Entrepreneurship Project: Understanding the Concepts and Theories of Entrepreneurial Start-ups

This report develops understanding on the concepts and theories of entrepreneurial start-ups. It reflects on the stages incorporated in the process of establishing start-ups and discusses various models including customer development model, value proposition development as well as business development model. The report also analyses the key skills that must be possessed by entrepreneurs for ensuring success of start-ups in long run.

Entrepreneurship project

Executive summary
The purpose of this report is to develop understanding on the concepts and theories of
entrepreneurial start-ups. The report reflects on the stages incorporated in the process of
establishing start-ups and it discuss various models including customer development model,
value proposition development as well as business development model. The objective of this
report is to discover the importance and significance of start-ups for a dynamic economy and
how can entrepreneurs effectively the execute the process of creating an enterprise. It further
analyse the key skills that must be possessed by entrepreneurs for ensuring success of start-ups in
long run.

Acknowledgement
I would like to express my special thanks to my management teacher ___________ for
providing my guidance and assistance for the purpose of successfully completing this project in
effective manner. I would also like to express my gratitude to the principal ____________ and
vice principal ____________ for their support and and constructive assistance which helped in
accessing various facilities that was required during the assessment.

Table of Contents
Executive summary..........................................................................................................................2
Acknowledgement ..........................................................................................................................3
Introduction......................................................................................................................................5
Main Body.......................................................................................................................................5
Conclusion.....................................................................................................................................14
References......................................................................................................................................16

Introduction
The term entrepreneurship is defined as an individual who has the new idea related to
launch of new products and services. The entrepreneurs are generally the owner and manager of
the business enterprise that undertakes risky initiative in order to make large volume of profits as
well as customer loyalty. The entrepreneurship is critical as it makes necessary improvements in
the lives of peoples as well as society members. In addition to this, the entrepreneurs also plays
the key role in making the strong economy of the country. The duty of entrepreneurs are critical
as they take greater initiatives in order to improve the way people work and live. This essay will
highlight the forms as well as nature of entrepreneurs. In addition to this, the essay will also
discuss about the entrepreneurial process which will show the critical evaluation of
entrepreneurship theories and practises. Moreover, the essay will also determine the relationship
between innovation and entrepreneurship. Furthermore, this essay will also throw a light on the
issues that comes around in the small business environment, enterprise as well as
entrepreneurship.
Main Body
The entrepreneurial process: Entrepreneurship is a broad concept which is associated with
various procedures and it evaluated numerous skills of an individual in order to establish a start-
up and successfully operates it. The success of an enterprise is highly dependent upon the ability
of an individual to perform various functions involved in the creation of a start-up as well as the
management of the enterprise (Dileo and García Pereiro, 2019). There are various functions that
defines the success and establishment of a start-up and conducting its operations in a constructive
manner. The entrepreneurial process is defined below which includes majorly five phases:
Idea generation: The process of entrepreneurship starts with an idea which is sustainable and
viable in the long run and it is associated with planning the requirements needed for transforming
the idea into reality.
Evaluation of opportunity: Under this stage, entrepreneur assess whether the plan is worth
investing or not and this phase is associated with conducting market analysis and analysing
customer trends.

Planning: This phase is associated with the process of capitalising the plan which involves
devising marketing and product strategies as well as constructing operational plan as on how the
activities of the enterprise will be conducted (Hadjielias, Dada and Eliades, 2021).
Launching: This phase is related with deciding the structure of organisation whether it will be a
company, sole proprietorship, partnership etc. and performing legal procedures for the same.
Growth phase: This phase is related with the ongoing management and processes and planning
in relation with attaining high profitability margins and achieving growth and progress.
There are many reasons due to which start-ups are unable to become well-established
organisations due to lack of funds, poor decision making or lack of product or customer research.
The customer development model enables an entrepreneur to recognise the actions which should
be considered at initial stages of creation of enterprises.
Customer development model :It refers to objectives and milestones which are valuable
for a start-up and CDM is an effective way to determine and test the assumptions in marketplace
made in relation to an enterprise. The main objective of CDM is to develop understanding of
customer behaviour and their preferences. This model enables entrepreneurs to pay attention on
product development as well as devise effective and constructive marketing strategies. CDM
develops synthesis of customer trends and preferences through experimenting the assumptions
and it helps in deciding how a product will deliver high value and utility to consumers. The
process of customer development make use of four-step framework which are different but
interconnected.
Customer discovery: This is the first part of the framework which is associated with determining
who will be the customers of an enterprise which must be supported with in-depth research. This
step is related with conducting customer analysis and evaluate the trends of market (Silva and
et.al., 2020). This phase barely focuses upon product and is completely emphasized upon
customers. Under this stage, teams are recommended to go out and search markets in real world
for the purpose of testing the assumptions made about a product or customers. In true sense, this
phase discovers the value that the product will deliver to the customers. Under this phase, the
entrepreneur must question the utility of a product and how it will solve problems of customers
and for purpose, it would be used by customers. The main objective of this phase must be the
problem solving nature of the product rather than additional features.

