MGT491 Exam 1 Midterm

Structuring the Deal of Buying an Existing Business

-A buyer and seller get together to negotiate the final price. -The buyer should have performed due diligence and arrived at the highest price they would pay, the point of indifference -You will open negotiations with a price below that point as you want keep the price low and the seller knows the first offer is low.

Executive Summary

-An executive summary is what most people read when they receive a plan; Typically one page -Usually arranged in short paragraphs which typically cover six key topics: -Problem. -Product -Market -Competitive advantages -Business team. -Financial summary

What Came First for New Businesses?

-Business idea(causal) 36% -Decision/desire to start a business(effectual) 23% -Idea and decision were simultaneous(combined) 41%

External & Internal Environment(Small Business) *Ch.3*

-External: Everything outside the firm's boundary -Internal: Those directly involved in the organization; Owners, employees, and board of directors

Franchising

-Trade name franchising -Product Distribution Franchising -Conversion Franchising -Business Format Franchising Before you sign, study: -The franchise agreement. -The uniform franchise offering circular (UFOC) You want to know: -If/how you can transfer the license to another -How you (or franchisor)can end the contract -What disclosures you are required to make

Making Ethical Decisions - Generating Ethical Options *Ch.3*

Caveat emptor: is often the line of rip-off artists and frauds. When generating ethical options, consider these proven philosophies: -Am I treating others the way I would want to be treated?(Golden Rule) -Is my solution the best thing for the most people over the long term?(Utilitarianism)

Risk Taking *Ch.2*

Person's tendency to tolerate and act where there is a potential risk, or where a positive outcome cannot be fully assured.

Basics of Entrepreneurial Behavior *Ch.2*

The behaviors the entrepreneur undertakes when doing their business are what is most important, not their personality

Types of Entrepreneurial Small Businesses *Ch.1*

There are over 30 million entrepreneurial firms in the U.S., called many things, such as: -Small and medium enterprises (SMEs). -Independent small businesses. -Owner-managed firms

Universally Mentioned Rewards(Starting a Small Business) *Ch.2*

-Flexibility: To have greater flexibility for my personal & family life; Perhaps the most rapidly growing type of reward -Income: To give myself, my spouse, and children financial security -Growth: To continue to learn and grow as person, which comes from facing and beating or learning from challenges

E-commerce & Ebay(Part-Time) *Ch.5*

-For part-time entrepreneurs, the lure of an e-commerce site is undeniable. -Sales are done through another site, like Amazon or eBay, or your own -Two important financial issues are payments and chargebacks. -You can sell services through Upwork.com in a reverse auction. -eBay allows you to set a reserve price and provides anonymity. *Home-based and internet business are the two core methods of getting started for part-time entrepreneurs*

Types of Part-Time Entrepreneurship *Ch.5*

-Home based -Internet informational websites -E-commerce and eBay websites. -Home retail - home party, door-to-door, network marketing, stands -Pop-up. -Mobile offices. -Virtual offices, executive offices, and incubators -Consignments and agents

Goals: To Whom Will You Sell?

-One is the scale of the market, the size of the market - mass or niche. Example of niche market? -The other is the scope of the market, the range - from local to global

Customers and Benefits: The Second Step of Strategic Planning

-The focus here is on the kinds of customers you want to sell to and the benefits that will attract them -Passionate customers are not just loyal, they rave about your product.

Starting a New Business

-The riskiest path, but promises the greatest rewards. -87% of start-ups using an incubator are still in operation after 5 years. -Not all businesses that close are a failure.

Due Diligence

A basic tenet of business law is caveat emptor, or "let the buyer beware." Due diligence has two primary goals: -First: -Look for any wrongdoing - fraud, misrepresentations, or missing information -Affects the value of the business -Second: -Look for inefficiencies, waste, opportunities, or mismanagement. -Shows potential ways to increase the firm's value -This gives you a negotiating advantage

Elevator Pitch

A business elevator pitch is an action-oriented description of your business designed to open the door to a more in-depth dialogue: -Elevator pitches must be 30 seconds or less

Business Plan Background

A business plan details major characteristics of a firm - its product/service, industry, market, manner of operating, and financial outcomes emphasizing the firm's present and future -Business plan is a story telling about a future place - your business Two circumstances when a business plan is necessary: -When outsiders expect it - external legitimacy -For internal understanding

Passion(5 P's of Entrepreneurial Business) *Ch.2*

An entrepreneur's passion both increases their commitment to the firm, and inspires key stakeholders like potential investors, employees, or subcontractors. Passion is displayed in three ways: -By looking at the challenges of the business in a creative way. -By being persistently focused on the business. -By being absorbed by the tasks and concerns of the business

