Patterns of Entrepreneurship
Online Study Tools
Chapter Review: A concise focused review of the important
Chapter themes and topics. Read these prior to taking the entrepreneurship self
Assessment to improve your entrepreneurial results.
Power Point Presentations: Each chapter power points presentations for class discussion and important guide lines to follow.
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On-line cases: These are interesting and current cases about
Real companies involved in real managerial dilemmas. These
Cases point out that what you are reading does have relevance.
On-line Business Plans: Current business plans about early stage entrepreneurial
Companies involved in marketing opportunities, raising capital and building the management team
Analytical Tools: Students can apply the analytical tools for conducting primary and secondary marketing research, evaluate the key factors for innovative start ups, use the model of competitive forces, and sample a business idea assessment model.
Personal Entrepreneurial Skills Assessment: Students can test their understanding of entrepreneurship by completing and answering a Personnel Entrepreneurial Skill Assessment to determine how capable you believe you are in performing entrepreneurial tasks and how interested are you in starting a business. The assessment is focused on five scales and emphasizes the entrepreneurial process and tasks required for a successful venture.
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Contents
Chapter 1
The Entrepreneurial Process
Click on the topics below for the summary of
Each topic. Use the links below to access the
Other materials available for this chapter.
· What are the five stages for the entrepreneurial process?.
· Why would people become entrepreneurs?
· What are the different approaches to identifying entrepreneurial types?
· What is the growth issues entrepreneurial companies face?
· What is the Entrepreneurial mindset? What characteristics do entrepreneurs often share?
Click on these links below to access the other
Materials available for this chapter.
PowerPoint
Entrepreneurship Self Efficacy Assessment
Analytical Tools
Chapter Review
Chapter 1: The Entrepreneurial Process
What are the five stages for the entrepreneurial process?
.
Stage I – Opportunity Analysis
The basic objective is to define the criteria that would make a business opportunity worthwhile to pursue. In this stage the founder identifies the opportunity and prepares and focuses on a vision and marketing for the company. If there is no vision for the venture, the new idea is just a dream
Stage 2 – Developing the Plan and Setting Up the Company
This is where ideas are discarded; strategies are documented and converted to a business plan. The focus at this stage is on writing a well-conceived business plan. It is a written plan that details how the vision and market analysis will become a sustainable competitive advantage.
Stage 3 – Acquiring Financial Partners - Sources of Funding
Armed with a well- conceived plan, the next challenge is to focus on acquiring financial investors and partners. In most cases, students and the entrepreneur may not be aware of the many financing options available that would best meet the needs of the business. Therefore, it is important to know the expectations and requirements of funding sources as well as the options available for financing.
Stage 4– Determine the Resources Required and Implementation
· This stage focuses on how the entrepreneur must learn to build the management team, organize the company, develop a human resource capability and create the spirit, culture and incentives for growth.
· The stage also examines the value of intellectual property for patents, trademarks and copyrights to gain competitive advantage in the marketplace and guides you toward effectively developing, protecting and promoting your own IP.
· Entrepreneurs are asked to plan operations and evaluate decisions using financial accounting information. An understanding of “Managing Financial Operations” is designed to analyze and to prepare budgets, ratios and cash flow forecasts will contribute to optimize learning of these skills
Stage 5 – Scaling and Harvesting the Venture
· A number of techniques and strategies can assist the entrepreneur in effectively developing an exit plan. This stage highlights the procedures and options available for entrepreneurs to scale the venture or consider an exit strategy. Described are the most common, sell an equity stake to a partner, sell the business, merge with another company or implement a leverage buy-out.
· Also discussed is the planning for a public offering that offers an option to sell a portion of the venture and scale the business for growth. The objective is to provide the knowledge to identify the best exit
Why would people become entrepreneurs?
· There are many reasons why men and women become entrepreneurs. For many individuals, there is the perception of independence and freedom from the politics and restrictions of corporate America.
