cars shown on Instagram and success stories shared endlessly on Facebook, many people get instantly excited, and take a plunge right into entrepreneurship. While some images shown on social media of successful entrepreneurs are true, others are created simply to generate likes and a heavy social media following.

Before you take the bold step to become an entrepreneur, you need to understand the entrepreneurial process, and how you can use it to ensure your success. You need to know that just as Rome wasn’t built in a day, your dreams probably won’t too, and you need to understand that not paying attention to certain details and not changing bad tactics fast, will lead to the end of your small business.

See Also:  10 Things No One Will Tell You About Being An Entrepreneur

Here Are The 5 Critical Stages You Will Go Through As An Entrepreneur:

1). finding the right business idea:.

Identifying and evaluating the right opportunity is the first step to setting out as an entrepreneur. Without a business idea, you can’t start a business, and without a business, you cannot be termed an entrepreneur.

Choosing just any small business idea to start up is an entire no-no. You must do a market research to know what people really need. You must also look at your inner talents to figure out if whatever you’ve chosen to start up is a good fit for you. No matter how lucrative a business opportunity is, if you don’t have the capacity to execute it, it would end up a failure. This likely event is an important reason you must ensure the business is something you can do passionately.

For example, most programmers are lazy at doing house chores and any physical activity. Forcing these sect to start a home cleaning and renovation company could be a total disaster. Even if the clients are abundant and waiting for them, most wouldn’t just have a high-failure rate, but would feel unfulfilled every step of the way.

Another important thing to do when coming up with a business idea is to try to sell to an individual you’ve identified as a potential customer, without having a single product or service in hand. If someone is willing to pay for what they cannot see, this doesn’t just show you that there’s a pressing need they’d gladly part their money for, but that you’ve got a business idea that can fly.

See Also:  How To Do Market Research For Any Business Idea

2). Developing the business plan:

The next step is to make a business plan that suits you best. Having a plan doesn’t entirely mean drafting a thorough business plan detailing several chapters and more. As a startup, you could write down a few points to target, as a basic plan, and make adjustments from there.

Usually when you start a new business no one has ever tried before, what you draft as a business plan would probably go down the toilet in a week or two because, whatever way you anticipated the market to react would most likely never happen. At this point, light tests, corrections, and re-tests, wouldn’t just help your business succeed, but would help you make a business plan poised for growth.

If your purpose for drafting the plan is to maybe seek a bank loan, or for some other financial purpose, then drafting a business plan is entirely important before you set out.

If writing a business plan seems difficult, you can draw up your plan by following a sample business plan template, or highlighting the things you want to achieve, and how, then consulting the services of a professional to draw out a business plan for you, based on those.

See Also:  How To Write A Business Plan: Step By Step Guide

3). Raising Your Seed Funding:

This phase of your entrepreneurial process is very important. By the time you’ve identified the problem you want to solve in a market and have drawn out a business plan for it, you’d have understood the full financial implications of the project.

At this point, your focus would be to raise seed funding for your small business idea. You could raise seed funding by getting an investment from angel investors, grants, a bank loan, amongst others.

Getting funding for your business will be one of the hardest things you do as an entrepreneur. People and institutions aren’t ready to easily part with their money. You stand a better chance of getting a loan or investment from someone, if you’re introduced by a similarly successful entrepreneur that they trust. Anything else, and it’s a really hard nut to crack.

The best way to raise working capital for any business idea is usually from family and friends. These individuals already trust you and would either invest-in or loan you the money not because they believe in your idea, but because they believe in you.

Some alternatives you could consider for small business loans are micro-finance banks and professional money lenders. These institutions and individuals can provide you with a line of credit with much more lenient requirements, but can sometimes have higher interest rates and short-repayment periods, compared to other larger financial institutions.

See Also:  How To Get Seed Funding For Your Small Business In Africa

4). Getting Paying Customers:

Here’s the real cracker. If you cannot get paying customers for your business at the lowest cost possible, your business will die out. Period!

No business can stay afloat without customers. The different factors you need to consider are both your customer acquisition costs and your customer retention costs.

