Once we have decided to pursue opportunities down the road of entrepreneurship, we must advance to a set of actions that we can refer to as the entrepreneurial process. While the circumstances under which people start or acquire businesses vary greatly, certain steps may be considered common to all.

These can generally be classified as

Commitment

Selection

Evaluation

Planning

Implementation

Resources

Commitment

Do you have what it takes to be an entrepreneur? What are my real reasons for considering going into business? Your motivation must be strong enough to sustain you when the excitement of the startup has passed, and the everyday grind begins.

Do you have a good business idea? Is there a product or service that fits my talents or desires? About 65% of new businesses are startups, 30% purchases of existing businesses, with the remainder inherited, promoted or otherwise brought into ownership. About 11% of the businesses operate under a franchise name.

Do I have adequate support? If you have a spouse, or are relying on some other form of family support, make sure that they understand the sacrifices involved and the pressures these will put on relationships.

What priority can I place on developing this business over other interests and goals for the foreseeable future? Am I willing to take on the personal demands of entrepreneurship? There is more to life than work, and maintaining a balanced and healthy lifestyle can be a challenge for the self-employed.

Do I have the financial resources to make the venture a success? Once I make the venture a full-time pursuit, can I live without a regular paycheck, a predictable work schedule, and for a while without vacations and other benefits? Even after startup, business concerns seldom end when you lock the door at closing time. Am I prepared for the possibility that I might lose my money and property, and damage my health and self-respect?

Selection and Evaluation of the Venture Idea

You should be asking questions such as; does the market need a product or service that is not currently being provided? Is there a needed product or service currently being provided in a less than satisfactory way? Is some particular market being underserved due to capacity shortages or location gaps? Can I serve any of these needs with some competitive advantage?

Remember that a business idea is not a business opportunity until it is evaluated objectively and judged to be feasible. You may wish to choose two to five of the ideas that seem most promising for more detailed study. Trying to consider too many would spread your time, energy and focus too thin. At the same time, if you focus too early on only one business idea, you are more likely to become "attached" to it, and could lose your objectivity.

Testing the feasibility of your top business ideas involves time and effort to collect key information. Assess the quality of the resources available to you. Actively determine the available data that is most useful in determining your chances for success.

Data collected from industry sources and journal articles is often referred to as secondary data, in that it was collected for purposes not directly related to our specific venture. Sometimes this can be sufficient, though we may find the need to fill the gaps with primary data. Collection of primary data can be very expensive. It generally consists of conducting market surveys, in person or by telephone, of a statistically significant random sample of our prospective clientele.

Develop an entry strategy. What type of business could best seize the chosen opportunity? Would taking in partners with complementary skills enhance my chances for success? What would be the optimum location? Whom would we serve, and how? Would my chances be improved by buying a franchise or an existing business, as opposed to starting a venture "from scratch?"

Planning

Resources/Implementation

Accessing the capital needed to start your business. Most businesses are funded with personal savings, credit cards and loans from family or friends. The prospective new business owner approaching a lending institution should keep in mind the "five c's of credit:" character, cash flow, capital, collateral, and (economic) conditions.

What are the types of services available to an entrepreneur? There is a broad range of services in the marketplace, ranging from highly specific activity oriented specialists, through to consultants, and coaches, as well as turnkey programs that provide an integrated approach to business development.

Created to help sell your idea to financiers and to attract competent associates, but in practice they are also tremendously helpful in enhancing your ability to succeed.

In previous lessons, we discussed the first three of the four stages in the entrepreneurial process: Commitment, Selection and Evaluation, and Planning. Let us now consider some issues relating to the fourth step, implementation.

A primary inhibitor of business start-up is that few people have the financial cushion to give up a job for the uncertain income of a start-up venture. In a recent survey, about 30% of new business founders identified inadequate funding as their biggest hurdle, and a similar amount said lenders were too conservative. About 15% reported being unable to find investors, and a similar amount claimed a lack of collateral.

The prospective new business owner approaching a lending institution should keep in mind the "five c's of credit:" character, cash flow, capital, collateral, and (economic) conditions. Character consists of the borrower's integrity, experience, and ability; particularly close attention is paid to a borrower's credit history, which is a matter of record. Should you decide to try to fund a startup through a commercial lender, the remaining criteria are addressed in the loan request.

Even where the start-up investment consists largely of other people's money, the amount of financial risk for the entrepreneur is beyond what most can responsibly handle. For many with the financial means, the stress of bearing complete responsibility for the company's direction and performance is the discouraging factor.

Resources

Alternative #1

Initially, you should determine if you have what it takes to be an entrepreneur. First, you must have a burning desire to go out on your own. Keep in mind that you are going to risk your money, and possibly others', on this venture.

Secondly, you have to be one who is willing to take initiative. In the entrepreneurial world nothing happens unless it is made to happen.

Third, you must be able to deal with ambiguous situations. One of the most important characteristics of an entrepreneur is the willingness and ability to adapt to change. The willingness to be flexible and to adjust on the fly is critical.

You've got to be determined to succeed and do whatever it takes to develop a winning attitude and be willing to deal with adversity on a consistent basis.

The next obvious question during this evaluation stage is to determine if you have a good business idea. Contrary to popular belief, your idea does not have to be new and innovative, although that could help. In reality, most new ventures are started because the founder saw an opportunity to improve on an existing business idea. Before you venture out, think about your capabilities of improving on an existing business and be sure you have the ability to sell your idea to your prospective customers, associates and financiers.

The next step would be to determine whether or not you can access the capital needed to start your business. Most businesses are funded with personal savings, credit cards and loans from family or friends.

Finally, it is important that you determine when the right time is to start your new venture. There are many scenarios. You could go to work in an industry you are interested in and learn on other peoples' money for a few years. This will give you important industry specific information. Should you choose this approach, you would be well advised to create a nest egg to fund your future venture and minimize your personal financial commitments.