Entrepreneurship: Successfully Launching New Ventures

What is included in the economics of a business section?

- This section addresses the basic logic of how profits are earned in the business and how many units of a business's profits must be sold for the business to "break even" and then start earning a profit.- Items to include in this section :Revenue drivers and profit margins .Fixed and variable costs .Operating leverage and its implications. Start-up costs .Break-even chart and calculations.

What is a competitor analysis?

-A competitor analysis is a detailed analysis of a firm's competition. It helps a firm understand the positions of its major competitors and the opportunities that are available

Describe bargaining power of buyers

-Buyers can suppress the profitability of the industries from which they purchase by demanding price concessions or increases in quality. -For example, the automobile industry is dominated by a handful of large companies that buy products from thousands of suppliers in different industries. This allows the automakers to suppress the profitability of the industries from which they buy by demanding price reductions.

What are emerging industries and what opportunities do they offer?

-Industries in which standard operating procedures have yet to be developed. §Opportunity: First-mover advantage.

What are fragmented industries and what opportunities do they offer?

-Industries that are characterized by a large number of firms of approximately equal size. Opportunity: Consolidation

What are declining industries and what opportunities do they offer?

-Industries that are experiencing a reduction in demand. §Opportunities: Leadership, establishing a niche market, and pursuing a cost reduction strategy.

What are global industries and what opportunities do they offer?

-Industries that are experiencing significant international sales. §Opportunities: Multidomestic and global strategies.

What are mature industries and what opportunities do they offer?

-Industries that are experiencing slow or no increase in demand. Opportunities: Process innovation and after-sale service innovation.

Describe bargaining power of suppliers

-Suppliers can suppress the profitability of the industries to which they sell by raising prices or reducing the quality of the components they provide. -If a supplier reduces the quality of the components it supplies, the quality of the finished product will suffer, and the manufacturer will eventually have to lower its price. -If the suppliers are powerful relative to the firms in the industry to which they sell, industry profitability can suffer.

How does threat of substitutes affect businesses?

-The extent to which substitutes suppress the profitability of an industry depends on the propensity for buyers to substitute between alternatives. -This is why firms in an industry often offer their customers amenities to reduce the likelihood that they will switch to a substitute product, even in light of a price increase.

What are the three types of start up firms?

1) salary substitute firms 2) lifestyle firms 3) entrepreneurial firms

What are the 3 types of business plans?

1- Summary Business Plan (10-15, "test the waters") 2-Full Business Plan (25-35, "blueprint") 3-Operational Business Plan (40-100, internal audience)

What are some Factors that have an impact on the ability of buyers to exert pressure on suppliers?

Buyer group concentration buyers cost Degree of Standardization of suppliers products Threat of backward integration

What are 3 categories of cost to consider in a business plan?

Capital costs . One-time expenses, such as building a Web site and training initial employees . Provisions for ramp-up expenses (most businesses incur costs before they earn revenues).

What is included in a company description section?

Company description. Company history. Mission statement. Products and services. Current status. Legal status and ownership. Key partnerships (if any).

What is the definition of creativity?

Creativity is the process of generating a novel or useful idea.

What are Disruptive Business Models?

Disruptive business models, which are rare, are ones that do not fit the profile of a standard business model.- They are impactful enough that they disrupt or change the way business is conducted in an industry or an important niche within an industry. ex. Direct-to-Consumer Computer Sales (which allowed consumers to customize their computers) DellOnline Text Ads on Search Engines (allowed advertisers to place ads for products that searchers were already searching for)Yahoo, Google

What do entrepreneurs do?

Entrepreneurs assemble and then integrate all the resources needed - the money, the people, the business model, the strategy - to transform an invention or an idea into a viable business.

What is the alternative view of entrepreneurship

Entrepreneurship is the art of turning an idea into a business.

What is the definition of entrepreneurship?

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control.

What is a focus group?

Focus groups involve a group of people who are familiar with a topic, are brought together to respond to questions, and who are able to shed light on an issue through the give-and-take nature of group discussions.

What are some Factors that have an impact on the ability of suppliers to exert pressure on buyers?

Supplier concentration Switching Costs Attractiveness of substitutes Threat of forward integration

What is execution intelligence?

The ability to fashion a solid business idea into a viable business is a key characteristic of successful entrepreneurs.