BRIE Model(Starting a Business) *Ch.1*

Boundary: Creating a place for your business(location & people's minds) Resources: The money, product, knowledge, that make up the business Intention: Desire to start a business Exchange: Moving resources/products/services in exchange for money

Strategy Selection: The Fourth Step in Strategic Planning

Differentiation: -Aimed at mass markets but with value benefits Cost strategies. Low cost provider: -Also aimed at mass markets but with an appealing cost benefit Focus strategies: -Target a segment or niche. There are also classic benefit combinations called supra-strategies

Professional Management in a Small Business

If a business grows large enough, it becomes too much for one person and one of two things happens: -The business starts to decline -Professional managers are hired to share the management load. Professional managers are not easy to find: -Ideally it would be a current employee -If you have the skills and experience of a professional manager, taking a position provides a unique perspective on the business -If you like the business, you may move to acquire it in the future -Employee managers of small firms are often would-be entrepreneurs

Ways to Keep On Being Creative

Keep yourself in an innovative frame of mind: -Read magazines or trade journals outside your area -Invite someone new to a meeting where you are solving a problem or searching for a new opportunity - try a supplier or a friend -Have a "scan the environment" day to discuss trends.• Try a mini-internship, spending a day with a colleague at their work -Put yourself in the customer's shoes to see what frustrates them -Redesign your work environment to give you a new outlook

Buy-Outs & Buy-Ins

LLCs, corporations, and some partnerships are subject to buyouts: -Accomplished through purchasing ownership interest -The subsequent business is considered a new entity -Primary advantage is simplicity -A buyout can take place all at once, in a single point of time -An employee buyout occurs through an employee stockownership plan (ESOP) A buy-in occurs when someone acquires part ownership: -One advantage is it allows the purchaser to leverage inside knowledge -Another is it aids in keeping key employees -On the other hand, key employees such as the owner or managers may be a disadvantage when they stay

The Business Plan: The Organization

Legal and organizational structures and IP and locations: -Describe the firm's legal form, where it is registered, and located Key personnel: -Owners and senior managers -Those handling key aspects -Talk about accomplishments rather than just experience -Board of directors -Also mention total employees and their status Related service providers: -Identify your banker, attorney, accountant, consultants -Any major relationships with suppliers or customers -Board of directors Key activities and operations: -Identifying familiar operations is useful -Highlight something in how you operate that is distinctive -Mention any specialized operations here

Industry Dynamics and Analysis: The Third Step of Strategic Planning

Look at the changes in competitors sales and profits - the industry dynamics - to make sure it is a good time to enter into business -Industry analysis (IA) allows an entrepreneur to see how profits are generated, which tells if an industry is growing, stable, or in decline

Environmental Scanning for Small Businesses *Ch.3*

Low-cost, fast ways to monitor the environment include: -Using trade press for trends -Asking customers, suppliers, and other groups for their thoughts on future trends -Keeping note of things that bother you about how work is done and look to improve.• -Use a custom feed of news. -Use a "real options" approach and establish benchmarks, timetables, and a formal review process for decisions Another key scanning ability is tofind the six types of resources: -Property/physical. -Relational - social capital -Organizational.• Financial -Intellectual, or Human -Technological *A successful start-up needs some of each type of resource*: -Determine what you have -Look for what you lack

Starting a New Business in an Existing Field

Most start-ups are "me-too" enterprises: -Customers are familiar, offering some protection from failure -But it can be difficult to differentiate your business from others -Often the only competitive advantage is location -The concept leading to a start-up usually comes from the experience of the person starting the business -The best predictors of success is the level of experience of the founders

Professionalism(5 P's of Entrepreneurial Business) *Ch.2*

Performing at the industry standard business practice(industry avg) level or better -Expert business professionalization occurs when most aspects of the business meet or exceed the industry's standard -Specialized business professionalization occurs when one or two aspects of the business are at this level -Minimalized business professionalization occurs when none of the aspects of the industry standard appear in the business

Innovativeness *Ch.1*

Refers to how important a role new ideas, products, services, processes, or markets play in an organization

Screen Ideas

The IDEO screen hails from the creators of design thinking: -Do people really want the solution being offered? -Can the solution really solve the problem, and can we make it? -Can we make the solution and make money doing it?