· Being able "to do one's own thing," and make one's own decisions, and exert greater control is an attractive alternative to the conformity--real or imagined--associated with life in a big company.
· Some may hit a plateau or see that they are blocked from further promotions or are not progressing as rapidly as they would like and these conditions become motivating factors. They believe building a company can furnish opportunities for sustained growth and mobility.[8] For others, starting their own company provides the flexibility they seek in their lives. And of course, for many, entrepreneurship offers a vehicle for creating huge financial rewards.
[8]What are the different approaches to identifying entrepreneurial types?
· Aspiring entrepreneurs are the entrepreneur who dream of starting a business; they hope for the chance to be their own bosses. But they have not yet made the leap from current employment into the uncertainty of a start-up.
· Lifestyle entrepreneurs are those who have developed an enterprise that fit their individual circumstances and style of life. Their basic intention is to earn an income for themselves and their families. These have been referred to as small businesses or mom-and-pop shops
· Growth entrepreneurs have both the desire and ability to grow as fast and as large as possible. These firms are the most dynamic job generators in the American economy
What are the growth issues entrepreneurial companies face?
· Some businesses may not offer any productivity improvement and therefore may have no significant potential for entrepreneurial growth. On the other, even with growth potential, the business owner may prefer to grow the business only to a certain point.
· Not all entrepreneurs aspire to business growth. Searching for independence and economic support for family and children, many small business founders work toward the goal of growing the business to a level to provide a relatively steady stream of income and employment.
· The true challenge for entrepreneurs is to avoid burnout from the daily operations and keep the entrepreneurial spirit that drove one into business alive and well.
· What distinguishes an entrepreneurial company from a small business is the ability of the venture owner to maneuver successfully through the transition stages necessary to handle distinctive periods of growth. .
What is the Entrepreneurial mindset? What characteristics do entrepreneurs often share?
· An entrepreneurial mindset is creating the conditions under which everyone involved is energized to look for opportunities to change the business model. These might include redesign existing product offerings, reshape markets and change products in novel ways
Common Shared Characteristics
· They passionately seek new opportunities always looking for the chance to profit from change and disruption in the way business is done. They revolutionize business models; examine how revenues are determined, how costs are incurred, and how operations or technology are conducted.
· They pursue opportunities with enormous discipline. And make sure that they act on them. They make investments only if the competitive arena is attractive and the opportunity is ripe.
· They pursue only the very best opportunities and avoid exhausting themselves and their organizations by chasing after every option they go after a tightly controlled portfolio of opportunities in different stages of development.
· They focus on execution—specifically, adaptive execution
· They engage the energies of everyone in their domain. They create and sustain networks of relationships rater than going it alone, making the most of the intellectual and other resources people have to offer and helping those people to achieve their goals as well.
Chapter 2
Developing ideas and Business Opportunities
Click on the topics below for the summary of
Each topic. Use the links below to access the
Other materials available for this chapter.
· What are the various methods used to generate business ideas?
· What are the various methods used to research a business opportunity?
· What are the five steps in completing an opportunity analysis?
· When does an idea need to be protected?
· What is the evaluation screening process?
· Why should you prepare a cash flow forecast?
· Describe the sections in the cash flow for cash received, cash disbursements, and reconciliation process.
Click on these links below to access the other
Materials available for this chapter.
PowerPoint
Chapter Case
Analytical Tools
Conducting primary and Secondary research
Key factors for Innovative Start ups
Model of competition
Chapter Review
What are the various methods used to generate business idea
· Develop ideas as an extension or redesign an existing service
· Re-segment and create an improved service
· Re-differentiate and market the product at a lower price
· Add value to an existing product or service
· Develop or redesign a new version of an existing product
What are the various methods used to research a business opportunity.
•Primary Research: Investigating the “original source” of data, interviewing customers/prospects
· Focus groups: gathering of 6-10 pre-selected respondents to discuss product or service; candid discussions encouraged; sample is too small to be projected; objective is exploratory
· Survey Research: Usually randomly selected (with parameters) sample to project to larger population in question; survey can contain open-ended and closed-ended questions; objective to learn perceptions, satisfaction levels, etc.
