Entrepreneurship Barringer

What are the three main reasons people decide to become entrepreneurs?

(1) Be their own boss, (2) Pursue their own ideas, (3) Pursue financial rewards

List five common myths regarding entrepreneurship

(1) Entrepreneurs are born, not made (2) Entrepreneurs are gamblers (3) Entrepreneurs are motivated primarily by money (4) Entrepreneurs should be young and energetic (5) Entrepreneurs love the spotlight

Identify four main characteristics of successful entrepreneurs

(1) Passion for the business (2) Product/customer focus (3) Tenacity despite failure (4) Execution intelligence:

Power Point Deck

...is a short set of PowerPoint sides that describe a business idea.

Tagline

A Tagline is a phrase that a business plans to use to reinforce its position in the marketplace.

What is a business plan?

A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business intends to accomplish and how it plans to achieve its goals. For most new businesses, the business plan is a dual-purpose document that is used both inside and outside the firm. Inside the firm, it helps the company develop a road map to follow in executing its strategies. Outside the firm, it acquaints potential investors and other stakeholder with the business opportunity the firm is pursuing and describes how the business will pursue that opportunity.

Competitor analysis

A competitor analysis is a detailed analysis of a firm's competitors.

How will investors typically react if they think the business plan is based on estimates and predictions rather than on careful analysis and facts.

A firm must validate the feasibility of its business idea and have a good understanding of its competitive environment prior to presenting its business plan to others. Sophisticated investors, potential business partners, and key recruits will base their assessment of a proposed firm's future prospects on facts, not guesswork or platitudes. If a firm does not have a business plan, the investors typically will not commit.

Fixed costs

A firm's fixed costs are costs that a company incurs whether it sells something or not.

Summary business plan

A full business plan is a type of business plan, which have following characteristics: 10 - 15 pages Works best for new ventures in the early stages of development that want to "test the waters" to see if investors are interested in their data Ironically, summary business plans are also used by very experienced entrepreneurs who may be thinking about a new venture but don't want to take the time to write a full business plan.

Operational business plan

A full business plan is a type of business plan, which have following characteristics: 40-100 pages Is meant primarily for an internal audience Works best as a tool for creating a blueprint for a new venture's operations and providing guidance to operational managers

Milestone

A milestone is a noteworthy or significant event.

What is the purpose of a mission statement?

A mission statement defines why a company exists and what it aspires to become. The mission statement can define the path a company takes, act as its financial and moral compass, and serve ad an anchor around which decisions are made.

Position

A product or service's position is how it is situated relative to its rivals.

Product prototype

A product prototype is the first physical manifestation of a new product, often in a crude or preliminary form.

Virtual prototype

A virtual prototype is a computer-generated 3D image of a product or service idea. It displays the idea as a 3D model that can be viewed from all sides and rotated 360 degrees.

What are the characteristics of firms with higher entrepreneurial intensity?

All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. The position of a firm on this continuum is referred to as its entrepreneurial intensity. Entrepreneurial firms are typically - proactive - innovators - are not averse to taking calculated risks

What is Back Stage activities?

Behind-the-scenes activities.

Describe the characteristics of entrepreneurial firms

Characteristics of entrepreneurial firms are - proactive - innovative - risk-taking in contrast to conservative firms, which take more of a 'wait and see' posture, are less innovative and are risk averse.

Describe corporate entrepreneurship

Corporate entrepreneurship is something existing firms practice, acting entrepreneurially. All firms fall along a conceptual continuum that ranges from highly conservative to highly entrepreneurial. The position of a firm on this continuum is referred to as its entrepreneurial intensity.

Mission statement

Defines why a company exists and what it aspires to become.

Due diligence phase

Due diligence refers to the process investors go through after they tentatively commit to an investment. The commitment is based on a thorough investigation of the merits of the venture, whether any legal complications exists, and whether the claims made in the business plan are accurate and realistic.

Describe entrepreneurship

Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control for the purpose of exploiting future goods and services. Others define it simpler, seeing entrepreneurship as the art of turning an idea into a business.