What is a standard business model + give examples

Standard business models depict existing plans or recipes firms can use to determine how they will create, deliver, and capture value. Advertising Business Model Google, FacebookAuction Business Model eBay, uBidBricks and Clicks Business Model Apple, Barnes & NobleFranchise Business Model 24 Hour Fitness, Panera BreadFreemium Business Model Dropbox, EvernoteLow-Cost Business Model Southwest Airlines, Warby ParkerManufacturer/Retailer Business Model Apple, Fitbit, Tesla MotorsPeer-to-Peer Business Model Airbnb, Uber

What are the 4 steps in the entrepreneurial process?

Step 1: Deciding to become an entrepreneur. Step 2: Developing successful business ideas Step 3: Moving from an idea to an entrepreneurial firm. Step 4: Managing and growing the entrepreneurial firm.

What are three steps to assessing product/service demand?

Step 1: Talking Face-to-Face with Potential Customers• Step 2: Using Online Tools• Step 3: Library, Internet and Gumshoe Research

What are some non-traditional barriers to entry?

Strength of management team, first mover advantage, passion of employees, unique business model, internet domain name,

What are some key assets?

assets that a firm owns that enable its business model to work. The assets can be physical, financial, intellectual, or human . Physical assets include physical space, equipment, vehicles, and distribution networks . Intellectual assets include resources such as patents, trademarks, copyrights, and trade secrets, along with a company's brand and its reputation . Financial assets include cash, lines of credit, and commitments from investors. Human assets include a company's founder or founders, its key employees, and its advisors.

What are the three types of competitors that new ventures face?

direct competitors, indirect competitors, future competitors

What are the most important trends?

economic forces, social forces, technological advances, political action and regulatory change

What are entrepreneurial firms?

firms that bring new products and services to market

How is he number of woman owner businesses growing?

has grown at a rate five times faster than the national average

What are the obstacles that prevent millennials from starting businesses?

lack of finances, lack of desire, fear of failure, and lack of knowledge of the business start-up process

What are the 3 ways to identify an opportunity?

observing trends, solving a problem, finding gaps in the marketplace

How many businesses in the US are owned by someone under 30?

only 3.6 percent of all businesses in the United States were owned by someone under the age of 30.

How many books does Amazon have about entrepreneurship and small businesses?

over 58,510 and 80,686

How many minority owner firms are there in the US?

there are eight million minority-owned firms in the United States—a 38 percent increase since 2007

What is included in the overall schedule section?

‒ A schedule should be prepared that shows the major events required to launch the business .‒ The schedule should be in the format of milestones critical to the business's success. ‒ Examples of milestones : Incorporating the ventur . Completion of prototypes. Rental of facilities. Obtaining critical financing. Starting production. Obtaining the first sale.

What is 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.

What is included in the design and development plan section?

‒ If you're developing 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.‒ Items to include in this section :Development status and tasks. Challenges and risks. Projected development costs .Proprietary issues (patents, trademarks, copyrights, licenses, brand names).

What is included in the operations plan section?

‒ Outlines how your business will be run and how your product or service will be produced. ‒ A useful way to illustrate how your business will be run is to describe it in terms of "back stage" (unseen to the customer) and "front stage" (seen by the customer) activities.‒ Items to include in this section: General approach to operations. Business location .Facilities and equipment.

What is included in the Management Team and Company Structure section?

‒ The management team of a new venture typically consists of the founder or founders and a handful of key management personnel.‒ Items to include in this section: Management team .Board of directors (if you have one). Board of advisors (if you have one). Company structure.

What is included in the marketing plan section?

‒ The marketing plan focuses on how the business will market and sell its product or service.‒ Items to include in this section :Overall marketing strategy. Product, price, promotions, and distribution. Sales process (or cycle). Sales tactics.

What are some common traits of successful entrepreneurs?

• A moderate risk taker • Persuasive • Promoter • Resource assembler/leverager • Creative • Self-starter • Tenacious • Tolerant of ambiguity • Visionary • Optimistic disposition • A networker • Achievement motivated • Alert to opportunities • Self-confident • Decisive • Energetic • A strong work ethic • Lengthy attention span

What are some characteristics of attractive industries?

• Are young rather than old. • Are early rather than late in their life cycle. • Are fragmented rather than concentrated. • Are growing rather than shrinking .• Are selling products and services that customers "must have" rather than "want to have." • Are not crowded. • Have high rather than low operating margins .• Are not highly dependent on the historically low price of a key raw material, like gasoline or flour, to remain profitable

What are the Advantages of a Sole Proprietorship?

• Creating one is easy and inexpensive. • The owner maintains complete control of the business and retains all of the profits. • Business losses can be deducted against the sole proprietor's other sources of income. • It is not subject to double taxation (explained later). • The business is easy to dissolve.

What is a feasability analysis?

