The Entrepreneurial Life Cycle: A Comprehensive Overview - Essay Sample

Introduction

The entrepreneurial life cycle is similar in all sizes of businesses, starting from small startups to big corporations. The period begins with an entrepreneur who perceives a venture opportunity and creates a business organization with which he would achieve the idea, assembles the necessary res, implements the actual plan, and takes all the risks and rewards. All this is done in a timely way for the realization of the business objectives without much difficulty. There are various stages of the entrepreneurial life cycle. The entrepreneurs engage in complex and dynamic interrelationships among the business strategy and management (Global Entrepreneurship Institute, 2020). The difference significantly distinguishes entrepreneurial management from other management practices of the business.

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This paper discusses the entrepreneurial life cycle of Vitality Group. Vitality is a company specializing in the provision of private health insurance in the United Kingdom market. It is a subsidiary of Discovery and forms Vitality Group along with Vitality Corporate services and Vitality Life. By the year 2018, Vitality Health had about one million clients across the U.K.

Stages of the Entrepreneurial Life Cycle

The company was started in 2004 by Discovery and Prudential and was initially branded PruHealth. It combined the capability of Prudential in distribution to launch into the foreign market in South Africa. The concept of Vitality was to provide incentives to its clients for the realization of healthy living. The target market seemed very optimistic and concerned about their health, and therefore, taking any corrective measures for the future was highly likely. Utilizing this opportunity, the company focused on capturing issues like unhealthy lifestyle and activities for its clients.

The company aimed to avert the immediate costs incurred by patients with unhealthy activities and lifestyles. Therefore, it offered to give immediate rewards to the clients to motivate them to make healthy and appropriate choices on their lifestyles. This gave the clients a solution that promotes wellness through better lifestyles and healthy activities, hence prevents disease (Herzlinger, 2010, p.2).

The services that Vitality offered to its clients included a Health Risk Assessment and possible biometrics screening. Then a Vitality Age was determined from the results, and the risk-adjusted age would account for lifestyle activities and behaviors (Herzlinger, 2010, p.2). Clients found to have the risk factors would then be offered incentives to encourage them to make better choices as corrective measures.

Vitality identified that majority of the clients are unable to maintain their health as they regarded doing good things as being expensive (Herzlinger, 2010, p.3). Therefore, rewarding them for maintaining their health would attract them to joining Vitality. The generation of resources for the incentive program by Vitality would be from the insurance premiums, which would instead be used in promoting healthy lifestyles and activities rather than in paying for the cost of healthcare.

The program was efficiently executed, is a subsidiary of the Discovery and Prudential companies that had already been established. It was a program that gained validation in the United States, the U.K., and South Africa. The impact of Vitality on the clients was assessed through a study that indicated that the company had a definite competitive advantage. The health risk factors and the care costs had significantly reduced (Herzlinger, 2010, p.3).

Business Opportunities

Business opportunities are ventures that can be found or invented. Entrepreneurs can address a problem they see in society or develop new ways from unseen possibilities (Parker, 2018, p.6). From these opportunities are what an entrepreneur's role is birthed, which is where they convert ideas into goods and services, assess customer's reactions, and learn from this process (Kuratko, 2016, p.7). There are admirable entrepreneurs in the world today, such as Jeff Bezos, who founded Amazon and Kevin Systrom, who founded Instagram and many more who found problems in the society and addressed them or instead invented new opportunities. Researchers have sought to interpret these two concepts that are at the core of business opportunities. For instance, Fraunhofer conceptualized an approach that explains the 'found' view of business opportunities. He focused on people's needs and identified six fields where opportunities would be found, and health was one of them. In health, he described the aim of providing affordable medical insurance for an extended period. This aim is real in the case of Vitality Group, whose goal is to 'incentivize clients to live healthy lifestyles.'

Vitality group is seeking to expand its market to the United States after being successful in South Africa and the United Kingdom. This decision arrived after much debate and pieces of evidence presented. Examples of these shreds of evidence were that the many employers were thinking to include wellness programs for their workers in the future and that health insurance firms were beginning to incorporate these programs. Also, the wellness market in the U.S was not fully developed (Herzlinger, 2010, p.6). Therefore, it was decided that with the appropriate resources, Vitality would grow the market.

However, for any new business venture and expansion, the market has to be understood, which was something Pollard argued, and Gore concurred. Pollard explained that Vitality needed an American CEO who understands the market from the bottom to the top, recognizes suppliers, and providers' mechanisms and would quickly form networks with people involved in the wellness market (Herzlinger, 2010, p.6). When these factors are understood, would the business have a better start in a newfound market with so many opportunities for growth?

