Initial Stages of a Business

Every business functions on some set of rules. These rules are adapted, the right term would be “stolen” from other companies. Ages ago, some big brains in business management developed different business models. These business models have been used since many years with some customization depending on a company needs. Here I take this opportunity to present my view of the initial stages of a business.

Let me use this figure to explain how it works…











Initial Investment
The Loop
Profit Zone

Initial Investment
This is the initial phase of the business. It needs a lot of research, lot of cash and lot of dedicated hours. Research is done through market survey. The best way is to interact with people who have already done similar kind of business. Scope of the business is very important. By scope I mean how long the business will last. Long term business involves lot of investment and risk in the initial stages. Always aim for long term business. Planning must be done for atleast 5 years ahead. This phase is more of fund raising. Bank loans are the best way to get the required capital. Its important that the right pay back scheme from the bank is chosen. Its better to choose for a scheme where interests need to be paid when the business reaches profit zone (see figure). Only the necessary investment must be made at this stage. The sufficient investment will be made in the loop zone (see figure).
After getting all the information, it must be refined. Implemental and practical ideas carry more weight than weird ideas.

The Loop Zone
When the investment is made and all the infrastructure set and the business actually starts running, the business enters the loop zone. As the name suggests the business enters a loop. It’s a stage when profits are yet to yield and no more investment can be made. Most of the companies are stuck in this loop. All the investment would have been made in the initial investment and hence there is no chance to invest any more. Profits are yet to yield as business has just started. The business is waiting for its sales. No sales and no revenue and hence no marketing and no sales. It’s a perfect loop. Remember roam was not built in one day.

Quicker the business gets out of the loop, quicker the profit. Some ways to get out of the loop quickly-
Making investment in the right direction in phase one.
Keeping absolutely no investment in the loop phase.
No wastage of investment in phase one.
Concentrating on sales and marketing in phase one.

Profit Zone
It an all smile zone. The zone where investment is not dependent on sales. Any investment can be made as business is in complete profit and from then on there is no looking back for any business.