Your goal should be to acquire as many customers as possible, at the lowest cost possible, and do everything to retain them in the most efficient way possible.

One way you could do these is to offer an exceptional customer service that no one would believe. A company that does this well is the American e-commerce company, Zappos. Their level of customer satisfaction goes as far as; if you need an item from their website and they don’t have it, they could recommend a competing business selling the same item.

Happy customer testimonials build a sense of trust in people who haven’t patronized your business before. Ensure your customer support team wows your customers every single time, and they’d never stop making you money.

See Also:  10 Ways To Find More Customers For Your Business Without Spending Any Money

5). Success Or Maybe Failure:

After all is said and done, you may still not succeed, or turn out an amazing success. While everyone strives for the latter, it’s important to know that sometimes, your failure isn’t based on the fact that you didn’t put in your all, but because of other factors like pursuing a business that had no real customers, or doing something that your natural inclination wouldn’t have approved.

It’s important that if your small business fails, you should take a step back and revisit the events that led to its failure. Highlight what went wrong and what worked. Identify what you could do better if given a second chance, and never beat up yourself about its closure.

The entrepreneurial process could result in successes or failures. If your business model didn’t work, then you never really failed, but only identified one way that doesn’t work.

The same applies to success. As your business grows, highlight your big wins, small wins, and losses. Focus on how to make more customers happy, how to flush out the losses completely, and above all else, don’t hide your success tips, mentor some else to increase their chances of succeeding in whatever they’re doing.

See Also:  You Will Fail As An Entrepreneur If You Do These 5 Things

While entrepreneurship may sound exciting, it’s definitely not a bed of roses. If you’re going to someday end up successful, you’d have to understand the entrepreneurial process, and work smart every single step of the way.

A Quick Tip!

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What are your thoughts on this article about the five (5) critical stages of the entrepreneurial process? Let me know by leaving a comment below.

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42 Comments

The piece is absolutely helpful. Thanks and keep it coming everyday☺.

Thank you for the commendation.

I’m glad you’re a daily reader.

Have a wonderful time!

Nice write up.

Thanks Onyinye for the commendation.

Have a great time!

Thanks alot 4 been a blessing

Thank you for the commendation Moni.

The article is really wonderful,thanks for sharing your knowledge.Do have a happy week

Thanks Ibraheem for the commendation.

I’m glad you’re a daily blog reader.

Thanks for your creation ideas. Have a wonderful day.

Nice write up, pls keep it up. Will love to c more of this.

Thanks Lawal for the Commendation.

I’ll do my best to keep it coming.

I’m so impressed by your inspiring entrepreneurship series.

Thank you Austin for the commendation.

[…] The 5 Critical Stages You Will Go Through As An Entrepreneur […]

Beautiful!!!

Thank you for the comment Ogie.

This is so timely. Had to go through ALL your posts. it was as if you were writing an epistle to change my orientation. Planned to start up a business soon. So glad to have read your blog. will be bookmarking this site. Thanks once again.

Thank you so much for the kind words.

I’m glad you found great value in the blog.

Hope to get more comments from you.

Very interesting article. It kind of summarize everything one looks for in starting a business.

Thank you for the comment Hilary.

great one bro

Thank you for the commendation Samuel.

Thank you for this piece. It came this time when I’m about to start a business. Kudos

I’m glad you found value in the article Kenneth.

Wish you the best in your new business.

I love your writing styles and choice of words. The article to me is an elevator to keep keeping on. In it I learnt FOCUS and never say never SPIRIT in the freedom race of entrepreneurship. You’re doing a good job here. Keep it coming.

Thank you for the kind words and commendation Chinonso.

I’m glad you’re a reader.

Thank you for the commendation Olamoyegun.

This was really helpful.thank you stan

You’re welcome Tuku.

Now I know better. thanks for the education.

You’re welcome Kadibia.

Nice article! , but I was almost confused at the title “5 critical stages you will go through as an entrepreneur”,that is for someone who is already an entrepreneur, but the article itself is portraying “5 critical stages of becoming an entrepreneur”… You should get my point there?

Yes I understand your point Michael.