Assessing a market's wants and demands is a vital concept. In the case of Vitality, entering a new market means to know how the market operates and meet its requirements. For instance, investigations made showed that employers wanted to provide wellness programs separate from health insurance. This approach would provide privacy for the employees. Employers would be able to include several insurance providers across different locations. The research also identified that they were more comfortable disclosing information to wellness providers. Also, they could continue receiving services from them if there would be a change in the health insurance providers (Herzlinger, 2010, p. 7). This evidence shows that there are concepts essential for identifying and assessing business opportunities before embarking into new ventures that a business or an entrepreneur will find.

Concept, Frameworks, and Tools for Turning Ideas into Products or Services, Measuring the Customer Response, and Learning from this Loop

The primary focus of any entrepreneur and a firm like Vitality Group is turning ideas into products or services, measure the customer response, and to learn from this loop. Steve Blank proposed a framework of customer development and customer validation to prove this activity. In association with the Business Model Canvas concept, Blanks asserts a start-up business is formed to inquire for a scalable business model to grow to a large firm. Blanks' four tools are customer discovery, customer validation, customer creation, and customer building. Customer discovery entails a firm designing their hypothesis and seeks to test its validations. The customer validation tool involves Vitality Group assessing the solutions available if they match customer needs and problems. Customer creation and customer building tools form the firm's primary objective, i.e., when a firm finds a scalable business model to lay the groundwork for creating end-users needs.

Lean Start-up Method is a concept developed by Eric Ries, based on identifying and eliminating any sources of wastes that can harm start-up operations. According to this concept, a firm should emphasize avoiding designing products or services that no customer wants, even if it perfectly fits the budget and completed on time. The idea primarily focuses on firms searching for purposes to create products and services that their customers need. The Build-Measure-Learn cycle is a feedback loop that the Vitality Group can employ in attaining its goals. The tool is essential in turning uncertainties, validations, or any factors into information that can help Vitality Group progress and achieve customer satisfaction. Ideas can be transformed into positive knowledge that a start-up can potentially employ in its product development and all activities.

Concepts Related to Effectuation

In 2001, Saras Sarasvathy proposed the effectuation theory. Saras asserted an effectuation is an approach or strategy for making informed decisions and undertaking actions for a start-up business. An entrepreneur identifies the best next step to perform and assess the resources available to attain set goals, while regularly trying to balance and adjust the set goals with available resources and activities (Sarasvathy, 2001

Bird in Hand Concept- The concept insists that for entrepreneurs willing to start business ventures, they must employ available resources and means to create solutions. Therefore, this concept asks an entrepreneur should not wait for a perfect chance to start a venture but start the entrepreneurial journey with available resources.

Affordable Loss Context- This concept asserts the prediction and setting of affordable losses. To start a business venture, an effectual entrepreneur should analyze opportunities primarily on any downsides that the business can have and those that are acceptable, rather than on the appeal of the business’s upsides.

Lemonade Concept- This concept emphasizes on leveraging contingencies. It is prudent to accept surprises arising from undetermined situations and remain flexible to achieve set goals.

Crazy-Quilt Concept- This concept asserts the importance of forming a positive partnership with people and firms willing to help or commit to starting a new venture.

Pilot in the Plane Concept- According to this concept, an entrepreneur should focus on aspects within the immediate business environment that, to a certain extent, can be managed or controlled.

Stages for Funding a Start-up

A start-up with an excellent business plan aims to get its operations up in time. The operations incurred and all relevant actions to get a start-up running requires capital. The five stages of funding are discussed below.

Seed Capital- This stage comprises of personal and family savings to fund a start-up. Other sources of funds for this stage include crowdfunding, credit cards, and start-up’s accelerators hubs.

Angel Investor Funding- This stage involves seeking investors to help to scale or improve business product development and its operations.

Venture Capital Financing- This stage comprises of private equity and other forms of finance, firms or investors can grant to a start-up.

Mezzanine Financing and Bridge Loans- This stage entails raising funds to sustain the business’s products, services, and business expansion. This stage can cover for Initial Public Offerings (IPO) expenses thorough selling of business’s stocks to receive funding.

Bibliography

Global Entrepreneurship Institute, 2020. Entrepreneurial Life Cycle. [online] Global Entrepreneurship Institute. Available at: <https://news.gcase.org/entrepreneurial-life-cycle/> [Accessed 2 June 2020].

Herzlinger, R.E., 2010. The Vitality Group: Paying for Self-Care.

Kuratko, D.F., 2016. Entrepreneurship: Theory, process, and practice. Cengage Learning. https://books.google.com/books?hl=en&lr=&id=6v9UCwAAQBAJ&oi=fnd&pg=PR3&dq=entrepreneurship+theor...