4/Why is growth important for new businesses and what are the key growth issues

Question

4/Why is growth important for new businesses and what are the key growth issues for an entrepreneur?

5/The textbook “PEM” itemizes five stages of the Entrepreneurial Process. Please note that the sequence matters and that the specific activities associated with each stage matter.

6/Throughout this and later chapters the text refers to Owners, Partners, Executives, Hired Managers, Mentors, Customers, Investors, and Social networks. What do these roles mean and how do these roles or titles differ from one another.

Explanation / Answer

4). To be successful, both profitability and growth are important for a company to survive and remain attractive to investors and analysts.

Growth of market and sales is important to achieve that initial profitability. After a company goes beyond the start-up phase, the next aim of focus should be growth. The identification of opportunity growth should become the next point of importance on any company’s list of goal. Growth for a business makes the company bigger, increasing its market share and ultimately making the company more profitable. Measuring growth is possible by analysing number of pertinent statistics, such as overall sales, number of staff, market share and turnover. The interrelation of growth and profibility is presented by the fact that a basic operating principle is that growth can best be best evaluated by examining profit and total sales.

5). Five stages are :-

1. Idea Generation: Every new business begins with an idea. Idea is taken to be a description of a need of some constituency combined with a concept of a solution.

2. Opportunity Evaluation: This is the step where question is asked of whether the opportunity worth investing in. Investment is principally capital, either from individuals in the company or from outside investors, and the time and energy of a set of people..

3. Planning: Once you have decided that an opportunity, you need a plan for how to capitalize on that opportunity. A plan begins as a fairly simple set of ideas, and then becomes more complex as the business takes shape. In the planning phase you will need to create two things: strategy and operating plan.

4. Company formation/launch: Once there is a compelling opportunity and a plan, the entrepreneurial team will go through the process of choosing the right form of corporate entity and actually creating the venture as a legal entity.

5. Growth: After launch, the company works toward creating its product or service, generating revenue and moving toward sustainable performance. The emphasis shifts from planning to execution. At this point, you continue to ask questions but spend more of your time carrying out your plans.

6). Owner - Refers to the person to whom the idea or concept belongs and who has invested in the capital to start the venture.

Partners - Those who invested in the capital along with the owner and have defined share in the profits.

Executives - Employees who work in the organization that belongs to owners and partners.

Hired managers - Executives that work their way basis experience and qualification are appointed as managers to manage executives of particular departments that they manage.

Mentors - Trainers that train the employees to perform their on job duty efficiently.

Customers - That buy thhe product or services of the organizations.

Investors - Stakeholders that buy the shares of the company and invest for profitability.

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