Classic Feasibility Study - Overview

The feasibility study consists of investigating five primary areas: -Overall business idea -The product/service -The industry and market -Financial projections -Plan for future action -Within each area, examine the strengths and weaknesses of your business opportunity Traditional problems facing new products or services: -The idea cannot be economically made into a product/service -The resulting product/service works, but lacks a large market appeal -The product/service works, has a market, and could be profitable, but you need to get additional people, funding, or other resources

Entrepreneurship Life Cycle *Ch.2*

*A firm's growth is predictable, as in a business life cycle* -Emergence is when a person takes steps to start a business. -Existence finds the firm in operation, but not yet stable -Liability of newness is an issue at this stage. -Success Stage occurs once the firm is established in its market. -Slack resources can be put back into the firm if needed -Resource Maturity Stage may include micro-commitments -Takeoff Sage occurs if the firm has a period of exceptional growth.

Making Ethical Decision - Integrating Lessons *Ch.3*

-An entrepreneur can integrate these lessons into their business structure. -Craft codes for legitimacy, networking, customer service, sustainability, crisis management, and ethical decision making -Discuss expectations when hiring employees, subcontractors, or service providers. -When external relations lapses occur, if not a major offense, use it as a learning experience and again bring up your expectations -When counseling about external relations issues, do not get emotional, be specific and consistent, work on what future behavior should be -Remember, you are a role model

Entrepreneur Are Everywhere *Ch.1*

-An entrepreneur's occupation depends on the type of goods or services they, and their firm, are producing -Entrepreneurial businesses show novelty in their products, services, or business models, while small businesses are imitative. -Small business owners are self-employed entrepreneurs. -Founders start a business - by themselves or in a franchise. -Other groups consist of buyers and heirs. -After entry, another role emerges - the owner-manager

Goals: Imitation and Innovation

-An imitative strategy is the classic small business strategy. -An innovative strategy means they do something very different

Mobile Offices(Part-Time) *Ch.5*

-As many as one in six Americans work from their cars or trucks: -Mostly in jobs involving face-to-face selling and client services. -There is no rent and car expenses can be deducted from tax returns -It places the entrepreneur close to the customer -The key is a cell phone, a laptop, and a printer: -Make sure your vehicle can accommodate you, your equipment and files, and handle the drain on the vehicle's battery over the long-term -You should also remember to provide adequate and comfortable accommodations for passengers

Goals: Product/Service Idea and Industry

-B2B sales has the highest average sales. -Professional services have the highest sales in B2C sales. -In addition, industries have numeric NAICS codes - North American Industry Classification System -Industries with high profits and minimal risk have high industry attractiveness

Perseverance/Persistence(5 P's of Entrepreneurial Business) *Ch.2*

-Best thought of as a type of learned optimism and one of the most powerful contributors to entrepreneurial success. -The danger is to keep trying the same action repeatedly without learning.

Why Part-time Businesses Are Important *Ch.5*

-Businesses such as "pop-up" restaurants or pop-up retailers are often called episodic businesses as they have no permanent location. -Hybrid entrepreneurship describes someone who keeps a constant job as an employee while working at their own business. -In the text, a part-time business describes all of these employment patterns while working fewer than 35 hours per week -Many people jump into and out of self-employment - a change called volatility by economists

Family Businesses *Ch.2*

-Firms with a majority family ownership -Employ 58% of America's total workforce. -A strong unit can be effective with quick decision making -Families are a source of funds and personnel -They also tend to raise future entrepreneurs Challenges: Role Conflict/Time Mgmt -Reduce role conflict by keeping family issues out of the business -A basic method of time management is to make a list, prioritize that list, then delegate tasks - repeat daily and strategize weekly. -Lack of a clear succession plan could end a family business. -Create a family council, gather an advisory board, or a formal board of directors for advice.

When to Consider Part-Time Entrepreneurship *Ch.5*

-If you are new to business in general and need to gain basic experience -If you lack the resources necessary to pursue a full-scale business or create a business plan -If there is a narrow window of opportunity -When you are uncertain about the demands of going into a full-time business

Challenge and the Entrepreneurial Way *Ch.1*

-If you don't succeed the first time, try, try again -perseverance. -Scale back to the level of resources you currently have. -Take it on the road by trying a market different from the one you live in. -Ask for help - harness the wisdom of crowds through crowdsourcing. -Plan to earn - find the best idea for you and then plan for action to make it happen. -Anything is possible with enough time, money, and resources.