· –Experimental Research: Most scientifically valid; If you can develop a version of your product/service, select different groups of subjects, control for external variables and note differences. Comparable to a “test run” before product/service enters market.
Secondary Research: Investigating research findings already written
· •Sources - Government Publications
· –Statistical Abstract of US (demographics, economics and social data)
· –County and City Data Book (relevant stats broken down by county and city)
· –U.S. Industrial Outlook (projections of industrial activity by industry including production, sales, shipments, etc.)
· –Other government publications like Census of Population, Federal Reserve Bulletin, Survey of Current Business
More Sources - Periodicals
· –Standard and Poor’s Industry Surveys (provide updated stats and analyses of industries)
· –Moody’s Manuals (financial data and names of executives)
· –Marketing journals like Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research
· –Trade Magazines including Direct, BrandWeek, Sales and Marketing Management
· –Business Magazines like Harvard Business Review and The Economis
·
What are the five steps in completing an opportunity analysis?
· Identifying which business ideas have real commercial potential is one of the most difficult challenges that an entrepreneur will face. In this section, a systematic approach to reducing the uncertainties is described. The five-step model below will assist entrepreneurs to know a winning business area when they see one.
· Seize the opportunity
- Know what factors create opportunity.
- Calculate the opportunity costs.
- Access the risks and rewards.
· Investigate the need through market research
- Ask preliminary questions.
- Prepare data collection.
- Execute a study to get answers.
- Analyze the data.
· Develop the plan
- Ask the right questions.
- Prepare the business plan (see chapter 4).
· Determine the resources needed
- Start personal contacts and networking.
- Perform financial requirements.
- Gather sources of technical skills
· Manage the business
- Keep planning.
- Deliver a total solution.
- Cultivate advanced resources.
When does an idea need to be protected?
· Patent protection for the idea and opportunity should be seriously considered A disclosure document, which essentially protects the idea for the first two tears is an option should be considered first.
· Most companies have their own internal research and development organization dedicated to monitoring and meeting the needs of their product or service line. The best method for submitting an idea is to contact the company and ask for their disclosure conditions to review an idea.
· Most will have their own protection form to sign, which essentially states that, while they may agree to review or discuss an idea, their research department may have already thought of the idea long before. Let an attorney have the last word.
What is the evaluation screening process?
· The following evaluation screening identifies those conditions whereby an idea may qualify for patent protection.
1. Is the service, product, or idea unique to get a head start on competition?
2. Does the service or product represent a breakthrough (either high-tech or different from others)?
3. Have other, less expensive, but adequate protective measures been explored?
4. Has an attorney discussed the options and recommended that a patent be pursued?
5. Is the fee for a patent search and application affordable?
Why should you prepare a cash flow forecast?
· Cash flow forecast shows the amount of cash coming in (receivables) and cash going out (payables) during a certain month. The forecast also shows a bank loan officer (or the entrepreneur) what additional working capital, if any, the business may need.
· Additionally, it provides evidence that there will be sufficient cash on hand to make the interest payments on a revolving line of credit or to cover the shortfalls when payables exceed receivables
Describe the sections in the cash flow for cash received, cash disbursements, and reconciliation process
Consider Cash Flow Revenues
· Find a realistic basis for estimating sales each month.
· For a start-up company, the basis can be the average monthly sales of a similarly sized competitor’s operations, which is operating in a similar market. Be sure to reduce your figures by a start-up year factor of about 50 percent a month for the start-up months.
Consider Cash Flow Disbursements
· Project each of the various expense categories (normally shown in your ledger) beginning with a summary for each month of the cash payments to suppliers as well as wages, rent, and equipment costs (accounts payable).
· Each month shows only the cash that is expected to be paid that month to the suppliers.