Your title also sounds very appropriate. But the article moves from becoming an entrepreneur to actually experiencing entrepreneurship, towards the end.

Thank you still, for the valuable contribution.

I look forward to seeing more of your insightful comments on the blog.

This is a nice meal to start my day with thanks a lot.

Thank you for the comment Ernest.

Effective Tips.

Thanks! It is an interesting display.

Hey Stan, great post! thanks for sharing, this will certainly help me when starting my own business.

its a useful article for my senior project

this is good….. thanks for sharing Stan

Find the right business idea is one of the most difficult things. Many dont even know where to start from which is more provoking.

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Entrepreneurial Process

Task Summary:

Lesson 3.1.1: The Entrepreneurial Process: Part 1

Lesson 3.1.2: The Entrepreneurial Process: Part 2

Lesson 3.1.3: Entrepreneurial Planning: Part 1

Lesson 3.1.4: Entrepreneurial Planning: Part 2

Lesson 3.1.5: Entrepreneurial Planning: Part 3

Activity 3.1.1: SDG Simulation

Unit 3 Assignment: Your Plan of Action

Learning Outcomes:

• Identify exciting entrepreneurial opportunities
• Evaluate exciting entrepreneurial opportunities
• Model the entrepreneurial process for the exciting entrepreneurial opportunities
• Create entrepreneurial planning documents

Successful entrepreneurship occurs when creative individuals bring together a new way of meeting needs and or wants. This is accomplished through a patterned process, one that mobilizes and directs resources to deliver a specific product or service to those in a way that is financially viable. While these could be 100% business ideas, they could also be concepts that are based in the spirit of altruism or non-profit. For innovative ideas that are strictly business concepts. sustainability can (and should) be embedded in the design of a product and operations by applying the criteria of reaching toward benign (or at least considerably safer) energy and material use, a reduced resource footprint, and elimination of inequitable social impacts due to the venture’s operations, including its supply-chain impacts.

Entrepreneurial innovation combined with sustainability principles can be broken down into the following four key elements, each of which requires analysis. Each one needs to be analyzed separately, and then the constellation of factors must fit together into a coherent whole. These four elements are as follows:

• Opportunity
• Entrepreneur/team

Successful ventures are characterized by coherence or “fit” across and throughout these steps. The interests and skills of the entrepreneur must fit with the product design and offering; the team’s qualifications should match the required knowledge needed to launch the venture. There needs to be a financially viable demand (enough people at a financially viable price) for the product or service, and of course, early adopters (those willing to purchase) have to be identified. Finally, sufficient resources, including financial resources (e.g., operating capital), office space, equipment, production facilities, components, materials, and expertise, must be identified and brought to bear. Each piece is discussed in more detail in the sections that follow.

Identify, Analyze, and Plan the Opportunity

As discussed in the last section, Opportunity Recognition is the active, cognitive process (or processes) through which individuals conclude that they have identified the potential to create something new that has the potential to generate economic value and that is not currently being exploited or developed and is viewed as desirable in the society in which it occurs (i.e. its development is consistent with existing legal and moral conditions). (Baron, 2004b, p. 52) Because opportunity recognition is a cognitive process, according to Baron (2004b), people can learn to be more effective at recognizing opportunities by changing the way they think about opportunities and how to recognize them.

The opportunity is a chance to satisfy the needs and desires of a certain group of people while generating returns that enable you to continue to operate and to build your organization over time. Many different conditions in society can create opportunities for new goods and services. As a prospective entrepreneur, the key questions are as follows:

• What is a need that is not being met?
• What are the conditions that have created an opportunity for my idea?
• Why do people want and need something new at this point in time?
• What are the factors that have opened up the opportunity?
• Will the opportunity be enduring, or is it a window that is open today but likely to close tomorrow?
• If you perceive an unmet need, can you deliver what the customer wants while generating durable margins and profits?
• How can I take on this venture while supporting the Sustainable Development Goals?