Ideas, Opportunities, and Business - Strategies *Ch.4*

-Imitative Strategy is doing the same thing as others -Incremental Strategy offers a slightly better way to don something. -Radical Innovation Strategy presents a different way to do things

CSI Entrepreneurship *Ch.1*

-Independent Entrepreneurship: Self employed Founders -Social Entrepreneurship: Founders of nonprofit organizations or for-profit social ventures -Corporate Entrepreneurship: Refers to innovative individuals who are employed by others in existing companies -Green/Sustainable Entrepreneurship: Focus is on ecological issues Motivation can be: Opportunity-driven entrepreneurship or Necessity-driven entrepreneurship

Industry Heuristics

-Industry heuristics are rules of thumb used to estimate firm value in relation to some easily observable characteristics of the business. -Industry heuristics can be amazingly accurate -Industry heuristics exist for all industries and are usually available from the group's trade association.

Internet Informational Websites(Part-Time) *Ch.5*

-Informs possible customers about your firm -Selling products to individuals is business-to-consumer (B2C). -Business-to-business(B2B) are sales from one firm to another. -Whether selling to customers or other firms, a website is essential

Building Legitimacy(External Relations) *Ch.3*

-Legitimacy lies in the impressions/opinions of customers, suppliers, investors, or competitors -Gaining legitimacy is challenging for a new small business, but very difficult for those seen as "different. -Building legitimacy is a major goal of an existing business that has gone through significant change -Achieving legitimacy means building trust among customers and other key groups. -Three forms of legitimacy: -Based on people -Based on product -Based on your organization

Firm Growth Strategies *Ch.1*

-Lifestyle or part-time firms(less than $25,000; 54%) -Traditional small businesses($25,000-99,999; 25%) -High-performing small businesses($100,000-999,999; 16%) -High-growth ventures($1,000,000+; 4.4%), including unicorns. All but high-growth ventures are considered main street businesses.

Handling a Crisis(Making Right Decision) *Ch.3*

-Managing crisis is a difficult but necessary skill - the government advises: -Plan to stay in business - use a disaster plan -Talk to your people -Protect your investment. -The best way to manage a crisis is to plan a head. In the middle of a crisis, stay calm, take care of the people involved, and keep people informed: 1. Quickly admit you're in trouble 2. Get to the scene as soon as possible - show accountability 3. Communicate facts you know to employees, customers, and suppliers. 4. Have one person as the spokesperson - best if owner 5. Separate crisis management from everyday management. 6. Deal with the crisis quickly

The Business Plan: Table of Contents and Executive Summary

-Many entrepreneurs write the one-page executive summary first. -Then use it as a guide for the rest of the plan -Covering the major sections is the usual strategy -It is common to revise the summary. -Your thinking changes as you write the plan. -This is the first and also the last item you will edit

How Marketing & Strategy Relate

-Marketing is the actions related to promoting and selling -Marketing focuses on value proposition -While strategy focuses on the firm's competitive advantage

Informational Websites Basics *Ch.5*

-Multichannel marketing means your web address is listed on business cards, all advertising, and every piece of official paper -Establish reciprocal links to other websites -Search engine optimization (SEO) means your customers are likely to see your site in search results -If you are willing to pay, you can buy a sponsored link

Small Business & The Economy *Ch.1*

-New Jobs: Small business are willing to offer jobs to people with atypical work histories or needs. -New Ideas: They cause creative destruction by creating new goods, services, or firms that hurt existing ones. -New Opportunities: Small businesses create new opportunities for immigrants, communities, entrepreneurs, customers, and larger businesses. -New Markets: Small businesses find new markets by importing and exporting. -Small businesses also conduct e-commerce using virtual instant global entrepreneurship (VIGE).

5 P's of Entrepreneurial Business *Ch.2*

-Passion -Perseverance/Persistence -Promotion/Prevention Focus -Planning Style -Professionalization

Developing Your Social Networks *Ch.3*

-Social networking expands the personal network. -The challenge is deciding which networks and strategy to use -The key is realizing where your target customers already are: -A B2C firm may use Facebook, YouTube, or Instagram, among others -For a B2B firm, LinkedIn is thetop platform -Many owners have their business on multiple platforms

Getting Out of Your Business

-Succession transfers or terminates a firm -A token purchase price is a sell off, and no payment is a pass off -Closing with no debts is a walk away -In a workout, the owner pays off debt by working another job -The worst case is bankruptcy -An entrepreneur may close one firm to start another -a serial entrepreneur

5 Paths to Business Ownership

-The entrepreneur can start a completely new business -They can purchase franchise rights to an existing business. -They can purchase a fully operating business. -They can work in a small business and eventually gain ownership. -They can inherit a business from a family member

