Entr Ch. 9

LIABILITY OF NEWNESS

-New ventures have a high propensity to fail. -The high failure rate is due in part to liabilities of newness, which refers to the fact that new companies often falter because the people involved can't adjust fast enough to their new roles and because the firm lacks a track record of success. -Assembling a talented and experienced management team is one path that firms can take to overcome these limitations.

board of directors 3 formal responsibilites

1 appoint the firms officers ( key managers) 2 declare dividends 3 oversee the affairs of the corporation

2 types of board of directors

1 inside director 2 outside director

HOW MANY MEMBERS SHOULD BE ON A BOARD OF ADVISORS

5-15 MEMBERS

NEW VENTURE TEAM

DEFINITION-Is the group of founders, key employees, and advisors that move a new venture from an idea to a fully functioning firm. -Usually, the team doesn't come together all at once. Instead, it is built as the new firm can afford to hire additional personnel. -The team also involves more than paid employees. Many firms have boards of directors, boards of advisors, and professionals on whom they rely for direction and advice.

SIGNALING

Providing legitimacy for the entrepreneurial venture is another function of a board of directors. well known and respected board members bring instant credibility to the firm.

ADVISORY BOARD

a panel o experts who are asked by a firms managers to provide counsel, direction and advice on an ongoing basis unlike the board of directors the advisory board possesses no legal responsibility for the from and gives NONBINDING ADVICE

INSIDE DIRECTOR

a person who is also an officer of the firm

intern

a person who works for a business as an apprentice or trainee for the purpose of obtaining practical experience.

HOMOGENEOUS TEAMS

areas of expertise are very similar to one another, they are likely to have different points of view about technology hiring decisions competitive tactics and other important activities.

NETWORKING

building and maintaining relationships with people whose interests are similar or whose relationship could bring advantages to a firm.

SKILLS PROFILE

chart that depicts the most important skills that are needed and where skills gaps exist.

HETEROGENEOUS TEAMS

diverse in terms of their abilities and experiences

CONSULTANT

individual who gives professional or expert advice on patents, tax planning, and security laws.

VIRTUAL ASSISTANT

is a freelancer who provides administrative, technical or creative assistance to clients remotely from a home office

BOARD OF DIRECTORS

is a panel of individuals who are elected by a corporations shareholders to oversee the management of the firm a new venture organizes as a corporation is legally required to have a BOARD OF DIRECTORS,

employee

is someone who works for a business, at the business location or virtually utilizing the business tools and equipment and according to the business policies and procedures.

FREELANCER

person who is in business for themselves, works on their own time with their own tools and equipment and performs services for a number of different clients

OUTSIDE DIRECTOR

someone who is not employed by the firm