Opportunity conditions arise from a variety of sources. At a broad societal level, they are present as the result of forces such as shifting demographics, changes in knowledge and understanding due to scientific advances, a rebalancing or imbalance of political winds, or changing attitudes and norms that give rise to new needs. Certain demographic shifts and pollution challenges create SDG opportunities. When you combine enhanced public focus on health and wellness, advanced water treatment methods, clean combustion technologies, renewable “clean” energy sources, conversion of used packaging into new asset streams, benign chemical compounds for industrial processes, and local and sustainability has grown organic food, you begin to see the wide range of opportunities that exist due to macrotrends.

Identify, Analyze, and Plan the Market

What are you offering/doing/selling/contributing? New ventures offer solutions to people’s problems. This concept requires you to not only examine the item or service description but also further understand the group of people whose unmet needs you are meeting (often called market analysis). In any entrepreneurial innovation circumstance you must ask the following questions:

• What is the solution for which you want someone to pay?
• Is it a service or product, or some combination?
• To whom are you selling it? Is the buyer the actual user? Who makes the purchase decision?
• What is the customer’s problem and how does your service or product address it?

Understanding what you are selling is not as obvious as it might sound. When you sell an electric vehicle you are not just selling transportation. The buyer is buying a package of attributes that might include cutting-edge technology, lower operating costs, and perhaps the satisfaction of being part of a solution to health, environmental, and energy security problems.

Identify, Analyze, and Plan the Entrepreneur & Entrepreneurial Team

The opportunity and the entrepreneur must be intertwined in a way that optimizes the probability for success. People often become entrepreneurs when they see an opportunity. They are compelled to start something to find out whether they can convert that opportunity into an ongoing source of fulfillment and potential financial gain. That means that, ideally, the entrepreneur’s life experience, education, skills, work exposure, and network of contacts align well with the opportunity. We have covered this in previous sections, so if you need to refer back to consider the role of the entrepreneur’s skills, abilities, and cognition.

Entrepreneurs sometimes act alone, but this can only take us so far. A good entrepreneurial plan, an interesting product idea, and a promising opportunity are all positive, but in the end it is the ability of the entrepreneur to attract a team, get a product out, and provide it to customers is the thing that counts.

Typically there is an individual who initially drives the process through his or her ability to mobilize resources and sometimes through sheer force of will, hard work, and determination to succeed. In challenging times it is the entrepreneur’s vision and leadership abilities that can carry the day.

Ultimately, led by the entrepreneur, a team forms. As the organization grows, the team becomes the key factor. The entrepreneur’s skills, education, capabilities, and weaknesses must be augmented and complemented by the competencies of the team members they bring to the project. The following are important questions to ask:

• Does the team as a unit have the background, skills, and understanding of the opportunity to overcome obstacles?
• Can the team act as a collaborative unit with strong decision-making ability under fluid conditions?
• Can the team deal with conflict and disagreement as a normal and healthy aspect of working through complex decisions under ambiguity?

If an organization has been established and the team has not yet been formed, these questions will be useful to help you understand what configuration of people might compose an effective team to carry the business through its early evolutionary stages.

Identify, Analyze, and Plan the Resources

Successful entrepreneurial processes require entrepreneurs and teams to mobilize a wide array of resources quickly and efficiently. All innovative and entrepreneurial ventures combine specific resources such as capital, talent and know-how (e.g., accountants, lawyers), equipment, and production facilities. Breaking down an opportunity’s required resources into components can clarify what is needed and when it is needed. Although resource needs change during the early growth stages of an opportunity, at each stage the entrepreneur should be clear about the priority resources that enable or inhibit moving to the next stage of growth. What kinds of resources are needed? The following list provides guidance:

• Capital. What financial resources, in what form (e.g., equity, debt, family loans, angel capital, venture capital), are needed at the first stage? This requires an understanding of cash flow needs, break-even time frames, and other details. Even non-profits need to make money to stay afloat. Back-of-the-envelope estimates must be converted to pro forma income statements to understand financial needs.
• Know-how. Record keeping and accounting and legal process and advice are essential resources that must be considered at the start of every venture. Access to experts is important, especially in the early stages of making an opportunity happen. New opportunities require legal incorporation, financial record keeping, and rudimentary systems and resources to provide for these expenses need to be considered.
• Facilities, equipment, and transport. Does the venture need office space, production facilities, special equipment, or transportation? At the early stage of analysis, ownership of these resources does not need to be determined. The resource requirement, however, must be identified.

