Entrepreneurship

Cover......Page 1
Title Page......Page 3
Copyright......Page 4
Contents......Page 5
Preface......Page 9
1 The Power of Entrepreneurship......Page 15
Entrepreneurship and Small Business in the United States......Page 16
Entrepreneurial Revolution......Page 18
Web: Three Revolutions Converge......Page 22
Entrepreneurship Revolution Strikes Gold......Page 23
Creative Destruction......Page 25
Causes of the Entrepreneurial Revolution......Page 26
Changes in the Entrepreneurial Framework Conditions......Page 27
Churning and Economic Growth......Page 32
Global Entrepreneurship Monitor......Page 33
Principal Findings from GEM......Page 34
Age......Page 36
Education......Page 37
Job Creation......Page 39
21st-Century Economies: Anglo-Saxon or Social Models?......Page 41
Conclusion......Page 43
Notes......Page 44
CASE: MALINCHO......Page 50
2 The Entrepreneurial Process......Page 63
Critical Factors for Starting a New Enterprise......Page 64
Environmental Factors......Page 66
Other Sociological Factors......Page 68
Evaluating Opportunities for New Businesses......Page 70
The Opportunity......Page 71
The Timing......Page 72
The Entrepreneur and the Management Team......Page 73
Determining Resource Needs and Acquiring Resources......Page 74
Startup Capital......Page 76
Profit Potential......Page 78
Ingredients for a Successful New Business......Page 80
Notes......Page 82
CASE: ALISON BARNARD......Page 84
3 Opportunity Recognition, Shaping, and Reshaping......Page 97
Finding Your Passion......Page 98
Idea Multiplication......Page 99
The Customer......Page 103
The Competition......Page 114
The Government......Page 117
“I Don’t Have an Opportunity”......Page 118
Conclusion......Page 120
Notes......Page 121
CASE: JIM POSS......Page 124
The Business Model......Page 139
The Revenue Model......Page 140
The Cost Model......Page 142
The First-Mover Myth......Page 144
Formulating a Winning Strategy......Page 146
The People Are What Matters......Page 147
Entry Strategy......Page 148
Growth Strategy......Page 152
Conclusion......Page 159
Notes......Page 160
CASE: ADAM AIRCRAFT......Page 163
5 Entrepreneurial Marketing......Page 181
Entrepreneurs Face Unique Marketing Challenges......Page 182
Acquiring Market Information......Page 183
Segmentation, Targeting, and Positioning......Page 184
The Marketing Mix......Page 185
Guerrilla Marketing......Page 196
Understanding and Listening to the Customer......Page 198
Conclusion......Page 199
Appendix: Customer Interview......Page 200
General Outline: It Needs to Be Tailored to Meet Your Research Needs......Page 201
Notes......Page 202
CASE: COLLEGE COACH......Page 203
6 Building the Founding Team......Page 213
Power of the Team......Page 214
Where Do You Fit?......Page 215
How to Build a Powerful Team......Page 219
Bootstrapping: Building the Team Based on Stage-of-Venture Life......Page 220
Equity......Page 222
Other Compensation Considerations......Page 227
Outside Investors......Page 228
Accountants......Page 229
Board of Directors......Page 230
Keeping the Team Together......Page 231
Burnout......Page 232
Interpersonal Conflicts......Page 233
Web Exercise......Page 234
Notes......Page 235
CASE: AJAY BAM......Page 236
7 The Business Planning Process......Page 249
The Planning Process......Page 251
The Story Model......Page 253
Executive Summary......Page 254
Table of Contents......Page 255
Industry, Customer, and Competitor Analysis......Page 256
Marketing Plan......Page 260
Operations Plan......Page 264
Development Plan......Page 265
Team......Page 266
Critical Risks......Page 269
Appendices......Page 270
Types of Plans......Page 271
Style Pointers for the Written Plan and Oral Presentation......Page 272
Web Exercise......Page 273
Notes......Page 274
CASE: P’KOLINO......Page 275
8 Building Your Pro-Forma Financial Statements......Page 319
Common Mistakes......Page 320
Financial Statement Overview......Page 321
Build-Up Method......Page 322
Revenue Projections......Page 324
Operating Expenses......Page 325
Preliminary Income Statement......Page 328
Comparable Method......Page 329
Building Integrated Financial Statements......Page 331
Income Statement......Page 332
Balance Sheet......Page 334
Cash-Flow Statement......Page 335
Putting It All Together......Page 336
Your Opportunity Journal......Page 337
Notes......Page 338
CASE: P’KOLINO FINANCIALS......Page 339
9 Financing Entrepreneurial Ventures Worldwide......Page 351
Microfinancing......Page 352
Microcredit for the Poorest of the Poor......Page 353
Entrepreneurs and Informal Investors......Page 354
Amount of Capital Needed to Start a Business......Page 356
Characteristics of Informal Investors......Page 357
Financial Returns on Informal Investment......Page 359
Supply and Demand for Startup Financing......Page 360
Classic Venture Capital......Page 361
Importance of Venture Capital in the U.S. Economy......Page 364
Mechanism of Venture Capital Investing......Page 366
Financial Returns on Venture Capital......Page 368
Venture Capital in Europe......Page 370
Factors Affecting Classic Venture Capital......Page 371
Your Opportunity Journal......Page 372
Notes......Page 373
CASE: DAYONE......Page 375
Jim Poss, BigBelly Solar......Page 393
Bootstrapping New Ventures......Page 394
Earnings Capitalization Valuation......Page 395
Market-Comparable Valuation (Multiple of Earnings)......Page 396