Customer validation: This is the second part of the CDM which takes place only after
successful identification of the target customer and market of high commercial potential. This
step helps in designing the map which is required in reaching to those customers that has been
identified for the product. This phase is associated with determining the way in which the
enterprise will enhance their reach to the targetted market. The unique aspect of this stage is that
this phase of CDM does not work, the team must restart the process of customer discovery and
performs proper customer analysis. Customer creation: The third step of CDM is highly crucial
and substantial in the overall process because it address the fact that different enterprises enter
different markets. There are majorly four types of primary market appropriate for start-ups.
Some enterprises will enter markets that are already in existence. While some start-ups will make
entrance in the markets that are completely new. Some enterprises would prefer the existing
marketplace as a means of low cost alternative while some will develop a completely new
segment as a niche in the market already existing (Murre, 2021). In some cases the business will
enter into market which is a combination of two of them as these markets are not mutually
exclusive. Customer creation is an integral part of CDM as it helps in avoiding extra spending on
the marketing strategies if the first customers are not acquired. Thus it prevents expenses on
markets if the first two steps are not done properly. Company building: This is the final part of
the CDM process as it enables the transformation process of an idea into reality and at this stage,
the enterprise is allowed to make expenditure on marketing and inducing customer base. It has to
be ensured that the enterprise is spending only after properly identifying target markets as huge
expenses in initial period would result in financial failure.
Value proposition development :Value proposition refers to the utility that a company
commit to deliver through provision of goods and services. Defining unique value proposition is
one of the most crucial aspect of an enterprise as well as of product development. The value
proposition of an enterprise defines its operations and establish core values through enhancing
the brand name and through delivering customers with a value that makes an enterprise unique as
well as standout in the market (Abdel-Basst, Mohamed and Elhoseny, 2020). A value proposition
is the one of most crucial element of a start-up as it describes the utility that customers will
derive through consumption of a product. It basically determine the value of a product which is
being developed and how it will deliver satisfaction to consumers and why they should consume
it. A value proposition is substantial element of product development and it is the basis for

marketing strategies and promotional techniques of a start-up. While promoting a new
enterprise, the entrepreneur must be able to differentiate their product from that of its
competitors and must be able to make it standout in a market full of potential rivals. Following
are the steps to define value proposition of an enterprise in a constructive manner.
Identification of ideal audience: As discussed in the CDM, defining target market is a crucial
step under the development of a business enterprise as it helps in deciding the development of
product according to preferences of a particular segment of customer. Listing benefits of
product: The second step is associated with stating the advantages that customers will obtain by
purchasing the product of the enterprise. This step is mainly related with analysing uniqueness of
a product and what makes it different from the same products offered by competitors (Polinskaya
and Gordeikhina, 2018). Focusing upon clarity: The value proposition of an enterprise must be
clear and eye-catching which should be easily understood by consumers. It is recommended for
start-ups to make use of clear and candid language which could easily grab attention of audience.
Testing and experimenting: The value proposition of an enterprise must be tested before
finalising it and it can be done through asking opinions of an unbiased group in order to obtain
reliable outcomes. An enterprise must design its value proposition after thorough testing by
gaining feedbacks.
Business model development : A business model is a plan for a company for making
money by selling the products to the customers. This assist in identifying products or services for
a business to sell to the targeted market through evaluating the expenses. It is significant for new
and existing business because it helps in developing an investment for a company by recruiting
new talent and motivate the employees(Burström and et. al., 2021). This is high level plan used
by an entrepreneur in creating their business because it covers the start-up cost for a business
with the financial resources. It also includes the target customer’s base marketing strategy,
competition prevailing in a market and the revenues and expenses that are associated with it.
This plan provides the opportunity for the establishing the partnership with the other business.
Therefore, the entrepreneur view the business as an investment model.
There are some steps that are adopted by the entrepreneurs to make a strong business
model which begins from the identification of the specific audience. In this the entrepreneurs
choose its targets market by segregating the customers on the basis of the demographics which
includes age, income, gender etc., geographically and so on. The entrepreneur intensely focuses