The Overall Process

The process of entrepreneurship melds these pieces together in processes that unfold over weeks and months, and eventually years if the business is successful. Breaking down the process into categories and components helps you understand the pieces and how they fit together. What we find in retrospect with successful launches is a cohesive fit among the parts. The entrepreneur’s skills and education match what the start-up needs. The opportunity can be optimally explored with the team and resources that are identified and mobilized. The resources must be brought to bear to launch the opportunity with an entry strategy that delivers the value-driven concept in a way that solves customers’ problems.

With all of these things in mind, documenting answers to the questions above, and the analysis undertaken to answer them is contained in an entrepreneurial plan. This is a document that you would use to plan out the details for the elements outlined above. Making sure you identify, analyze, and plan these elements is a great starting point, and to make sure this is all done really well, have a look at the principles below.

Entrepreneurial Plan Communication Principles

As Hindle and Mainprize (2006) note, business plan writers must strive to communicate their expectations about the nature of an uncertain future. However, the liabilities of newness make communicating the expected future of new opportunities difficult (more so than for existing organizations).  They outline five communications principles:

• Translation of your vision of the venture and how it will perform into a format compatible with the expectations of the readers
• you have identified and understood the key success factors and risks
• the projected market is large and you expect good market penetration
• you have a strategy for commercialization, profitability, and market domination
• you can establish and protect a proprietary and competitive position
• Anchoring key events in the plan with specific financial and quantitative values
• your major plan objectives are in the form of financial targets
• you have addressed the dual need for planning and flexibility
• you understand the hazards of neglecting linkages between certain events
• you understand the importance of quantitative values (rather than just chronological dates)
• Nothing lasts forever—things can change to impact the opportunity: tastes, preferences, technological innovation, competitive landscape
• the new combination upon which venture is built
• the magnitude of the opportunity or market size
• market growth trends
• venture’s value from the market (% of market share proposed or market share value in dollars)
• Four key aspects describing context within which new opportunity is intended to function (internal and external environment)
• how the context will help or hinder the proposal
• how the context may change and affect the organization and the range of flexibility or response that is built into the venture
• what management can or will do in the event the context turns unfavorable
• what management can do to affect the context in a positive way
• A brief and clear statement of how an idea actually becomes a business that creates value
• Who pays, how much, and how often?
• The activities the company must perform to produce its product, deliver it to its customers, and earn revenue
• And be able to defend assertions that the venture is attractive and sustainable and has a competitive edge

Entrepreneurial Plan Credibility Principles

Entrepreneurial plan writers must strive to project credibility (Hindle & Mainprize, 2006), so there must be a match between what the entrepreneurship team (resource seekers) needs and what the resource providers expect based on their criteria. A take it or leave it approach (i.e. financial forecasts set in concrete) by the entrepreneurship team has a high likelihood of failure in terms of securing resources. Hindle and Mainprize (2006) outline five principles to help entrepreneurs project credibility:

• Without the right team, nothing else matters.
• What do they know?
• Who do they know?
• How well are they known?
• sub-strategies
• ad-hoc programs
• specific tactical action plans
• Claiming an insuperable lead or a proprietary market position is naïve.
• Anticipate several moves in advance
• View the future as a movie vs. snapshot
• Key assumptions related to market size, penetration rates, and timing issues of market context outlined in the entrepreneurial plan should link directly to the financial statements.
• Income and cash flow statements must be preceded by operational statements setting forth the primary planning assumptions about market sizes, sales, productivity, and basis for the revenue estimate.
• If the main purpose is to enact a harvest, then the entrepreneurial plan must create a value-adding deal structure to attract investors.
• Common things: viability, profit potential, downside risk, likely life-cycle time, potential areas for dispute or improvement

General Entrepreneurial Plan Guidelines

Many entrepreneurs must have a plan to achieve their goals. The following are some basic guidelines for entrepreneurial plan development.

