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Introduction
Entrepreneurship is one of the most widely taught subjects in schools, by organizations, and informally through family members and friends. Many people are reluctant to start a new business due to uncertainties regarding the growth and sources of finance. However, analysts have established that enterprises evolve in predictable ways and face similar challenges in growth (Singh & Gupta, 2020). Understanding the five life cycle stages may enhance preparedness and increase the chances of a person succeeding. Moreover, it is vital to be aware of some sources of capital and the risks and advantages that each present to make a well-informed decision. Although the experiences of every entrepreneur are different understanding, the journey of progress and financial options makes navigating through the problems easier.
Discussion
The five stages of the life cycle include implementation of the idea (launching), growth, shake-out, maturity, and decline. The individual must actualize the thoughts or proposal into an enterprise where people can purchase goods or services. Leadership and creativity are of prime importance, given that it is the foundational phase. Once the business has attracted a considerable number of clients, it can market the enterprise by word of mouth and promote growth. The shake-out is when the company starts to get stability amidst new entrants, customer fallout, and loyal customers. Greiners model asserts that the greatest challenge here is getting control where delegation may help grow (Singh & Gupta, 2020). At maturity, the firm is well established, but coordination may be problematic with the expansion. The business can start declining if it does not have a sustainable strategy and fails to diversify the products and enter new markets. Noteworthy, since businesses have different internal and external factors affecting their growth, the duration taken in each phase may differ.
Options for start-up capital that are at the disposal of entrepreneurs include retained earnings, loan stocks, bank lending, government grants, venture capital, and higher purchase. The person can save the money they get from salary, friends, or running other errands and use it to start a business without having to borrow from other lending institutions (Brooks, 2020). The advantage of sponsoring the business with personal savings is that the individual does not start with debts. However, the cash may be small and limit the kind and size of business that a person starts.
Bank loans and overdrafts, where they get money and return after an agreed period with interest, are a good choice when a person does not have personal savings. The loans can be short-term or long-term, but the longer a person takes to pay back, the more interest they have to give. In some cases, the government can offer grants for start-up businesses like a gift to the entrepreneur (Brooks, 2020). With venture capital, a financial investor agrees to sponsor the business if they believe it has a high potential for success. Alternatively, they can enter into a hire purchase agreement in which they get the resource to start the company but only get full ownership after they complete the payment.
Conclusion
In conclusion, starting a business is a risk entrepreneur must be willing to take. The growth of any enterprise often takes a predictable pattern which those endeavoring to establish companies should understand. Once the idea is implemented and the business solves a market need, it is bound to flourish. Understanding the possible challenges at each phase gives wisdom for navigating and remaining sustainable amidst challenges. A person can finance their business or choose from a wide variety of other sources, which have advantages and drawbacks.
References
Brooks, R. M. (2020). Financial management: Core concepts (4th ed.). Pearson.
Singh, S. K., & Gupta, S. (2020). Entrepreneurship with practical class XII by Dr. S. K. Singh, Sanjay Gupta: SBPD publications. SBPD Publications.
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