EEE 2023 Exam 1
reasons to become an entrepreneur
be your own boss, pursue your own ideas, realize financial rewards
part 2: industry analysis
begin by describing the industry the business will enter in terms of its size, growth rate, and sales projections
part 3: company description
begins with a general description of the company
general business model
birchbox
techniques for generating ideas
brainstorming, focus groups, library & internet research
section 4: market analysis
breaks the industry into segments and zeros in on the specific segment (or target market) to which the firm will try to appeal
primary elements of a core strategy
business mission, basis of differentiation, target market, product/market scope
environmental trends suggesting business or product opportunity gaps
economic forces, social forces, technological advances, political and regulatory changes
"sixth sense" that entrepreneurs have
entrepreneurial alertness - the ability to notice things without engaging in deliberate search
common myths about entrepreneurs
entrepreneurs are born, not made, entrepreneurs are gamblers, entrepreneurs are motivated primarily by money, entrepreneurs should be young and energetic, entrepreneurs love the spotlight
venture capitalist
entrepreneurship is the art of turning an idea into a business
section 6: marketing plan
focuses on how the business will market and sell its product or service
section 7: design and development plan
focuses on the status of your development plans
what is the proper time to determine a company's business model?
following the feasibility analysis stage and prior to fleshing out the operational details of the company
section 9: management and company structure
founder or founders and a handful of key management personnel
economic forces
help determine areas that are ripe for start-ups and areas that start-ups should avoid (ex.) a weak economy favors start-ups that help consumers save money - GasBuddy.com
why is industry analysis important
helps a firm determine if the target market is identified during feasibility analysis is favorable for a new firm
section 8: operations plan
how your business will be run and how your product or service will be produced
examples of companies started to solve a problem
iCracked, KaZam, Flings Bins, Rover.com, GymFlow, Parking Panda, Uptown Cheapskate, Sir Kensington's Ketchup,
components of industry/target market feasibility
industry attractiveness, target market attractiveness
political action and regulatory changes
laws to protect the environment have created opportunities for entrepreneurs to start firms that help other firms comply with environmental laws and regulations (ex.) OSHA, commercial drone industry
section 1: overall schedule
major events required to launch the business
components of organizational feasibility analysis
management prowess, resource sufficiency
tools used to conduct a feasibility analysis
market research, google trends, google adwords, SimilarWeb, prototyping services, surveys, a/b split testing, landing pages
three ways to identify an opportunity
observing trends, solving a problem, finding gaps in the marketplace
entrepreneurial mindset
opportunity recognition, creativity, responsible risk-taking, self-awareness
risk-aversion
opposed to taking risks
four primary characteristics of a successful entrepreneur
passion for the business, product/customer focus, tenacity despite failure, execution intelligence
endowment effect
people value a good, service, or anything value more once they possess it
five steps to generating creative ideas
preparation, incubation, insight, evaluation, elaboration
section 11: financial projections
presents a firm's pro forma (or projected) financial projections
personal characteristics of of the entrepreneur
prior experience, cognitive factors, social networks, creativity
2 components of product/service feasibility analysis
product/service desirability & product/service demand
four key areas of a feasibility analysis
product/service feasibility, industry/target market feasibility, organizational feasibility, financial feasibility
risk-taking
refers to the tendency to engage in behaviors that have the potential to be harmful or dangerous, yet at the same time provide the opportunity for some kind of outcome that can be perceived as positive
part 1: executive summary
short overview of entire business plan, everything that needs to be known about the new venture's distinctive nature
concept test
showing a preliminary description of a product or service idea, called a concept statement. to industry experts and prospective customers to solicit their feedback
strong tie relationship v. weak tie relationship
strong tie - characterized by frequent interaction and form between coworkers, friends, and spouses weak tie - characterized by infrequent interaction and form between casual acquaintances
assessing industry attractiveness
study environmental and business trends, the competitive five forces model
3 types of business plans
summary business plan, full business plan, operational business plan
definition of entrepreneurship
the process by which individuals pursue opportunities without regard to resources they currently control for the purpose of exploiting future goods and services
feasibility analysis
the process of determining if a business idea is viable
creativity
the process of generating a novel or useful idea
window of opportunity
the time period in which a firm can realistically enter a new market
the five competitive forces model
threat of substitutes, threat of new entrants, rivalry among existing firms, bargaining power of suppliers, bargaining power of buyers
components of financial feasibility analysis
total start-up cash needed, financial performance of similar business, overall financial attractiveness of the proposed venture
destructive business models
uber, google
tools for industry/target market feasibility analysis
IBISword, LexisNexis Academic, ProQuest,
useful sources of information to understand the business models of other firms
Merging Online, LexisNexis Academic
tools for organizational feasibility analysis
Thomas Register of American Manufacturers, City-Data.com, Quickfacts, Trade Associations, Partnering for Success,
formula for break-even analysis
Total fixed costs/(price-average variable costs)
break-even analysis
a calculation that allows a firm to determine the volume of business is must do to "break even" in terms of profit and loss
domino effect
a cumulative effect produced when one event initiates a succession of similar events
opportunity
a favorable set of circumstances that creates a need for a new product, service, or business
two primary audiences for a business plan
a firm's employees, investors and other external stakeholders
business model
a firm's plan or recipe for how it creates, delivers, and capture value for its stakeholders
opportunity gap
a problem
idea
a thought, an impression, or a notion
competitive analysis grid
a tool for organizing the information a firm collects about its competitors
business plan
a written narrative, usually 25 to 35 pages, that describes what a new business plans to accomplish
section 5: the economics of the business
address 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 profit
technological forces
advances in technology frequently create business opportunities (ex.) computer industry, internet, biotechnology, digital photography, sharing economy - H20Audio
social forces
alter how people and businesses behave and set their priorities (ex.) Life wear spoon, Jitterbug phone, pill pak, care linx
product/service feasibility analysis
an assessment of the overall appeal or the product or service being proposed
4 essential qualities of an opportunity
attractive, timely, durable, anchored in a product, service, or business that creates or adds value for its buyer or end user
tools for financial feasibility analysis
Biz stats, Bizminer,
types of competitors new ventures face
direct competitors, indirect competitors, future competitors
steps in product/service desirability
1. ask yourself questions 2. concept statement
steps in the entrepreneurial process
1. decision to become an entrepreneur, 2. developing successful business plans, 3. moving from an idea to an entrepreneurial firm, 4. managing and growing an entrepreneurial firm
steps in product/service demand
1. talking face-to-face with potential customers 2. using online tools to assess demand
changing demographics
18-29= 17.5%, 30-39= 25%, 40-49= 24%, 50-59= 21%, 60+= 12.5%
individual sections of the business model
core strategy, resources, financials, operations