• A standard format helps the reader understand that the entrepreneur has thought everything through and that the returns justify the risk.
• Binding the document ensures that readers can easily go through it without it falling apart.
• everything is completely integrated: the written part must say exactly the same thing as the financial part
• all financial statements are completely linked and valid (make sure all balance sheets validly balance)
• the document is well-formatted (layout makes the document easy to read and comprehend—including all diagrams, charts, statements, and other additions)
• everything is correct (there are NO spelling, grammar, sentence structure, referencing, or calculation errors)
• It is usually unnecessary—and even damaging—to state the same thing more than once. To avoid unnecessarily duplicating information, you should combine sections and reduce or eliminate duplication as much as possible.
• all the necessary information is included to enable readers to understand everything in your document
• For example, if your plan says something like “there is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units,” a reader is left completely confused. Does this mean there is a total shortage of 100,000 units, but competitors are filling this gap by producing 25,000 per year (in which case there will only be a shortage for four years)? Or, is there an annual shortage of 100,000 units with only 25,000 being produced each year, in which case the total shortage is very high and is growing each year? You must always provide the complete perspective by indicating the appropriate time frame, currency, size, or another measurement.
• if you use a percentage figure, you indicate to what it refers, otherwise, the figure is completely useless to a reader.
• This can be solved by indicating up-front in the document the currency in which all values will be quoted. Another option is to indicate each time which currency is being used, and sometimes you might want to indicate the value in more than one currency. Of course, you will need to assess the exchange rate risk to which you will be exposed and describe this in your document.
• If a statement is included that presents something as a fact when this fact is not generally known, always indicate the source. Unsupported statements damage credibility
• Be specific. An entrepreneurial plan is simply not of value if it uses vague references to high demand, carefully set prices, and another weak phrasing. It must show hard numbers (properly referenced, of course), actual prices, and real data acquired through proper research. This is the only way to ensure your plan is considered credible.

An interactive H5P element has been excluded from this version of the text. You can view it online here: https://kpu.pressbooks.pub/introtoentrepreneurship/?p=105#h5p-75

The purpose of this assignment is to connect all of the dots that you have been learning about and engaging with over the past unit when it comes to the entrepreneurial planning process. Watch this video on developing a process map . You are going to develop your own process map outlining the steps you need to take to develop a robust and well-thought-out entrepreneurial plan. Have a look at the Unit 4 Assignment: Entrepreneurial Plan for more information on what you’re going to be building.

The submission should be methodical and outline the process you will go through (i.e. what steps you will complete), and the information sources you will need to fill in the gaps and fill out your plan. Your submission should include a process map diagram, and be about 250 words, which is one page double spaced, or it could be done as an infographic, or a two-three minute presentation. If you are doing this as part of a formal course and have a different approach that you would like to take for developing this assignment, please check with your instructor.

Text Attributions

The content related to how it all starts and the process steps was taken from “ Sustainability, Innovation, and Entrepreneurship” by LibreTexts (2020) CC BY-NC-SA

The content related to the opportunity identification cognition and the entrepreneurial plan was taken from “ Entrepreneurship and Innovation Toolkit, 3rd Edition ” by L. Swanson (2017) CC BY-SA

Baron, R. A. (2004b). Opportunity recognition: Insights from a cognitive perspective. In J. E. Butler (Ed.), Opportunity identification and entrepreneurial behavior (pp. 47-73). Greenwich, Conn.: Information Age Pub

Hindle, K., & Mainprize, B. (2006). A systematic approach to writing and rating entrepreneurial business plans. The Journal of Private Equity, 9 (3), 7-23.

Entrepreneurial Idea Generation: Understanding This Key Step in the Process

As an entrepreneur, one of your major job responsibilities is generating ideas. This starts at the very beginning with coming up with a viable business idea and continues with developing ideas on how to grow that business. That is why idea generation is one of the first and crucial steps in the entrepreneurial process. But how does an entrepreneur or an aspiring one learn this process and execute it?

Chemist and Biochemist Linus Pauling once said the way to come up with good ideas is to come up with a lot of them. In this article, we will explain the idea generation step in the entrepreneurial process and how to come up with better ideas to apply to your business.