• Feasibility analysis is the process of determining whether a business idea is viable. • It is the preliminary evaluation of a business idea, conducted for the purpose of determining whether the idea is worth pursuing.

What are the Components of industry/target market feasibility analysis

• Industry Attractiveness • Target Market Attractiveness

What is the purpose of Industry/Target Market Feasibility Analysis?

• Is an assessment of the overall appeal of the industry and the target market for the proposed business. • An industry is a group of firms producing a similar product or service .• A firm's target market is the limited portion of the industry it plans to go after.

What is the purpose of a product/service feasibility analysis?

• Is an assessment of the overall appeal of the product or service being proposed. • Before a prospective firm rushes a new product or service into development, it should be sure that the product or service is what prospective customers want.

What is the purpose of Financial Feasibility Analysis?

• Is the final component of a comprehensive feasibility analysis.• A preliminary financial assessment is sufficient.

What are the Disadvantages of a Sole Proprietorship?

• Liability on the owner's part is unlimited. • The business relies on the skills and abilities of a single owner to be successful. Of course, the owner can hire employees who have additional skills and abilities. • Raising capital can be difficult. • The business ends at the owner's death or loss of interest in the business. • The liquidity of the owner's investment is low.

What are the Components of organizational feasibility analysis?

• Management Prowess • Resource Sufficiency

What are the advantages of an LLC?

• Members are liable for the debts and obligations of the business only up to the amount of their investment. • The number of shareholders is unlimited. • An L L C can elect to be taxed as a sole proprietor, partnership, S corporation, or corporation, providing much flexibility. • Because profits are taxed only at the shareholder level, there is no double taxation.

What are the advantages of a c corporation?

• Owners are liable only for the debts and obligations of the corporation up to the amount of their investment. • The mechanics of raising capital is easier. • No restrictions exist on the number of shareholders, which differs from subchapter S corporations. • Stock is liquid if traded on a major stock exchange. • The ability to share stock with employees through stock options or other incentive plans can be a powerful form of employee motivation.

What 4 characteristics make someone better at finding opportunities?

• Prior Industry Experience • Cognitive Factors • Social Networks • Creativity

What characteristics do entrepreneurial firms have?

• Proactive • Innovative • Risk taking

What are the Components of product/service feasibility analysis?

• Product/Service Desirability• Product/Service Demand

What are the 4 components of a feasibility analysis?

• Product/Service Feasibility • Industry/Target Market Feasibility • Organizational Feasibility • Financial Feasibility

What are the disadvantages of a c corporation?

• Setting up and maintaining one is more difficult than for a sole proprietorship or a partnership. • Business losses cannot be deducted against the shareholder's other sources of income. • Income is subject to double taxation, meaning that it is taxed at the corporate and the shareholder levels. • Small shareholders typically have little voice in the management of the firm.

What are some Financial Factors Associated With Promising Business Opportunities?

• Steady and rapid growth in sales during the first 5 to 7 years in a clearly defined market niche .• High percentage of recurring revenue—meaning that once a firm wins a client, the client will provide recurring sources of revenue. • Ability to forecast income and expenses with a reasonable degree of certainty. • Internally generated funds to finance and sustain growth. • Availability of an exit opportunity for investors to convert equity to cash.

What characteristics do conservative firms have?

• Take a more "wait and see" posture • Less innovative • Risk averse

What are the Components of financial feasibility analysis?

• Total Start-Up Cash Needed • Financial Performance of Similar Businesses • Overall Financial Attractiveness of the Proposed Venture

What is a consortia?

A type of business partnership, A group of organizations with similar needs that band together to create a new entity to address those needs

What are customer advisory boards?

Some companies set up customer advisory boards that meet regularly to discuss needs, wants, and problems that may lead to new ideas.

What is a product/market scope?

- A company's product/market scope defines the products and markets on which it will concentrate.

What is a concept test?

- A concept statement is a one-page description of a product or service idea that is distributed to people who are asked to provide feedback on the potential of the idea. - The feedback will hopefully provide the entrepreneur: A sense of the viability of the product or service idea. Suggestions for how the idea can be strengthened or "tweaked" before proceeding further.

What is a core competency?

- A core competency is a specific factor or capability that supports a firm's business model and sets it apart from rivals.- A core competency can take on various forms, such as technical know-how, an efficient process, a trusting relationship with customers, expertise in product design, and so forth.

What are the 3 primary reasons people want to become an entrepreneur?

- Desire to be their own boss - Desire to pursue their own ideas - Financial rewards

What is included in the financial projections section?

