Warning: very technical article ahead

Several similarities couple together entrepeneurs starting a new business and men establishing relationships with women.

First of all, you need a target market and money. Once you have them, you can start. Selection and due diligence are most of the times (wrongly) skipped to exploit the benefits of an early execution. This leads most men to enter really lousy ventures with very bad girls. But let's look at the bootstrap.

Financing takes a fundamental role in this. You can go from the self financing girl to the multiple round financing and again up to the never profitable girl.

The self financing girl is the one you meet at Sutton at 5 am. She is already drunk because either she has been drinking by herself or she has been offered drinks by other club pretenders (trade financing). You don't have to do anything more than milk the results as much as you can. In a BCG matrix, this is the cash cow business. If you are lucky, she come home with you the same night, if you are not, she is still in bed with you when you wake up. Suddenly you realize how drunk you must have been the night before. ROA is quite high especially if you consider that the cover charge of sutton has been a sunk cost even before you entered the venture with the girl. However, this kind of situaions can be common in Barcelona but not that common in developed countries like Italy, where, to achive this high returns, you really need a competitive advantage backed by some disruptive technology (the last one was in the seventies: the Casio watch with embedded calculator!)

Some girls bring you in very common but tough situation of multiple financing. You pay the first night, but results don't materialize. So you think of a second round financing and still, results struggle to come and you keep carrying forward the NOL (net operating losses). You are torn, because you have already invested a lot of money (let's say two dinners and drinks) and you don't know if to risk another investment (the third might be the lucky one) but can also turn you down lower than when you already are. Usually in these tough moments, other stakeholders rise their voice. Typically, the one who's most pissed of and claims something, is the manager in the middle, the bold one.

One criteria to analyze business opportunities is always the scalability of the business. Unfortunately, girls are rarely scalable even if a recent study showed that bisexuality and threesomes are at 2% CAGR. Usually scalability can be achieved on a geographical level but synergies are hard to achieve and I would even hypotize that there are some disconomies of scale in that. Globalization and imports from cheap-labor countries can, in the long rutn, increase supply and consequently lower prices, at least when you adjust them over inflation.
Some entrepeneurs, especially the ones that spend lot of time abroad, adopt a business model based on a flahship store at home coupled with a franchise network in the other main cities.

However, we shouldn't forget that knowledge of the market is crucial. It's much easier to operate in a local market than to expand internationally. A network of friends and resorts is also a nice to have that might improve your reputation and easiness to conduct business. But always keep an eye on the operative level, because steal of assets and equity is still common practice especially in emerging markets.

In the long run, returns and profits tend to decrease and capital invested tends to follow the rule of "decreasing marginal returns" which is quite common in business. Product lifecycle is always that one. Rapid growth followed by plateau that then turns to rapid decline. The lenght of the cycle depends on the base timing in which you enter the market and the CAPEX that the girl is willing to invest on herself. Some of them can finince maintenance on internally generated cash flows, other ones just ask you the credit card.

Depreciation is usually higher than CAPEX, which inevitably makes you think that you rather invest in a new plant than maintain the old one. Unfortunately, after five years or so, the woman is able to leverage on your commitment to trigger a lock-in mechanism called marriage. This immediately rise a huge barrier to exit that might be impossible to overcome. Strategic buyers are quite rare in the industry and IPOs opportunities are limited. Spin-offs are common but costly. Most of the time you need to drop your manufacturing plant, your company car, fringe benefits and sign some earnaout clause on your future cash flows. Not necessary to say that all this, decrease your potential to expand into new ventures (investments in disruptive technologies).

There are several kind of investments. From early stage financing (which is illegal in almost all the countries) passing through seed financing to later stage and up to banckrupcy and turnaround situations. Turnaround, however, is still considered a niche market for the ones who really want to put their hands in the dirt.

Some entrepeneurs lose their grip on the business over a certain period of time. It's not uncommon to see situations in which the entrepeneurs decides to put himself aside and let somebody else to manage the business.