Skills For Making The Right Decisions *Ch.3*

-The entrepreneur will make all sorts of decisions, now and in the future. -Thinking ahead of time about some decisions and situation scan help you prepare yourself, and your firm, for the future -There are three areas where this is particularly important: -Handling a crisis. -Achieving sustainability -Making ethical decisions

Home-Based Business(Part-Time) *Ch.5*

-The greatest challenge may be zoning or family challenges. -Regulations limiting the use of your space are called zoning laws when applied by the government or covenants when applied by organizations such as a neighborhood group. -You can minimize problems by using a private mailbox and self-storage facilities or get a variance -After the location is set, you will need equipment and tools. As your business grows, you may choose to expand or keep it small.

Women & Men in Small Business *Ch.2*

-Women-owned businesses are one of the fastest-growing sectors of all -U.S. businesses, yet they account for only 4.3% of national small business revenue. Women own 42% of all businesses -Glass ceiling involves the idea that an invisible barrier exists that prevents women from rising above certain levels in an organization. -Women choose service industries with lower sales levels, while Men choose construction and financial industries, with higher sales.

Home Retail(Part-Time) *Ch.5*

-You can hold a home party without a franchised product.• -The success of door-to-door selling is closing the deal -A parent company organizes network marketing: -Salespeople are expected to recruit other salespeople -Stands or Kiosks: -The most ancient form of sales -Semi-permanent or mobile -Stands can be the least expensive way to set up shop -A high-end version exists in the mall cart or kiosk. -The key success factors are a busy location and inventory

Developing Your Networks(External Relations) *Ch.3*

-Your personal network are people you encounter in your everyday life, while your social network are people you know online. -Knowing how to grow and sustain each is a key skill. -Both forms are a way to work trust, reciprocity, and long-term relationships into your daily business operations. -They help build your company's expertise. -The key is building a network of people who trust each other and reciprocate help and advice -In both types, you seek to build your reputation

Women in Small Business *Ch.2*

1. 42% of all U.S. businesses are owned by women (13 million). 2.Women-owned businesses employ over 9.4 million workers. 3.Women are three percentage points more likely to start a business than men. 4.The top three motivations for women starting their own businesses are pursuing their passion, gaining financial independence, and increasing their flexibility. 5.Gross receipts for women-owned employer firms increased by 51.9% from 2012 to 2019,while men-owned firms only rose 34.2%. 6. The states with the most women-owned businesses, employment, and revenue are Georgia, Oregon, Idaho, Nevada, and South Dakota. 7. 44% of women-owned businesses are in low-growth industries such as childcare, beauty salons, and home healthcare. 8. It's estimated that 849 new women-owned businesses open every day. 9. Since the early 2000s, women-owned companies have increased by 114%. 10. In 2020, the average annual revenue for women-owned businesses was $330,226. 11. The majority (68.9%) of women business owners are from the Gen X generation

Goals: The First Step of Strategic Planning

1. As owner, what do you expect out of the business? $$$ 2. What is your product or (and its industry)? 3. For your product/service, how innovative or imitative will you be? 4. Scale: Whom do you plan to sell to - everyone or targeted markets? 5. Scope: Where do you plan to sell- locally, regionally, nationally, globally?

Four Key Ideas: Starting an Entrepreneurial Small Business *Ch.1*

1. Believe that you can do this(self-efficacy). 2. Planning + Action = Success. 3. Help helps 4. Do well. Do good. Feel->Check->Plan->Do

11 Sources of Business Ideas

1. Work/personal experience 2. A similar business 3. Chance 4. Family and friends 5. Education or expertise 6. Magazines 7. Idea sites 8. Side gigs 9. Make and sell, locally, online, or at a market 10. Going online to spot trends 11. Fixing a wrong (a social or environmental problem)

From Ideas to Opportunities through Creativity -SCAMPER

A pioneer in the field of creativity, who first coined the word brainstorming, invented SCAMPER: -Substitute, Combine, Adapt, Magnify/Modify, Put to other Uses, Eliminate, Rearrange What opportunities result from substituting or replacing something that already exists? What separate products, services, or businesses can you combine to create ad istinct business? What could you adapt from other industries? What could you make more noticeable or different in some way from competitors? What other uses might there be? What could you get rid of that would eliminate something the customer has to do? What can you rearrange in the way your product or service appears, or the way businesses in your industry usually look o rare decorated or located?