on prospective customers so that the wants of the customers are satisfied by selling them
products or services(Pieroni and et. al., 2021). This helps an entrepreneur in making the loyal
customers and encourage them to buy the products again. Thus, it is the best activity to identify
the customers for their offerings and also define various benefits for the products so that they get
attracted towards products or services. The next step establish business processes which is the
collection of various linked activities that gets end when the delivery of the products are made to
the customers. Thus, the entrepreneur make the process for the businesses because an effective
process increase the efficiency of the organization. Therefore, the entrepreneur take help of
tactics and technologies of the business process management which improves the overall
efficiency of a business of an entity and level of satisfaction of customers(Randhawa, Wilden
and Gudergan, 2021). An entrepreneur create the process by identifying the scope, input and
output for the process need for research and so on. Another step is record key business resource
in which an entrepreneur identify the main resources that are required to operate the functions for
the business. An entrepreneur documents all the essential resource such as financial, physical,
human, intellectual, digital and many more to ensure that business model is prepared efficiently
to maintain the needs for the business. The resources help in finding out the customer’s base to
reach out to the goals. Therefore, it is significant to start the business with right resources for the
growth. The finance is the main resource at the business cannot be run without money, thus the
capital is invested to start an occupation. Physical resources are also important that includes
equipment, inventory, building, manufacturing plant and many more. All these are required to
the process of making the products. Human resources plays an important role in an enterprise
because the products or services are introduced with the help of these resources. They bring
innovative ideas to create new products that attract the customers towards it. The next step is
develop strong value proposition which refers to creating the value for the targeting customers
by satisfying their needs. For this, company must interact with the customers to offer them the
desired products. For example, the interaction can be done through social media platforms that
will enable an organisation to get direct feedback from the customers which help in facilitating
the customer’s satisfaction(Rigo and et. al., 2022). A business concern should provide the
required information about the products through their websites to enhance the experience of the
customers that will create value for the customers. A next step focuses on determining the key
business partners by an entrepreneurs which can be done by finding someone who is well

trusted. Thus, an entrepreneur can collaborate with the partners through strategic associations
between the non-competitors or also join the venture to start the new business. The next step is
create demand generation strategy which make an entrepreneur enable to make awareness for
brand about the products or develop a content strategy among the customers. The last step is
leave room for innovation where an entrepreneur use a variety of innovative skills and cognitive
ideas for the business model and the processes. This innovative skills are demanded in the
industries because of arising trends in a market.
Explaining about the importance of entrepreneurial start-ups for the dynamic economy
The entrepreneurship is considered as the ability of business professionals to launch a
new enterprise with new products or services in order to satisfy the new demands of customer in
marketplace. The entrepreneurs are responsible for making innovative changes in its existing
products with the purpose of drawing attention of large number of customers. The entrepreneurs
possess various characteristic in order to make innovative changes. The one of their nature is
Risk Bearing spirit, the entrepreneurs are fearless when taking the step in order to implement
new idea into reality (Rauch, 2020).The entrepreneurs are high risk takers as well as have the
quality to bear large amount of loss in positive manner. The other characteristic is Ability to
innovate, the process of entrepreneurship is seen as an innovative process which helps them in
identifying new ideas and implement those ideas in effective manner. In addition to this, the
entrepreneurs give greater attention to grab new opportunities and technologies present in
external market conditions. The other nature of entrepreneurship is the Environment oriented
Activity, the entrepreneurship is the open as well as external activity that is linked with the forces
of external environment such as economic, social, political and cultural forces. The entrepreneurs
takes measures to effectively take environment oriented activities. The other main nature of
entrepreneurs is Motivational activity, the activities of entrepreneurs motivates the business
professionals in order to make new ideas and find effective solutions of complex business
problems. In relation to this, the entrepreneur takes great responsibility to inspire new
professionals in grabbing new opportunities within market conditions (Porfírio, Felício and
Carrilho, 2020).
There are different types entrepreneurs who are responsible for managing different types
of businesses. The first is Small business entrepreneur, The entrepreneur who runs their
business by investing less resources are known as small scale entrepreneurs. There business are

