START-UP
The following paragraphs will provide you with further information regarding start-up.
(a) Definition of Start-up
A Start-up Company is a company that is recently formed. It is a process where the entrepreneur creates a completely new business starting from scratch. Some of these businesses are created as follows:
• Many entrepreneurs start-up their business by themselves.
• Usually entrepreneurs will use their own funds from their savings or by borrowing from others.
• An entrepreneur who wants to start-up his businesses usually needs to have lots of experience, knowledge, skills and interest in the field involved.
• Start-up business usually involves the invention of new products or services.
(b) Phases in Start-up
Any new venture goes through three types of phases. They are the prestart-up phase, start-up phase and poststart-up phase. Figure 6.2 shows the three phases in start-up.
However, the major focus in the new venture development is only during the prestart- up phase and start-up phase. In both of these phases, five critical factors are important for new-venture assessment and they are as follows:
1. The uniqueness of the venture.
2. The investment size at start-up.
3. The expected increase in sales and profits as the venture cruises through the start-up phase.
4. The availability of products at the two phases.
5. The availability of customers during the two phases.
(c) Advantages and Disadvantages of Start-up
There are a few advantages and disadvantages of Start-up. Table 6.1 indicates those
advantages and disadvantages.
