Entrepreneurial process of new venture formation comprises all the functions, activity and action which are necessary for developing the new venture. Basically it is a process through which a new venture is created by an entrepreneur. The entrepreneur must find evaluate and develop an opportunities by overcoming the forces that resist the creation of something new. The process has four distinct phases which are as follows:
1. Identify and Evaluate Opportunity
2. Develop Business Plan
A business plan is a well defined written argument, based on relevant facts, figures, and estimates. It portrays an overall picture of a business proposal, attempts to justify its technical feasibility as well as commercial success and makes clear suggested course of action in distinguished section. An entrepreneur usually has not prepared a business plan before and does not have the resources available to do a good job. Although the preparation of the business plan is important to understand the basic issues involved in new venture setup. A good business plan is essential to develop the opportunity and determine the resources required, to obtain those resources and successfully manage the resulting venture.
3. Determine Resources Required
The resources can be divided into following key ingredients:
- Technical know-how, which assists in the production of a quality product or offering of a service.
- Finance, including equity, cash, and borrowing power.
- Physical assets, including building, equipment, machinery, and vehicles.
- Human resources.
- Intangible resources, including information, networks, protected patents, unique technology, and brand reputation.
4. Manage the Enterprise
After resources are gathered and acquired, the entrepreneur must use them to implement the business plan. The operational problems of the growing enterprise must also be examined. This involved implementing a management style and structure, as well as determining the key variables for success. A control system must be established, so that any problem areas can be quickly identified and resolved. Some entrepreneur have difficulty in managing growing the venture they created.