small enough and lack the innovation factor due to which the small entrepreneurs are unable to
attract venture capital (Parente and et.al., 2018).The second form of entrepreneur is Large
company entrepreneur, the entrepreneurs who invest large amount of capital as well as human
resources to launch new firm are large scale entrepreneur. The company takes into practise the
new innovations in order to sustain better in the market conditions. The other form of
entrepreneur is Social entrepreneurs, in this, the entrepreneur identifies and analyse the social
problems and then evaluate the strategies in order to make effective solutions to the problems of
society. The entrepreneur takes into practise society oriented business practises with the purpose
of creating value to the members of society (Ferreira, Fernandes and Kraus, 2019).
The Venture financing is defined as the type of private equity as well as form of
capital that is provided by the investors especially to the small or start-up companies that have
the high potential for attaining market growth. The venture capital fund generally comes from
the renowned investors, investment banks or by other financial investors. In addition to this, it is
the type of fund provided by the outside investors in order to help start-up businesses to attain
market growth in the most effective manner (Stenholm, 2021).This also supports the small
companies to make new innovative products or services by purchasing the new machines or
technology from the market. There are various methods of attaining venture financing. The one
of the method is Equity financing, this fund collecting method is practised by start-up
companies who have higher needs in order to invest in their robust business plan as well as for
sustaining future growth potentials (Bruton, Zahra and Cai, 2018). In this, the small companies
receives the fund from the investors by providing them some percentage of stake form their firm.
The other method to gain venture fund is through Debentures, this type of method allows the
start-up companies to acquire the required amount of capital. In order to collect funds, the firm
gives guarantee to the fund providers to return the funds with interest once the securities
matured. The start-up company gives the debt paper to the fund providers that depicts the
acknowledgement slip to raising the required funds for the specific period of time. The other
form of venture financing through which the firm can apply funds is conditional loans, these
types of loans are in contrast with the common bank loans as in this the firm is not liable to pay
the fixed rate of interest (Arend, 2020).In this type of loans, the start-up company gives the fixed
amount of royalty only after the firm starts generating the revenue in proper manner. The other
form of venture financing is Conventional loans, these form of loans are different than the

conditional loans where the entrepreneur pays interest to the lender as well as also gives the
fixed royalty according the profits and sales of the start-up organisation.
The scaling of business is considered as developing the proper infrastructure in order to
allow the small scale companies in attaining growth and development in market conditions. The
strategy to scale up business requires appropriate planning, funding and the effective systems in
the form of staff, technology as well as partners. The foundation of scaling the small scale
business requires greater focus on three parameters such as capital, speed and efficiency. There
are different business scaling options available to the small scale firms. One of the option is
Bootstrapping, this method of scaling option is more influenced by the internal factors of start-
up companies. In relation to this, the bootstrapping scaling option is basically slow in process as
the success majorly depends on the various internal structure of the firm such as products, its
marketing strategy as well as adopted business models (Parker, 2018). There are many
advantages of bootstrapping like accessibility, customer oriented as well as higher freedom. The
other option for scaling up business is Slow scaling, this method is similar to that of
bootstrapping and also shares the same benefits. The entrepreneur who adopts slow scaling
business generally take support of external financing options such as venture financing in order
to make significant changes within the organisational structure. The firm that adopts slow scaling
acquire funds in order to meet their strategic reasons for meeting customer demands. The one of
the benefits of slow scaling option is that it supports the entrepreneur to make smarter decisions
as they have ample of time to think about best business strategy. The other type of scaling
process is Fast scaling, this particular option is the most viable for the organisations that are
supported by venture fund providers. The venture capital allows the company in ensuring proper
growth by investing the acquired funds in developing the innovative business processes. There
are some important benefits for choosing large fast scaling strategy. The one of the benefits is
that it helps in fostering the entrepreneurial growth as this provides the best learning experience
in terms of developing new skills and knowledge. The large scale option also supports the
entrepreneur to enhance its competitive growth as the venture funding capital allows the start-up
company to invest those capital in developmental projects and activities (Kuratko and Morris,
2018).
The term partnership is considered as the formation of contracts between the business
parties in order to run business operations by putting collective efforts. The development of

