Entrepreneurship

It is the task of an entrepreneur to take a good idea or innovation and turn it into a viable enterprise. This requires a lot of effort to line up a working business plan, fund the enterprise, and create a marketing/sales plan that is realistic and achievable. It also creates uncertainty. First there is risk, which you can measure as a statistic. The risk of heads or tails is 50%. Ambiguity is a hard to measure risk, where you are not quite sure what it is you are supposed to measure. Then there is true uncertainty, which is completely impossible to predict.

Planning is the way entrepreneurs try to get a handle on uncertainty. Before you can plan, you need a good idea and perhaps some thoughts about a novel way to market it. The good idea may translate into a new company or it may revitalize an existing firm. A new business is called a startup company, and it may start off as the work of a single self-employed individual. The bigger and better the idea, the more complexity the organization acquires. This means new work and new hires, the job engine that empowers America.

Venture capitalists (VCs) work with entrepreneurs to get initial funding in place. Often, in return for a large ownership stake in the company, VCs arrange a series of financing steps until the new firm can make an initial public offering, at which point VCs cash out, usually with a handsome profit.

The business plan for a startup requires a component that specifies the marketing plan and sales projections for the next 12 months or longer. The structure of the sales force, the compensation model, the sources of sales leads and a host of other questions must be addressed in the sales plan. Without the ability to estimate realistic sales volumes over at least a one year horizon, most startups are likely to fail.

Investors will be more sympathetic if they are presented with a sales plan that seems achievable. Besides the VCs already mentioned, other sources of funding include angel investors, hedge funds, and crowd-sourced capital. The latter is interesting - it is largely an Internet phenomenon among networking individuals and groups who share a common viewpoint or goal. Clearly, a strong sales plan and marketing strategy are keys to the successful rollout of a new entrepreneurial venture.