Discuss the guidelines to follow to write an effective business plan

Guidelines are available for those writing a business plan to follow, and those guidelines should influence the writing of a business plan. It is important to be sensitive to the structure, content, and style of a business plan before sending it to an investor or anyone else who may be involved with the new firm.

Executive summary

Is a one- to - two-page overview of the full plan.

Why is writing a business plan the last activity to be completed in the entrepreneurial process?

It is a mistake to write a business plan too early. The business plan must be substantive enough and have sufficient details about the merits of the new venture in order to convince the reader that the new business is exciting and should receive support. Much of this detail is accumulated in the feasibility analysis stage of investigating the merits of a potential new venture.

Why is the "Management Team and Company Structure" section of the business plan often touted as one of the most important sections?

Many investors and others who read business plans look first at the executive summary, and then go directly to the management team section to assess the strength of the people stating the firm. It's often not the idea or market that wins funding among competing plans, but the perception that one management team is better prepared to execute its idea than others.

Market segmentation

Market segmentation is the process of dividing the market into distinct segments. Markets can be segmented in many ways, such as by geography, demographic variables, psychographic variables (personality, lifestyle, values), and so forth. Sometimes a firm segments its market based on more than one dimension in order to drill down to a specific segment

What is the difference between a product prototype and a virtual prototype?

One you can hold in your hand, and the other one you cannot. A product prototype is the first physical manifestation of a new product, often in a crude or preliminary form. A virtual prototype is a computer-generated 3D image of a product or service idea. It displays the idea as a 3D model that can be viewed from all sides and rotated 360 degrees.

What are the differences among a summary business plan, a full business plan, and an operational business plan?

P. 228 - 229 figure

Power Point Deck

Rank-and-file generally means the employee doesn't occupy a high-level position within the organization.

Rank-and-file employees

Rank-and-file generally means the employee doesn't occupy a high-level position within the organization.

What is GEM? And what does it study?

The Global Entrepreneurship Monitor is the world's foremost study of entrepreneurship. Theys study: - The entrepreneurial behaviour and attitudes of individuals - The national context and how that impacts entrepreneurship

Blueprint

The business blueprint in all its essence is the genuine, realistic and conclusive detailing of our understanding of the scope, the specifications and the completeness of the solution design to be fulfilled to the business objectives, desired project outcomes and envisioned benefits.

Costs of goods sold

The costs of goods sold, are the materials and direct labor needed to produce the revenue driver.

What is the purpose of "The Economics of the Business" section of a business plan?

The financial analysis of a business, is further fleshed out in the financials projections. It addresses the basic logic of how profits are earned in the business and how many units of a business's product or service must be sold for the business to "break even" and then start earning profit.

What is the number-one rule in making an investor presentation?

The first rule in making an oral presentation is to follow instructions.

What is the difference between the industry analysis section and the market analysis section of a business plan?

The industry analysis, which is another part of the business plan, describes the industry a business will enter. Where the market analysis part of the plan breaks the industry analysis into segments and zeros in on the specific segments (or target markets) to which the firm will seek to appeal.

Describe who reads a business plan

The two primary audiences for a firm's business plan are - its employees - and potential investors and other external stakeholders.

Explain the purpose of a business plan

There are two primary reasons to write a business plan: Internal Reason: Forces the funding team to systematically think through every aspect of its new venture. And develop a concrete blueprint to follow. External Reason: Communicates the merits of a new venture to outsiders, such as investors and bankers. We are writing a business plan to create a selling document for a company. It provides a mechanism for a young company to present itself to potential investors, suppliers, business partners, key job candidates, and others.

What is Front Stage activities?

What the costumer sees and experience.

When is the appropriate time to write a business plan?

Writing a business plan is the last activity completed in the step of the entrepreneurial process titled "Developing Succesful Business Idea".

What is a break-even analysis?

a break-even analysis is an analysis of how many units of its product a business must sell before it breaks even and starts earning a profit.