What is Idea Generation in Entrepreneurship?

Idea generation in entrepreneurship is the creative process where entrepreneurs formulate original concepts that can be transformed into viable business opportunities. This process is at the heart of entrepreneurship. It involves identifying needs or problems in the market and devising innovative solutions to address them.

The aim is to create a pool of ideas. Once that is accomplished, an entrepreneur chooses the most promising ones that can be selected for further development. Idea generation is not just about coming up with new products or services; it can also involve finding new approaches to business models , marketing strategies, or operational techniques.

Why Is Idea Generation Important?

Idea generation is crucial in entrepreneurship. That is because it’s the foundation for new businesses and the precursor to innovation. In a competitive business environment, the ability to generate unique and valuable ideas sets entrepreneurs apart and gives them a competitive edge. These ideas are the starting point for all entrepreneurial ventures. The ideas an entrepreneur comes up with will determine the direction and potential success of the business.

Effective idea generation can lead to the development of products or services that fulfill unmet needs in the market. Good ideas also solve complex problems for consumers. This is why good ideas tend to create new markets or disrupt existing ones. The idea behind being able to get around town without owning a car or hailing a taxi launched the entire rideshare industry.

Another reason why idea generation is an important part of entrepreneurship is that being able to come up with ideas is an important skill all entrepreneurs must possess. When first starting a business, entrepreneurs should think of this stage in the entrepreneurial proces s as practice for the rest of their entrepreneurial life. Coming up with product, staffing, marketing, collaboration, and productivity ideas is all part of the job for an entrepreneur. Knowing the best ways to go about this can help make the journey easier.

1. Brainstorming

Most people have heard of this first idea-creation method. In fact, many have already done this at least once in their professional lives. Brainstorming is one of the most traditional and widely used techniques for idea generation in entrepreneurship. It involves a person or a group of individuals spontaneously generating ideas around a specific topic or problem. The primary goal of brainstorming is to produce a large quantity of ideas in a short amount of time. 

During a brainstorming session, participants are encouraged to think freely and suggest as many ideas as possible. It really doesn’t matter how unconventional or outlandish they may seem. There is no judgment during the session. This atmosphere of open and unrestrained thought often leads to the discovery of innovative and creative solutions.

Brainstorming can be particularly effective in the early stages of the entrepreneurial process. That’s because, in the beginning, the goal is to explore possibilities before narrowing down to the best options. The technique fosters collaboration, leverages the diverse perspectives of team members, and can be a powerful way to engage and energize a team toward creative problem-solving.

2. Mind Mapping

Mind mapping is a visual and creative technique used extensively in the entrepreneurial idea generation process. It involves creating a diagram that visually outlines information, starting from a central idea and expanding outward to include related concepts, tasks, or other items associated with the main idea.

This method is particularly useful for entrepreneurs who are trying to organize complex information or explore the relationships between different aspects of a potential business idea.

A mind map starts with a central node, typically the main idea or theme, from which related ideas branch out. These branches can further expand to include more specific details, allowing for a comprehensive exploration of a concept. For example, if the central idea is a new tech startup, branches might include market research, potential products, target demographics, funding sources, and marketing strategies.

Mind mapping helps in identifying gaps in thinking, exploring new avenues, and making connections that might not be immediately obvious. It’s a highly flexible tool, beneficial for individual brainstorming, team meetings, and project planning, providing a clear and visual way of thinking that can enhance creativity and organization.

SCAMPER is an acronym for Substitute, Combine, Adapt, Modify, Put to another use, Eliminate, and Reverse. This checklist makes you to think about a product, service, or process from different angles. By systematically going through these prompts, you can generate ideas that improve or transform the original concept.

