Entrepreneurship Midterm

Know lemons and pearls

• Lemons ripen in 2 ½ years • Pearls take 7 to 8 years

Understand the type of leadership needed at different org growth stages

• Mid sized company- opportunity driven management • High tech- decisive leadership • Big companies-continuous improvement

Threshold concept

• Odds for survival change drastically when a critical mass of 10 to 20 people with 2 to 3 million in revenues are still pursuing opportunities with growth potential • Fewer than 19 employees=35-40% survival • 20-49 employees=55% survival rate

Stages of growth

• Research and Development Stage • Start-Up Stage • High-Growth Stage • Maturity Stage • Stability Stage

Sea Changes

• Significant changes that will change an industry

Know differences and similarities between social entrepreneurship and traditional entrepreneurship

• Social entrepreneurship is more concerned with solving a social problem than making money. Both about harvesting value they just have a different definition of value.

What makes a good opportunity?

• Strong leadership from the main entrepreneur • Complementary talents and outstanding teamwork of team members • Skill and ingenuity to find and control resources • Financial backing to chase opportunity

Know aspects of new venture success

• Success is highly situational, depending on time, space, context, and stakeholders

Who is attracted to entrepreneurship and why?

•Laid off corporate managers and high school seniors/ young people •Why? Because the self-employed report the highest levels of personal satisfaction, challenge, pride and remuneration

Characteristics of new venture creation

•Rewards only talent and performance •Enables people to pursue their dreams •Seek opportunities which match them •Falter and try again •Choose how and where to live

TIMMONS MODEL - KNOW WELL

-ACCORDING TO THE TIMMONS MODEL OF ENTREPRENEURSHIP THE THREE CRITICAL FACTORS OF A SUCCESSFUL VENTURE ARE OPPORTUNITIES, TEAMS, AND RESOURCES. THE SUCCESSFUL ENTREPRENEUR IS ONE THAT CAN BALANCE THESE CRITICAL FACTORS. OPPORTUNITY: UNLIKE CONVENTIONAL ENTREPRENEURSHIP MODELS THAT START WITH A BUSINESS PLAN AND IDENTIFY AN OPPORTUNITY, THE TIMMONS MODEL STARTS WITH A MARKET OPPORTUNITY. THE BUSINESS PLAN AND THE FINANCING RECEIVE SECONDARY IMPORTANCE, AND COME ONLY AFTER IDENTIFICATION OF A VIABLE OPPORTUNITY. THE MODEL HOLDS THAT A SOUND BUSINESS OPPORTUNITY WOULD READILY RECEIVE FINANCING, AND IDENTIFICATION OF THE OPPORTUNITY FIRST MAKES THE BUSINESS PLAN FAILURE-PROOF. TEAMS: THE TWO MAJOR ROLES OF THE TEAM, RELATIVE TO THE OTHER CRITICAL FACTORS ARE:REMOVING THE AMBIGUITY AND UNCERTAINTY OF THE OPPORTUNITY BY APPLYING CREATIVITY.PROVIDING LEADERSHIP TO MANAGE THE AVAILABLE RESOURCES IN THE MOST EFFECTIVE MANNER BY INTERACTING WITH EXOGENOUS FORCES AND THE CAPITAL MARKET CONTEXT THAT KEEPS CHANGING CONSTANTLY.THE TIMMONS MODEL HOLDS THE ENTREPRENEUR'S ABILITY TO CONJURE UP A GREAT TEAM AS A MAJOR FACTOR OF BUSINESS SUCCESS. GREAT TEAMS, HOWEVER, ALWAYS REMAIN SCARCE AND THE RESPONSIBILITY IS ON THE ENTREPRENEUR TO COACH TEAM MEMBERS TO EXCEL. RESOURCES: THE TIMMONS MODEL DISCOUNTS THE POPULAR NOTION THAN EXTENSIVE RESOURCES REDUCE THE RISK OF STARTING A VENTURE AND ENCOURAGES BOOTSTRAPPING OR STARTING WITH THE BARE MINIMAL REQUIREMENTS AS A WAY TO ATTAIN COMPETITIVE ADVANTAGES.

Innovation

Heart of entrepreneurial process

Buyout agreement

is a legally binding agreement between co-owners of a business that governs the situation if a co-owner dies or is otherwise forced to leave the business, or chooses to leave the business

Business plan

know when and how it's used, know basic components, who should be involved in its creation • Used to learn about the business and gain critical insights into partner's styles, strengths and weaknesses. • Used to also communicate to and persuade stake holders, financial backers, team members, key new hires, directors, brain trust prospects and strategic partners • Basic components o Executive summary o Industry o Market Research and analysis o Economics of a business o Marketing plan o Design Plans o Manufacturing plans o Management team o Risks o Financial plans o Company offering • Involve all management team in the preparation of the business pan

CSR

• Corporate social responsibility which emphasizes helping and serving communities while still making a profit

Understand characteristics of high potential ventures

• Criteria for evaluating venture opportunity • Industry and market • Economics • Harvest issues • Competitive advantage issues • Sustainability • Management team • Fatal flaw issue - Personal criteria • Strategic differentiation

Brain Trust

• Group of experts appointed to advise

Common characteristics/profile of successful entrepreneur

• Intrinsically motivated • High energy leaders • Can tolerate ambiguity • Can mitigate risk • Effectively commercialize • Can innovate

Double bottom line

• The Double Bottom Line (DBL) is a relatively new concept for business leaders. We think of Double Bottom Line (DBL) businesses as entrepreneurial ventures that strive to achieve measurable social and financial outcomes. In the past few years, as the lines between grantmaking and investing have begun to blur, the idea of measuring social return concurrent with traditional financial accounting has caught on among investors, funders and entrepreneurs.

Triple bottom line

• The TBL is an accounting framework that incorporates three dimensions of performance: social, environmental and financial. This differs from traditional reporting frameworks as it includes ecological (or environmental) and social measures that can be difficult to assign appropriate means of measurement. The TBL dimensions are also commonly called the three Ps: people, planet and profits. We will refer to these as the 3Ps.

Understand when an ideas is an opportunity

• They create or add significant value to a customer or user end • They fix a real problem in the market, something that is truly market pain • The need for the product or service is pervasive, the customer wants and is willing to pay to fix it • They have robust market, margin and profitability characteristics that an entrepreneur can prove • The founders and management team have collective domain experience that matches the opportunity

Weak Ties

• Ties that lay outside of your normal network of relationships

Know why VOSE is used

• To assess potential opportunities for their attractiveness

Window of Opportunity

• Usually occurs around for 5-10 years depending on market size • Can change depending on market

Sustainability lens

• Weak ties • Systems thinking • Thinking like a molecule-Think small but don't lose perspective of larger environment

Know wicked problems

• You don't understand the problem until you have a developed solution • Wicked problems have no stopping rule • Solutions to wicked problems are not right or wrong • Every wicked problem is unique and novel • Every solution is a one shop operation • No given alternative solutions

Understand the relationship of entrepreneurship to economic development

•Allows for innovation •Creates jobs •Forms new industries

Entrepreneurial paradoxes

•An opportunity with no or very low potential can be an enormously big opportunity. •To make money you have to first lose money. •To create and build wealth, one must relinquish wealth. •To succeed, one first has to experience failure •Entrepreneurship requires considerable thought, preparation, and planning, yet is basically an unplannable event.

dominant themes of entrepreneurship

•Commitment and determination •Courage •Leadership •Opportunity Obsession •Tolerance of risk, ambiguity, and uncertainty •Creativity, self-reliance, and adaptability •Motivation to excel