Buying an Existing Business

Adv: -Established customers and immediate cash inflows -Having business processes in place -Lower cash outlay required Disadv: -Finding a successful firm for sale -Determining a firm's worth -Existing staff may resist change -The firm may have a bad reputation -The firm may be in decline due to changes in technology -Facilities or equipment may be obsolete or in need of major repair Use multiple sources to find the right business to purchase: -Make some calls -Consider a broker -Networking -Trade journals -The internet -Local business people and associations -Your employer.

Advantages/Disadvantages of Start-Ups

Adv: -You can "do it your way." -You begin with a clean slate -You can use the most up-to-date technologies -You can provide new, unique products/services -You can keep the business small to limit losses -You may take the time to perfect your product/service and processes Disadv: -There will be no initial name recognition -A start-up requires significant time to get established. -Difficult to finance with no assets, sales, or cash flow -Cannot easily gain revolving credit from suppliers or banks -A start-up may lack experienced mangers and workers -You must train employees and garner management support.

Skills for Managing Relations with the Environment *Ch.3*

After gathering knowledge of the environment, scanning and analyzing, apply that knowledge to help launch and grow your small business: -External Relations: -Building Legitimacy -Developing Your Networks *The goal is to manage external relations in order to create social capital, the major component of "goodwill."*

Environment of Small Business *Ch.3*

All of the forces outside the firm or the entrepreneur -Setting up a boundary within that environment gives the firm an organizational identity: -A set of shared beliefs or basic assumptions that demonstrate how things are done -Organizational culture also includes common, accepted ways of dealing with problems and challenges

Proactivity *Ch.2*

An attitude describing a person's tendency to go ahead and do something rather than wait to see what will happen or wait for someone else to do it

Determining the Value of the Business Asset Valuation Methodology

Asset valuation assumes the firm's value is assets minus liabilities Major problems: -Such estimates do not consider the value of an ongoing firm over the value of its identifiable assets -It is very difficult to separately identify and value all the assets. Book value: is acquisition cost minus depreciation - unreliable as depreciation is arbitrary and some assets have no book value Net realizable value: is the amount an asset would sell for, less the cost of selling it. Replacement Value: Estimates what an identical asset would cost to acquire and prepare for service

Classic Feasibility Study Narrative - Part 5(The Financial Projections)

Assumptions: -List all the assumptions on which you are basing your financials Summary financial table: -Develop a basic three-year summary including: revenues, cost of goods sold, gross margin, operating expenses, net profit (or loss) Three-year detailed financials: -Details of the above step - typically you give monthly numbers for the first year and cumulative numbers for years two and three Start-up budget: -Provide a list of all costs, including legal costs and other professional fees, initial inventory or manufacturing costs, building and fixture costs, and technology costs.

Bootstrapping, Bricolage, and Lean Business Practices

Bootstrapping: is finding a low-cost, or no-cost way to do something. -Key Ideas: -Do without as long as you can and cut all expenses to the bone. -Borrow, barter, rent or lease rather than buy and consider offering equity if you must buy -Borrow money from yourself first -Minimize debt and limit credit card balances -Always keep track of your cash Bricolage: is the practice of using whatever you have at hand Lean business practices: Eliminating waste and producing a minimum viable product. *Both lean operations and bootstrapping share three ideas: -Waste not, want not -Create, standardize, repeat -Keep in touch

Planning a Path into a Business

Causal/Predictive Reasoning: -Useful technique regardless of whether you want a full-time or a part-time business. Effectual Reasoning: -What entrepreneurs use when they imagine what can be accomplished with the resources at hand.• Affordable loss: -Practice of bringing your product/service to market with the minimum expenditure of capital, effort, and time Strategic Partnerships: -Can be either formal or informal with others who provide support to your efforts at starting your business

The Business Plan: Company, Product/Service, and Industry

Company description: -State the vision or tagline and a brief description of the business -Its age, current status (and milestones), location, and its markets. Product/service and value proposition: -An important section - where the reader understands your business -Starts with the pain and gain -Competitive advantage is mentioned here -If the product/service is a proprietary technology, mention your patent, trademark, or copyright here.

