Chapter 6: Entrepreneurial Opportunities

Growth of Sales: In small profitable ventures:

financial considerations play a major role. Autonomy and control also are important in the sense that the entrepreneur does not want to venture sales to become so large that he or she must relinquish equity or an ownership position

What are the three major categorizes of causes for failure?

1. Product/market problem 2. financial difficulties 3. managerial problems

Is it important to identify and investigate these variables before committing resources to launch a new venture?

True

What is poor timing?

a premature entry into the marketplace contributed to failure in 40 percent of the cases studied

What is a profile analysis?

a tool that enables entrepreneurs to judge a business venture's potential by sizing up the venture's strengths and weaknesses along a number of key dimensions or variables

Growth of Sales: Lifestyle Ventures

appear to have independence, autonomy, and control as their primary driving forces. neither large sales nor profits are deemed important beyond providing a sufficient and comfortable living for the entrepreneur

What was found about dominant problems?

at start-up related to sales/marketing (38 percent), obtaining external financing (17 percent), and internal financial management (16 percent)

What is failure prediction model?

based on the financial data from newly founded ventures

What is a critical task in starting a new business?

conducting a solid analysis of the feasibility of the product/service in getting off the ground

What is the feasibility criteria apprach?

criteria selecting list, based on the following questions, from which entrepreneurs can gain insights into the viability of their venture

what is the "real challenge" for new firms?

firms to survive and grow

What is technical feasibility?

for producing a product or service that will satisfy the expectations of potential customers

What is the comprehensive feasibility approach?

incorporates external factors in addition to those included in the criteria questions cited above

Is it unusual for estimates to be less than half of what is eventually required?

no, it is not

entrepreneurial motivations relate to:

personal characteristics environment venture itself

When you have a superior product....

price becomes less of an issue i.e. apple products

What did successful firms make greater use of?

professional advice and developed more detailed business plans

What is product availability?

the availability of a salable good or service at the time the venture opens its doors

What are the critical factors for selecting ventures?

the known reasons for venture failure, and an effective evaluation process

What is critical?

timing is critical. actions taken too soon or too late will often result in failure no real insight into the market= managerial shortsightedness

Entrepreneurs who successfully started a business?

were more aggressive in making their business real, that is, they undertook activities that made their businesses tangible to others: they looked for facilities and equipment, sought and got financial support, formed a legal entity, organized a team, bought facilities and equipment, and devoted full time to the business

When does pricing become less of a problem?

when the customer sees the product a superior to its competitors. a product that is unique in a significant way can gain the advantage of differentiation

"fully developed new firm"

requires full-time commitment of 1+ individuals, is selling a product or service, has formal financial support, and has hired 1+ individuals

Growth of Sales: high-growth ventures:

significant sales and profit growth are expected to the extent that it may be possible to attract venture capital money and funds raised through public or private placements

When is the hardest time to secure investment in your new venture?

start-up phase

Does the product not have to be patented, but it should be sufficiently proprietary to permit a long head start against competitors and a period of extraordinary profits early in the venture to offset start-up costs?

true

What is important about growth of sales?

*accurately* estimating sales product availability

What are the pitfalls of selecting new ventures?

1. *Lack of Objective Evaluation* most dangerous 2. No Real Sight into the Market 3. Inadequate Understanding of Technical Req'ts 4. Poor Financial Understanding 5. *Lack of Venture Uniqueness* 6. Ignorance of Legal Issues

7 components for new-venture motivation:

1. need for approval 2. need for independence 3. need for personal development 4. philanthropic considerations 5. perception of wealth 6. tax reduction and indirect benefits 7. following role models

What are the three specific phases a new venture goes throught?

1. prestart-up: begins with the idea for the venture and end when the doors are opened for business. 2. start-up: commences with the initiation of sales activity and the delivery of products and services, and end when the business is firmly established and beyond short-term threats to survival 3. poststart-up: lasts until the venture is terminated or the surviving organizational entity is no longer controlled by an entrepreneur

5 critical factors of restart-up and start-up phases

1. the relative uniqueness of the venture 2. the relative investment size of the startup 3. the expected growth of sales/profits as the ventures moves thru its start-up phase 4. the availability of products during the restart-up and start-up phases 5. the availability of customers during the restart-up and start-up phases.

What is lack of Objective Evaluation?

Falling in love with the idea of a product or service but unaware of the need for the scrutiny they would give to a design or project in the ordinary course of their professional work