Describe the three types of start-up firms

(1) Salary-substitute firm: are firms that basically provide their owner or owners a similar level of income to what they would be able to earn in a conventional job. (2) Lifestyle firms: are firms that provide their owner or owners the opportunity to pursue a particular lifestyle and make a living at it. (3) Entrepreneurial firms: are firms that bring new products and services to the market by creating and seizing opportunities regardless of the resources they currently control.

Discuss the changing demographics of entrepreneurs in the United States

(1) The number of women-owned businesses is increasing. (2) Minority entrepreneurs there has been a substantial increase in minority entrepreneurs in the United States. (3) Senior entrepreneurs the number of seniors starting businesses is substantial and growing. (4) Millennial entrepreneurs a desire to pursue an entrepreneurial career is high among millennials.

Board of advisors

A board of advisors is a panel of experts asked by a firm's management to provide counsel and advise on an ongoing basis. Unlike a board of directors, a board of advisors possesses no legal responsibility for the firm and gives nonbinding advice.

Board of directors

A board of directors is a panel of individuals elected by a corporation's shareholders to oversee the management of the firm.

Why should the executive summary which is one of the first things that appears in a business plan, be written last?

A business plan has multiple parts, the first of which is the executive summary. The executive summary is a quick overview of the entire business plan and provides busy readers with everything they need to know about the distinctive nature of the new venture. In many instances, an investor will ask for a copy of a firm's executive summary and will request a copy of the full business plan only when the executive summary is sufficiently convincing. The most critical point to remember when writing an executive summary is that it is not an introduction or preface to the business plan; instead, it is meant to be a summary of the plan itself. Even though the executive summary appears at the beginning of the business plan, it should be written last. If you write the executive summary first, you run the risk of trying to write a plan that fits the executive summary rather than thinking through each piece of the plan independently.

Marketing strategy

A firm's marketing strategy refers to its overall approach for marketing its products and services. A firm's overall approach typically boils down to how it positions itself in its market and how it differentiates itself from competitors.

Operating leverage

A firm's operating leverage is an analysis of its fixed versus variable costs. Operating leverage is highest in companies that have a high proportion of fixed costs relative to their variable costs. In contrast operating leverage is lowest in companies that have a low proportion of fixed costs relative to variable costs. The implications of the firm's projected operating leverage should be discussed.

Variable costs

A firm's variable costs vary by sales.

Full business plan

A full business plan is a type of business plan, which have following characteristics: 25-35 pages Works best for new ventures that are at the point where they need funding or financing Serves as a "blueprint" for the company's operations

Identify and describe a suggested outline of a business plan

A suggested outline of the full business plan appears in table 6.2 page 232. Specific plans may vary, depending n the nature of the business and the personalities of the founding entrepreneurs. Most business plans do not include all of the elements introduced in the Table, they are included for the purpose of completeness. Topics: - Cover Page and Table of Contents - Executive Summary - Industry Analysis - Company Description - Market Analysis - The Economic of the Business - Marketing Plan - Product (or Service) Design and Development Plan - Operations Plan - Management Team and Company Structure - Overall Schedule - Financial Projections - Appendix - Putting It All Together

Assumptions sheet

An Assumption sheet is an explanation of the most critical assumptions that a business's financial analysis is based on

Organizational chart

An organizational chart is a representation of how authority and responsibility are distributed within the company. The organizational chart should be presented in graphical format if possible.

"red flags" that are raised when certain aspects of a business plan are insufficient or miss the mark.

Founders with none of their own money at risk - explanation: if the founders aren't willing to put their own money at a risk, why should anyone else? A poorly cited plan - explanation: a plan should be built on hard evidence and sound research, not guesswork or what an entrepreneur 'thinks' will happen. The sources for all primary and secondary research should be cited. Defining the market size too broadly - explanation: defining the market for a new venture to broadly shows that the true target market has not been clearly identifies. For example, saying that a new venture will target the music industry isn't helpful. The market opportunity needs to be better defined. Obviously, the new venture will target a segment or a specific market within the industry. Overly aggressive financials - explanation: many investors skip directly to this portion of the plan. Projections that are poorly reasoned or unrealistically optimistic lose creditability. In contrast, sober, well-reasoned statements backed by sound research and judgment gain creditability quickly. Sloppiness in any area - explanation: It is never a good idea to make a reader wade through typos, balance sheets that don't balance, or sloppiness in any area. These types of mistakes are seen as inattention to detail and hurt the entrepreneur's credibility.

