LIFE CYCLE OF AN

ENTREPRENEURIAL
VENTURE

ENTREPRENEUR
The term entrepreneur has been derive from
the French word entreprenere means to
undertake a business venture.
Entrepreneurs are simply those who
understand that there is little difference
between obstacle and opportunity and
are able to turn both their advantage.
Niccolo Machiavelli

ENTREPRENEURSHIP
It is the process of creating something
new, with value, by devoting the
necessary time and effort, assuming the
accompanying financial, psychic, and
social risk, and receiving the resulting
rewards monetary and personal
satisfaction and independence

THE NEW VENTURE creation process

The environment is the most

comprehensive component in the venture
creation process.
It includes all the factors that affect the
decision to start a business, for example,
government regulation, competitiveness,
and life cycle stage.

 Within specific industries and in specific

geographic regions, environmental
variables and the degree of their
impact will differ.
The new venture process begins with
an idea for a product, service, or
business.

Key Issues about the Venture

Cycle
There are static and dynamic forces
which need a special attention of the
entrepreneur
Entrepreneur needs to manage for
changes and not changes
The growth stage of the venture is more
sophisticated with competition and
dilemmas
At a certain stage, you need to decide
whether to do more innovation or allow

Life cycle of an
entrepreneurial venture
Life cycle of entrepreneurial firms
Birth stage
Breakthrough stage
Maturity stage
Each stage poses different managerial
challenges and requires different
managerial competencies.

Stages in the life cycle of an

entrepreneurial firm

The Five Stages of a Businesss

Life Cycle
There are five key stages (just typical)
(i) New Venture Development
(ii) Start-up Activities
(iii)Growth of the Venture
(iv)Stabilization
(v) Innovation or Decline

New Venture Development

Creativity and assessment
Resource base analysis
Networking including vertical marketing
Vision, Mission, Objectives, Strategies &
Tactics

Start-up Stage
Formal Business plan
Searching for capital (Analyze the risks)
Marketing research
Developing a working team
Identifying any core competencies for
Competitive Advantage

Growth Stage
Any modification on he operating
strategy
Positioning and re-positioning
Knowing more details about he
competitors (Survival of the fittest)

Stabilization Stage
Increased competition
High bargaining power of customers
Saturation of the market
The entrepreneur needs to think where
will the business be in the near future
It is a stage preceding a great dilemma: to
innovate or exit the business

Innovation or Decline
Without innovation the clear option is
death
Possibility of acquiring or being
acquired
Might design new products for new
markets (Diversification)

A Ventures Typical Life Cycle

Innovatio
n
Decline

Limitations of Life Cycle

Models
Growth is rarely as smooth as the curve of
the graph suggests. It is more likely to
represent spikes of growth and contraction
rather than rounded peaks. For example
many small businesses have relatively few
customers, so that the addition of one new
significant client will lead to a sudden
growth spurt. Conversely, the loss of one

 The transition from one stage to another

does not necessarily take place in the
order predicted by the model. Economic
or trade cycles outside the control of the
firm may contribute substantially to the
growth or decline of an enterprise at any
time irrespective of the stage of
development. The economic downturn of
2008/9 forced a large number of

 The contention that the transition from

one stage to the next is triggered by a
particular kind of crisis has not been
tested through empirical research. The
development of an enterprise is likely to
be subject to many different internal and
external variables so that isolating one
primary cause for the evolution of a firm
from one stage to another is an over

 Many enterprises reach a stable size

and never make the transition out of
this phase. Once they have
developed a business to a stage of
survival, life-style entrepreneurs will
have little motivation to grow it
further. Some take deliberate steps
to avoid growth which they see as

Conclusion
ALL STAGES ARE
STRATEGIC POINTS OF THE
VENTURE HENCE A NEED
FOR SPECIFIC STRATEGIES
FOR EVERY STAGE!