Delegation and Outsourcing *Ch.5*

Delegation: -Happens when you assign work to subordinates -Delegation is best when others can do something better than you, or when you want your business to operate when you are not present -Delegation is not for everyone or every situation. Outsourcing: -Employs outsiders to handle part or all of a function -Most firms outsource legal issues, web hosting, tech support, web design, and accounts receivable -Appropriate in areas in which expertise is hard to come by, changes frequently, or is an important support to a firm's functioning. -Never outsource what defines your distinctive competence

Classic Feasibility Study Narrative - Part 3(The Business)

Description of the entrepreneur, or entrepreneurial team: -Developed from the technical feasibility and business viability sections of the IDEO screen. Stage of development: -Where are you in the process and what is the time frame? Legal issues: -List any patents, copyrights, trademarks, licenses, or domain names -List any franchise agreements or applicable government regulations. Insurance requirements: -Research the liability involved and protect adequately

Classic Feasibility Study Narrative - Part 1(Business Idea)

Description of your business: -Describe your product/service concisely, with attention to the characteristics you think it brings to the customer experience. Your customers: -Get demographics, but use creativity to learn as much as you can about potential customers -If more than one target market, do this for each market segment Trends related to the product or service: -How will you stay relevant? -What trends in product use are in the future?

Ownership Transfer(Inheriting Business)

Do not wait until the founder's death to transfer ownership: -If you are the founder, your desires become irrelevant -If you are the successor, there is now no authority figure to help with issues of control and strategy. In most cases, a gradual transfer is preferable to a single inheritance: -May not work with multiple heirs -Of greatest importance is who gets voting stock. The transfer of ownership is complex and unique to each family business: -For larger, successful firms, consider using experts andspecialists.22

The Business Plan: The Market

Market and target customer: -Describe the market in terms of size, scope, and channels -Describe target customers by demographics, product use, purchase schedule, experience with similar items, and what they are looking for -Describe each target segment Competition and competitive advantage: -Identify competitors by name -Focus on your firm's competitive advantages Marketing strategy: -Focus on overall strategy, sales plans to apply strategies, and long-term plans. -Give pilot test results, sales, or preselling efforts. R&D/growth plan or next steps: -Explains how you will maintain a competitive advantage -Discuss long-term partnerships, new markets, or ways to leverage assets

Classic Feasibility Study Narrative - Part 2(Product/Service)

Product/service description: -Describe your product/service very simply, using photos or drawings. The Competition: -Consider both direct competitors and indirect competitors who may sell a substitute. Competitive advantage(USP): -Consider what they are, why they exist, and how they will help you succeed Market penetration: -Describe all the ways you will reach your customers, don't forget the costs involved.

Promotion/Prevention Focus & Planning(5 P's of Entrepreneurial Business) *Ch.2*

Promotion Focus is Intent on maximizing gains(PROFIT) -Gives bias toward pursuing opportunities likely to lead to those gains Prevention Focus is Intent on minimizing losses(EXPENSES) -Can work well in an established industry or a poor one. -Successful entrepreneurs balance the two focuses -Comprehensive planners take a long-term view and act on their plans -Critical-point planners plan first, act on it, then consider more planning -Opportunistic planners start with a goal and look to achieve it -Reactive planners are passive, the environment determines actions -Habit-based planners do not really plan, they just have a routine *generally do very poorly in business*

Moving to Full-Time Entrepreneurship *Ch.5*

Some people start a part-time business with intentions to go full-time, while others want to stay part-time The key question is usually financial: -If often makes sense to wait until there is a solid income likely -Make use of any transition services your former employer offers -Change over when your family and personal obligations are low and support from family and friends is high

Developing Your Personal Networks(External Relations) *Ch.3*

Sources for network connections include: family, social network connections, friends and neighbors, your bank, customer contacts, school, hobbies, business associations, other organizations (religious, civic, community, political), work, and small business support organizations -Not all contacts are equal -The most powerful connections are face-to-face meetings -Building social capital is called personal networking -You can use your contacts list or a customer relationship management (CRM) software to organize your contacts -The goal is to make sure you keep track of your social and business contacts to keep relationships fresh

Strategic and Tactical Competitive Actions

Strategic actions include: -Entering new markets -New product introductions -Changing production capacity -What does it cost to make? -Mergers/alliances. Tactical actions include: -Price cutting (or increases) -Product/service enhancements -Increased marketing efforts -How will people find out about you? -New distribution channels

Strategy in the Small Business

Strategy is the idea and actions that explain how a firm will make its profit- it defines how your business operates The first step involves reviewing and confirming the goals that define your firm and knowing your magic number The second step is finding your distinctive competence - plot your customers and the benefits you want to offer against competitors The third step is studying dynamics and trends of your industry using industry analysis to identify the best way and time to enter business The fourth step involves building on the prior three steps to determine the best strategic direction and strategy for the firm. After this four-step process, there is a continuing effort called post start-up, refining your strategies/tactics to maintain a competitive advantage