If you are developing a completely new product or service, what type of information should you include in your business plan regarding the status of the development efforts?

If you develop a completely new product or service, you need to include a section in your business plan that focuses on the status of your development efforts. Many seemingly promising start-ups never get off the ground because their product development efforts stall or the actual development of the product tor service turns out to be more difficult than expected. Information that should be included: - describe the present stage of the development of your product or service - disclose any major anticipated design and development challenges and risks that will be involved in bringing the product or service to market. - describe any patents, trademarks, copyrights, or trade secrets that you have secured or plan to secure relative to the products or services you are developing.

Ratio analysis

Most business plan writers interpret or make sense of a firm's historical or pro forma financial statement through ratio analysis. Ratios, such as return on assets and return on sales, are computed by taking numbers out of financial statements and forming ratios with them. Each ratio has a particular meaning in regard to the potential of the business. WHAT IS RATIO? In mathematics, a ratio is a relationship between two numbers indicating how many times the first number contains the second.

What are the positive effects of entrepreneurship and entrepreneurial firms on economies and societies.

Schumpeter argued that entrepreneurs develop new technologies and products that over time make current products and technologies obsolete. Schumpeter called this process creative destruction. Because new products and technologies are typically better than those they replace, and the availability of improved products and technologies increase consumer demand, creative destruction stimulates economic activity. Entrepreneurial firms' innovation has a dramatic Impact on a society. Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us. For two reasons, entrepreneurial behavior has a strong impact on an economy's strength and stability: Innovation and job creation Impact on larger firms

Why is it important for a business plan to follow conventional structure rather than be highly innovative and creative?

Some entrepreneurs want to demonstrate creativity in everything they do, departing from the basic structure of the conventional business plan format is usually a mistake. Typically, investors are very busy people and want a plan where they can easily find critical information. If an investor hunt for something because it is in an unusual place or just isn't there, he or she might simply give up and move to the next plan.

Sources and uses of funds statement

Sources and use of funds statement, is a document that lays out specifically how much money a firm needs (if the intention of the business plan is to raise money, where the money will come from, and how the money will be used.

What are the steps of the entrepreneurial process

Step one) Decisions to become an entrepreneur Step two) developing successful business ideas Step three) moving from an idea to an entrepreneurial firm Step four) managing and growing an entrepreneurial firm: Step five)

What is the purpose of an executive summary?

The executive summary is a quick overview of the entire business plan and provides busy readers with everything they need to know about the distinctive nature of the new venture.

Market analysis

The market analysis breaks the industry into segments and zeroes in on the specific segment (or target market) to which the firm will try to appeal.

What is the purpose of the "operations Plan" section of a business plan?

The operations plan section of the business plan outlines how your business will be run and how your product or service will be produced.

Explain how to effectively present a business plan to potential investors.

The oral presentation of a business plan typically consists of 20 minutes of formal remarks, accompanied by approximately 12 PowerPoint slides, and 40 minutes of questions and answers. The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered with material. If the investor is impressed and want to learn more about the venture, the presenters will be asked back for a second meeting to meet with the investor and his or her partners. This meeting will typically last longer and will require a more thorough presentation.

Contribution margin

The price a product sells for minus the costs of the goods sold, is called the contribution margin. This is the amount per unit of sale that's left over and is available to "contribute" to covering he business's fixed costs and producing a profit.

Pro forma (or projected) financial statements

The pro forma (or projected) financial statements are the heart of the financial section of a business plan. It includes pro forma income statement, the pro forma balance sheet, and the pro forma cash flow statement, Most experts recommend three to five years of pro forma