Looking to start a business of your own? This section highlights the stages of starting your business and problems that may arise during each stage.
As an entrepreneur you will have to learn to identify your company’s strengths and weaknesses and analyze the market opportunity and threats. You must know how to compete and thrive in a dynamic, uncertain and risky environment, and to manage resource effectively to meet the challenges.
As a guide, we have outlined the four stages of small businesses and the common problems associated with each.
Characteristics: Startups often operate with minimal support staff and struggle to survive. The true main goal of the business, more often than not, is to give a financial assurance to the startup owner.
Problems: Most businesses fail in the early stage from the lack of management skills, poor marketing, lack of financing, and cash flow problems. Major concerns are in expansion of company, recruitment of employees and safety environment.
Characteristics: A company has refined its business plan, has some of its management team in place and is starting to develop products and sales. The value of the business has grown to a point where is it necessary to protect and preserve the business.
Problems: Many businesses fail in the growth stage because they lack the knowledge to face continual challenges and to recognize a time-sensitive opportunities. The primary concerns are cash flow, hiring and retaining key employees and growth.
Characteristics: A company has made good progress on its plan, sales have started to increase and the business is expanding. Cash flow reaches break-even point and the business is able to examine ways to finance future growth. The primary concern is with the expansion of the business. If this issue has not been addressed, attention turns to providing complete employee benefit packages to all employees, as well as additional selective benefits that are needed to reward and retain key people.
Problems: Many businesses fail in the prematurity stage because they do not understand the importance of expanding or finding successful ways to duplicate products or to penetrate the markets. Again, expansion and recruiting often top the list of concerns, followed by safety, personal benefits and the transfer of the business.
Characteristics: At this stage, the business has reached the point where the fruits of labor can be realized. The company has done well, attacked its market, refined its product and is gearing up for an initial public offering or other major progress. By this point, the owner has some decision to make. Does he/she concentrate on continuing to run a successful venture, pursue new ventures, or devise a plan for succession of the business so he/she can retire.
Problems: Many businesses fail in the maturity stage from the lack of experience in managing their financial and human capital aspects. Taxation may become a concern, as well as the transfer of the business.