Example of Market-Comparable Valuation......Page 397
Asset-Based Valuation Example......Page 399
Financing a New Venture......Page 400
Informal Investors......Page 401
Business Angels......Page 402
Searching for Business Angels......Page 404
Types of Business Angels......Page 405
Putting Together a Round of Angel Investment......Page 406
Candidates for Venture Capital......Page 407
Ideal Candidates for Venture Capital......Page 408
Actual Venture-Capital-Backed Companies......Page 409
Dealing with Venture Capitalists......Page 410
Follow-On Rounds of Venture Capital......Page 412
Initial Public Offering......Page 413
Pros and Cons of an IPO......Page 414
The Process of Going Public......Page 416
A Strategic Acquisition: LowerMyBills.com......Page 418
Why Be Acquired?......Page 420
Conclusion......Page 421
Web Exercise......Page 422
Notes......Page 423
CASE: BLADELOGIC......Page 426
Getting Access to Funds—Start with Internal Sources......Page 435
Start with Credit Cards and Home Equity Lines......Page 436
Cash Conversion Cycle......Page 437
Working Capital: Getting Cash from Receivables and Inventories......Page 438
Using Accounts Receivable as Working Capital......Page 439
Credit Policies......Page 440
Setting Credit Terms......Page 441
Collection Policies......Page 442
Setting Credit Limits for Individual Accounts......Page 443
Inventory......Page 444
Cash from Trade Credit......Page 445
Cash Available Because of Seasonal Business Credit Terms......Page 446
Cash Obtained by Tightening Up Accounts Receivable Collections......Page 447
Factoring......Page 448
Obtaining “Financing” from Customer Prepayments......Page 449
Traditional Bank Lending: Short-Term Bank Loans......Page 450
Interest Rates......Page 451
Collateral......Page 452
General Provisions......Page 453
Routine Provisions......Page 454
Equipment Financing......Page 455
Applying for an SBA Loan......Page 456
Conclusion......Page 458
Web Exercise......Page 459
Notes......Page 460
CASE: FEED RESOURCE RECOVERY......Page 461
12 Legal and Tax Issues......Page 475
Corporate Opportunity......Page 476
Proprietary Information......Page 477
Noncompetition......Page 479
Choice of Legal Form......Page 480
Control......Page 481
Personal Liability......Page 483
Taxation......Page 484
Initial Investment of the Founders......Page 486
Choosing a Name......Page 488
Disposition of Equity Interests......Page 489
Distributions of Company Profits......Page 491
Employees as Agents of the Company......Page 492
Employment Discrimination......Page 493
Employment Agreements......Page 494
Equity Sharing......Page 495
Liability Insurance......Page 496
Legal Issues in the Sale of Securities to Investors......Page 497
Your Opportunity Journal......Page 499
Notes......Page 500
CASE: CADENCE DESIGN SYSTEMS AND AVANT! (A)......Page 501
13 Intellectual Property......Page 513
The Basics: What Is Protectable and How Should It Be Protected?......Page 514
Obtaining a Utility Patent......Page 515
Criteria for Obtaining a Utility Patent......Page 517
Drafting the Patent Claims......Page 518
Managing Patent Costs......Page 520
Trade Secrets......Page 521
Trademarks......Page 524
Registering a Mark......Page 525
Copyright......Page 526
International Protection for Intellectual Property......Page 527
How to Extend Patent Filing Deadlines......Page 528
Common Concerns and Clauses......Page 529
Assigning Value to a License......Page 530
Negotiating License Agreements......Page 531
Patents for Software......Page 532
Software Trade Secret Protection......Page 533
IP Agreements......Page 534
Transfer of Employee Rights to Company Innovations......Page 535
Noncompetition Clauses......Page 536
Preventing Employee Raiding......Page 537
Consultant Contracts......Page 538
Confidential Disclosure Agreements......Page 539
Conclusion......Page 540
Notes......Page 541
CASE: CADENCE DESIGN SYSTEMS AND AVANT! (B)......Page 542
14 Entrepreneurial Growth......Page 545
Looking Forward: The Choice to Grow, or Not , . . .or Sell......Page 546
A Model of Driving Forces of Growth......Page 548
Instituting Controls......Page 549
Tracking Performance......Page 551
Managing the Cash Cycle......Page 552
Maintaining the Entrepreneurial Organization......Page 554
Opportunity Domain......Page 555
Obtaining Financial Resources for the Growing Company......Page 558
Intangible Resources and Capabilities......Page 559
Leadership......Page 560
Starting the Delegation Process......Page 561
First-Level Management......Page 562
Professional Management and Boards......Page 563
Leading People; Developing Entrepreneurs......Page 564
Conclusion......Page 565
Your Opportunity Journal......Page 566
Notes......Page 567
CASE: LAZYBONES......Page 568
15 Social Entrepreneurship: An Overview......Page 577
Definition......Page 578
Imitative Nonprofit Organizations......Page 580
Innovative Nonprofit Organizations......Page 581
Hybrids......Page 582
For-Profits......Page 583
New Forms of Organizations......Page 584
Identifying an Opportunity......Page 585
Forming an Organization......Page 587
Securing Resources......Page 589
Evaluating Results......Page 590
Conclusion......Page 592
Your Opportunity Journal......Page 593
Notes......Page 594
CASE: EARTHWATCH......Page 597
Glossary......Page 611
Company Index......Page 621
Name Index......Page 625
Subject Index......Page 627