- On February 2, 2018
- emprendedores, emprendimiento
Entrepreneurs tend to be dreamy. They always have something in mind, they’re optimistic and consider that nothing can stop them. Sometimes, they have more than an idea. They actually come up with excellent concepts and business models.
However, when reality strikes, they realize that the innovation journey can be quite distressing. It’s like riding a roller coaster. Everything goes up and down, there are curves and turns, sunny days and rainy days. That’s how their creativity is tested until it helps to find the solution to the problems. Money for the initial investment is usually the main concern.
To successfully start up a new business, we need to fully understand the stages involved in the process. There are two key moments: the birth of the project and the point where it achieves stability.
Cycles: Their most common problems
There are problematic circumstances in the first step, which is the birth of the project. In the beginning, innovators may easily obtain results but an inconvenient emerges in the second step, a step known for lacking the right balance.
To answer this question, we introduce you to the entrepreneurship life cycles.
There’s a moment when a business gets started. It’s about visualization and it begins with a first project that can evolve into a business model. In this stage, entrepreneurs work to legally register the enterprise. They need to request the permits to start their operations.
That’s when the germination begins. It doesn’t work the same in every case. This step refers to the development of a project and the advantage lies in the fact that you don’t need significant investments to offer the product to the public.
Then, it’s important to invest in image and advertising, create the legal invoices, and find materials to start and be able to market the product. Note that this stage doesn’t transform you into an entrepreneur. You’ll need more than that.
Entrepreneurs can feel very anxious when the time to invest in product development arrives. They also need to design a structure of experiments and find experienced partners. In this stage, they can only rely on their capital because they haven’t started to generate income.
The first sale
The first sale is crucial given that it helps generate income to increase the initial investment, although it’s not enough to continue. This is why this stage is called “the desert way”, where almost anything can be seen as a mirage. Requesting bank-issued credits is one of the alternatives. Sometimes, entrepreneurs take bigger risks such as housing mortgage and they even sell their personal assets as an attempt to obtain more funds.
This is a very difficult moment but entrepreneurs can successfully overcome the obstacles if they are persistent. Once they have walked through the desert, they will encounter bigger opportunities to turn their innovation project into a profitable business until they achieve the point of balance without spending the initial investment.
It occurs when the income equals the expenses and there’s no need to search for external capital. Once they are in this position, the entrepreneurs can celebrate their victory and move on to the next level, in which they’ll do their best to maintain a sustainable business.
However, expenses are not static. Indeed, they can increase and there’s no warranty that the income will stay the same.
Expanding the business
This is the time to make decisions to expand the business. In this case, entrepreneurs are now able to request bank-issued credits to increase their funds and thus boost the initial operations. This the time of the metamorphosis, when entrepreneurs become businessmen.
They need to adjust the initial project to the existing market needs. For instance, this can be possible by transforming a restaurant into a food franchise chain in order to keep the balance during a large period of time and obtain annual benefits to afford the expansion. From now on, the further steps will contribute to the development and consolidation of a successful business.