partnership contract depicts the sense of mutual interest between the business parties. This
support the entrepreneurs to share profits, loss as well as fund needs in equal manner. There are
different types of partnership agreements between the business parties. The following options
can enable the entrepreneurs in choosing the most viable partnership agreement. The first type of
partnership is General Partnership, this type of partnership agreement is the most simplest one
and cheaper to maintain (Kreiser and et.al., 2021).The general partnership agreement can be
taken into practise on immediate basis as there are no compulsion to sign the official paperwork.
Hence, the contract can be terminated at any time without signing any legal documents.
However, there are some downfalls such as the partners that engages through this agreement face
unlimited liability and are accountable for each other actions. The other type of partnership is
Limited partisanship, this type of partnership provides more security to the members as
compared to General partnership agreement. In this, the one member holds unlimited liability
and manages overall operations. On the other side, the remaining parters are considered as
limited who holds financial stakes of the firm but does not share any loss. In this, the business
entrepreneur needs to sign the state filings before making partnership agreements. The other type
is limited liability partnership, this type of partnership contract is known as the further extension
of General partnership agreements. In this, all the partners are secured from the actions of other
partners as well as all the partners have limited liability. This type of contract allows the
entrepreneur to safe themselves from any future losses. In addition to this, in order to enter into
limited liability partnership it takes large amount of documentation activities.
The innovation is the greatest factor in determining the future growth of products and
services. The adoption of innovational strategies supports the entrepreneur in gaining
competitive position in the market. The start-up business can achieve the greater heights by
adopting newer technologies within the business process. In addition to this, the innovational
strategies allows the firm to open the door of success by supporting the entrepreneur to match
adopt newer technological changes in the market (O’Donnell, O’Gorman and Clinton, 2021).The
role of innovation in entrepreneurship is quite important as it helps in boosting the business
reputation in the marketplace. In addition to this, the innovational practises also support the
entrepreneur to effectively attract large number of customers by providing the specialised
products and services. The other importance of deploying innovation by entrepreneur is that it
supports the firm to sustain longer in business environment. In addition to this, the practise of

innovative strategies by the entrepreneurs assist them to effectively meet the ever changing needs
of customers in most effective manner. Moreover, the innovative practises also allow the
entrepreneurs to develop newer products and services according the current trends in the market.
This aid the entrepreneur to satisfy customer demands in appropriate manner which leads them to
attain higher profits and market growth. The other most critical importance of adopting
innovational practises within the organisation is it assist the entrepreneur in drawing positive
attention from large number of customers. This leads the entrepreneur to make positive global
impact.
The Small start-up companies faces the number of challenges throughout their journey
which is some times threatening to the long term survival in the business environment. The small
scale companies can face many issues due to the high competition, rapidly change in customer
needs and wants, any technological change and many more (Julien, 2018). In addition to this,
due to the small scale existence the entrepreneurs are not able to target potential customers in
most effective manner. The one of the main problems that usually threats the long term growth
strategy of the small firms is the difficulty to arrange large finances, the small level firms face
more issues when raising large funds when compared to the larger scale companies. It has been
seen that many banks are more interested to allocate their resources to the larger organisations.
This is because the large scale organisations have cleaner financial statements as well as also
have the low risk of default as compared to the small scale companies. The other main challenge
in front of the small organisations is the lack of information infrastructure, the information
infrastructure allows the firms to rectify the information problems between fund providers and
entrepreneur. The small scale companies have no connection to the capital markets due to this
the entrepreneur faces the lack of information infrastructure. Hence, the above factors puts the
greater challenge to small scale organisations in terms of future losses.
Conclusion
It has been concluded from the above essay that entrepreneurs plays the critical
responsibilities in order to generate newer ideas for developing new products and services. It was
also analysed that role of entrepreneurs are important for both the economy of the country as
well as for the society members. It has been analysed that entrepreneurs make new products by

understanding the needs and demands of customer in effective manner. This essay has explained
the forms as well as nature of entrepreneurs. In addition to this, the essay has also explained the
entrepreneurial process under which the essay has effectively defined the customer development
process, value proposition development,business model development. Apart from this, the essay
also discussed about the concept and methods of venture financing, scaling up business as well
as partnership. Moreover, the essay has also described that innovation in critical factor that
supports the entrepreneur to implement new innovative changes within the business processes.
Furthermore, the essay has also highlighted the challenges faced by small scale business
entrepreneurs in day to day operations.

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