- The final section of a business plan presents a firm's pro forma (or projected) financial projections.- Items to include in this section: Sources and uses of funds statement .Assumptions sheet. Pro forma income statements. Pro forma balance sheets. Pro forma cash flows Ratio analysis.

What is Day-In-The-Life Research?

A type of anthropological research, where the employees of a company spend a day with a customer.

What percentage of Americans are starting a business or own one less than 3 years old?

11.9%

Who reads a business plan and what are they looking for?

A Firm's Employees A clearly written business plan helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner. Investors and other external stakeholders A firm's business plan must make the case that the firm is a good use of an investor's funds or the attention of others.

What is a business model?

A business model is a firm's plan or recipe for how it creates, delivers, and captures value for its stakeholders.

What is a business mission?

A business's mission or mission statement describes why it exists and what its business model is supposed to accomplish.

What are a companys channels?

A company's channels describe how it delivers its product or service to its customers.- Businesses either sell direct, through intermediaries (such as distributors and wholesalers), or via a combination of both

What is a founder agreement?

A founders' agreement (or shareholders' agreement) is a written document that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the "sweat equity" they put into the firm, and how long the founders will have to remain with the firm for their shares to fully vest

What is the definition of opportunity?

An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business.

What are the 4 essential qualities of an opportunity?

Attractive, Timely, Durable, Anchored in a product, service, or business that creates or adds value to its end user

What is the purpose of an organizational Feasibility Analysis?

Is conducted to determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business. • Focuses on non-financial resources (financial resources are considered later)

What is corporate entrepreneurship?

Is the conceptualization of entrepreneurship at the firm level.

What is innovation?

Is the process of creating something new, which is central to the entrepreneurial process.

What is the definition of brainstorming?

Is the process of generating several ideas about a specific topic.

What is included in an industry analysis section?

Items to include in this section: Industry size, growth rate, and sales projections. Industry structure. Nature of participants .Key success factors. Industry trends. Long-term prospects.

What are lifestyle firms?

Lifestyle firms are those businesses which provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so. Lifestyle firms include ski instructors, golf pros, and tour guides. These firms are not innovative, nor do they grow quickly.

Why are seniors excellent candidates to start a business?

Many people in the 60 and older age range have substantial business experience, financial resources, and excellent vigor and health

What is included in a market analysis section?

Market segmentation and target market selection. Buyer behavior. Competitor analysis. Estimate of the firm's annual sales and market share.

What are 5 myths about entrepreneurs?

Myth 1: Entrepreneurs Are Born, Not Made Myth 2: Entrepreneurs Are Gamblers Myth 3: Entrepreneurs Are Motivated Primarily by Money Myth 4: Entrepreneurs Should Be Young and Energetic Myth 5: Entrepreneurs Love the Spotlight

What are some Factors that determine the intensity of the rivalry among existing firms in an industry?

Number and Balance of competitors, Degree of difference between products Growth rate of an industry Level of fixed costs

What are trade associations?

Organizations (typically nonprofit) that are formed by firms in the same industry to collect and disseminate trade information, offer legal and technical advice, furnish industry-related training, and provide a platform for collective lobbying

What is the number one characteristic shared by entrepreneurs?

Passion for the Business

What are the four primary characteristics of successful entrepreneurs?

Passion for the Business, Product/Customer Focus, Tenacity Despite Failure, Execution Intelligence

What are resources?

Resources are the inputs a firm uses to produce, sell, distribute, and service a product or service.- A firm's most important resources, both tangible and intangible, must be both difficult to imitate and hard to find a substitute for.

How do small and large innovative firms compare?

Small innovative firms are 16 times more productive than larger innovative firms in terms of patents per employee

What is an Executive Summary?

The executive summary is a short overview of the entire business plan.- It provides a busy reader with everything that needs to be known about the new venture's distinctive nature.

What is a salary substitute firm?

These are small firms that yield a level of income for their owner or owners that is similar to what they would earn when working for an employer.

How do weak-tie relationships lead to new business ideas?

These relationships, which form between casual acquaintances, are not as apt to be between like-minded individuals, so one person may say something to another that sparks a completely new idea.

How do strong-tie relationships lead to new business ideas?

These relationships, which typically form between like-minded individuals, tend to reinforce insights and ideas that people already have

What are the 5 forces that determine industry profitability?

Threat of Substitutes Threat of New Entrants Rivalry Among Existing Firms Bargaining Power of Buyers Bargaining Power of Suppliers

What is a barrier of entry?

a condition that creates a disincentive for a new firm to enter an industry. ex: economies of scale, product differentiation, capital requirements, access to distribution channels legal barriers