1: Establishment - Features and Challenges

Highly vulnerable stage; business is yet to find a secure foundation. 

The main concern in the establishment stage is building enough revenue to cover expenses - see Breakeven Analysis.

Cash flow issues are of central concern; due to sporadic and unpredictable revenue from sales and high and constant expenses in establishing the firm.

A newly established business has no reputation, no established customers and very high expenses in capturing sales and market share from existing firms.

The firm needs to ensure it has enough cash on hand to keep business afloat during early stages. It may require additional investment from shareholders / owners. 

Business owners can increase their chances of success by effective business planning, undertaking substantial market research and have great skill in establishing new clients / customers.