• Substitute Consider what elements of the product, process, or service you can replace. For example, if you’re running a café, you might substitute regular milk with plant-based alternatives.
• Combine- Look at how you might combine two or more elements to create a new product or enhance functionality. In the 1990s, cell phones only made and received calls. However, brands like Nokia and Blackberry started combining the functionalities of a phone, camera, and computer.
• Adapt- This means changing or adapting a feature to serve a different purpose or market. A simple example is how bicycles adapted for off-road use become mountain bikes.
• Modify- This is modifying an aspect of the product in terms of size, shape, or other attribute. Cars have been modified with larger, more durable tires and engines for off-roading.
• Put to Another Use- Thinking about how you could use your product or service in a different way or in a different context. For example, old tires are being repurposed as garden planters.
• Eliminate- Here, you c onsider what might happen if you remove elements from your product or service. Apple, for example, eliminated ports from its Macbooks to streamline its design.
• Reverse (or Rearrange)- An entrepreneur may look at what would happen if they reversed the process or reorganized components. A restaurant might reverse the order of service, allowing customers to pay and order in advance via an app for quick pickup.

Through these different approaches, SCAMPER helps you to look at familiar objects or concepts in a new light.

4. The Five Whys

Originally developed for problem-solving in a business context, the Five Whys technique involves asking the question “Why?” five times in succession to explore the cause-and-effect relationships underlying a particular problem.

While typically used for root cause analysis, this method can also uncover underlying opportunities and spark new ideas by deeply exploring the reasons behind existing problems or needs.

5. Trend Analysis

Trend analysis means you systematically examine current market and industry trends to find any upcoming opportunities or threats. This technique requires entrepreneurs to stay informed about the latest developments in their industry.

Also, they need to be on top of what is going on with technology, consumer behavior, and socio-economic changes. By analyzing these trends, entrepreneurs can predict future market demands. Hopefully, they can develop ideas that align with where the market is heading.

For instance, if an entrepreneur notices a problem that is happening in remote work might lead to developing digital tools that facilitate virtual collaboration. Trend analysis helps in generating ideas that are timely and relevant. Also, it helps anticipate shifts in consumer preferences. It enables entrepreneurs to position their businesses strategically, capitalizing on emerging trends before they become mainstream.

An entrepreneur needs to know how to be observant and how to interpret data and insights from various sources. Entrepreneurs often use tools like market reports, surveys, and social media analytics to gather information. The key is to not just observe the trends, but to analyze them critically and creatively. This is all to uncover underlying opportunities that could be transformed into viable business ideas . 

6. Brainwriting

Brainwriting is an alternative to traditional brainstorming. It is particularly effective in making sure that everyone involved contributes ideas. In this process, each member of a group writes down their ideas privately before sharing them with the team.

This can be done on paper, index cards, or digitally. After a set period, the ideas are collected and discussed collectively. The advantage of brainwriting is that it mitigates the influence of dominant personalities.

This happens too often in brainstorming sessions. Brainwriting offers a more diverse range of ideas. It also gives individuals time to think deeply and creatively without the pressure of a group setting. This technique can lead to a more comprehensive collection of ideas, as it combines the benefits of both individual and group ideation processes.

7. Reverse Thinking

Reverse thinking is a creative technique that involves looking at problems or situations from an entirely different perspective. Sometimes this is called reverse engineering or negative brainstorming. Instead of asking how to achieve a goal or solve a problem, you ask how you could cause the problem or prevent the goal from being achieved.

This method can uncover hidden assumptions and open up new avenues for innovation. For example, if you are trying to create a new product to increase productivity, you might ask, “How could we make people less productive?” By identifying factors that reduce productivity, you can then work backward to create solutions that enhance it. Reverse thinking is particularly useful for challenging conventional wisdom and encouraging out-of-the-box solutions.

Economist John Maynard Keynes once said, “The difficulty lies not so much in developing new ideas as in escaping from old ones. ” While this may be true, coming up with ideas is still important. Take this article to learn more about this critical process. Also, test these techniques to see which ones work best for you. Each of these techniques has its strengths and can be particularly effective in different scenarios or for different types of thinkers. Before you know it, you will be able to generate your own ideas that could skyrocket your business.

Harvesting in Entrepreneurship: Understanding This Step in the Process

Recognizing Opportunity as an Entrepreneur

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Ralph is the Managing Editor at StartUp Mindset. The StartUp Mindset team consists of dedicated individuals and is designed to help new, seasoned, and aspiring entrepreneurs succeed.

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