Classic Feasibility Study Narrative - Part 4(Future Action Plan)

Summary feasibility evaluation: -Likely outcomes: confirming your idea, holding off until you learn more, or realizing the idea is not feasible in its current form Next steps: -This depends on the previous step: if feasible, start working on a business plan and if there are questions, address them Start-up capital: -List money needed, including cost of goods sold, marketing and administrative expenses, and additional costs like rent and utilities Sources of start-up capital: -Consider all sources - personal savings, family and friends, bank loans, investors, and so on

Achieving Sustainability(Making Right Decision) *Ch.3*

Sustainable entrepreneurship identifies (or creates) and then exploits opportunities to make a profit in a manner that: -Minimizes the depletion of natural resources. -Maximizes the use of recycled material -Improves the environment. -Or achieves any combination of these outcomes -Sometimes called green entrepreneurship. -Triple Bottom Line: -For-profit startups, social ventures and existing organizations are turning their attention more and more toward social responsibility with a particular eye on people, planet, and profit Entrepreneurs can manage a firm's impact on the environment: -Perform a "green audit," which is needed to obtain ISO 14001 certification

Success in Part Time Entrepreneurship *Ch.5*

The cost to start up your new part-time business: -You want a low cost as the returns may not be enough to pay of an expensive start-up effort. The time to start up your business: -Shortest is best - the more time it takes, the longer it takes for profits. The permanence of the business you are creating: -Related to legitimacy - customers want to know the company will be around for future sales and service

General Environment(Small Business) *Ch.3*

The even larger part of the environment which represents the major forces on the lives of people and institutions like businesses, and even nations. -Ex). The Economic sector

The Business Plan

The full (or classic) business plan runs 18 pages(May be longer for new products or shorter for imitative products): -Cover letter -Title page and table of contents -Executive summary -The company, product/service, and industry -The market -The organization -Financial summary -The appendixes

Entrepreneurial Mindset *Ch.2*

The motivations, cognitions, attitudes, aptitudes, and behaviors that lead to a propensity to create solutions to problems or seek opportunities to do something new or better.

The Vision Statement

The vision statement is a simple 5- to 10-word sentence telling where you want your business to be in the future: -Should be inspiring, overarching, and long term -Bill Gates and Paul Allen started Microsoft as teenagers with the vision "a computer on every desk - running Microsoft software." A related concept is the mission statement, which is a bit longer and often adds the firm's competitive advantage

Myths About Small Businesses *Ch.1*

There's not enough financing: -Besides SBA and/or bank loans, there is crowdfunding, P2Plending, drop-shipping, and bootstrapping techniques. To make profits, you need to make something: -There are plenty of service industries making profits. If you fail, you can never try again: -Not true, Henry Ford failed - twice - before making Ford. Students (or some other group) don't have the skills to start a business: -There are examples of successful companies founded by students, moms, and second-career entrepreneurs. Ninety percent of all new businesses fail within two years: The percentage is wrong - 25% survive 15 years or more; also the majority of businesses do not fail - they close financially successful.

Separating and Balancing Business and Home *Ch.5*

Time management is crucial for balancing your work and personal life: 1. Do not waste time complaining; do something about a problem. 2. Do not aim for perfection; "good enough" really is good enough. 3. Do not dwell on the past; just plan to do better next time. 4. Minimize your time spent in meetings, schedule short meetings. 5. Schedule and protect quality time with your family. 6. Schedule and protect some time for yourself to have fun. *Keeping a clean boundary, a "business corner," helps make sure that family and business are protected from each other*

Virtual Offices, Executive Offices, and Incubators *Ch.5*

Virtual Office: -The next step in most web hosting packages. -In addition to handling your emails and newsletters, it gives you access to your files, fax services, and phone services Executive Offices: -Have short-termspace for an office or work area.• Furnished or unfurnished -They provide basic utilities -Offers phone services with a live receptionist. -In a co-working space, you paya fee for access Incubator Rental Space: -For-profit incubators are similar to executive offices, but cheaper -Nonprofit incubators are sponsored and subsidized. -There is an online directory for incubators run by the National Business Incubator Association

Inheriting a Business

Whether inheriting or bequeathing, the problems are the same. Steps in a successful family business transition include: -Step 1: Define the Process of selecting a successor -Step 2: Stakeholder Buy In to ensure the process is understood -Step 3: Manage the Experience to allow feedback and maintain harmony -The founder must be proactive in bringing family member in -As successor, you must gain loyalty and walk a fine line