Entrepreneurship & small business management

Cover......Page 1
Title......Page 2
Copyright......Page 3
Contents......Page 6
Preface......Page 14
UNIT 1 Entrepreneurial Pathways......Page 24
 Chapter 1 Entrepreneurs Recognize Opportunities......Page 25
   What Is an Entrepreneur?......Page 26
   The Economic Questions......Page 27
   Benefits and Challenges of Free Enterprise......Page 28
  Why Become an Entrepreneur?......Page 29
   Definitions of Success—Monetary and Other......Page 31
  Benefits and Costs of Becoming an Entrepreneur......Page 32
   Cost/Benefit Analysis......Page 33
   Seeking Advice and Information to Succeed......Page 34
  Entrepreneurial Options......Page 36
   Entrepreneurs Creatively Exploit Changes in Our World......Page 38
   Train Your Mind to Recognize Business Opportunities......Page 39
  An Idea Is Not Necessarily an Opportunity......Page 40
   Integrating Internal and External Opportunities......Page 41
   Establishing Strategies......Page 42
   Buying an Existing Business......Page 43
   Do Not Take Unfair Advantage of Someone Else’s Creativity......Page 44
   The Many Faces of Entrepreneurship......Page 45
   Profit Results from the Entrepreneur’s Choices......Page 46
   The Team Approach......Page 47
 Chapter 2 Franchising......Page 57
   What Are the Types of Franchises?......Page 58
   Start-Up Assistance......Page 60
   Advertising and Promotional Support......Page 61
   Operating Guidelines and Assistance......Page 62
   Constraints on Creativity and Freedom......Page 63
   Costs......Page 64
  The Structure of the Franchise Industry......Page 65
  Franchising and the Law......Page 66
  Steps for Franchise Selection......Page 68
  Exploring Global Franchising Opportunities......Page 70
 Chapter 3 Finding Opportunity in an Existing Business......Page 79
   Reduced Risk......Page 81
  Potential Pitfalls of Buying an Existing Business......Page 82
   Buying Someone Else’s Problems......Page 83
   Sources of Existing Businesses......Page 84
   Due Diligence—Reality versus the Story......Page 85
  Determining the Value of a Business......Page 87
  Family Business as an Entrepreneurial Opportunity......Page 89
 Chapter 4 The Business Plan: Road Map to Success......Page 97
  Feasibility Analysis: Does My Idea Work?......Page 98
   Analyzing Product and/or Service Feasibility......Page 99
   Analyzing Market and Industry Feasibility......Page 100
   Analyzing Financial Feasibility......Page 102
  Creating a Business Model Canvas......Page 103
  What Is a Business Plan?......Page 106
   Writing a Business Plan Early Will Save You Time and Money......Page 107
  Business Plan Components......Page 108
   Executive Summary: A Snapshot of Your Business......Page 109
   Mission, Vision and Culture......Page 110
   Opportunity Analysis and Research: Testing Ideas......Page 111
   Marketing Strategy and Plan: Reaching Customers......Page 112
   Management and Operations: Making the Plan Happen......Page 113
   Financial Analysis and Projections: Translating Action into Money......Page 114
   Funding Request and Exit Strategy: The Ask and the Return......Page 118
  Business Plan Suggestions......Page 119
  Presenting Your Business Plan......Page 120
  Business Plan and Venture Competitions......Page 121
 Honest Tea Business Plan......Page 128
 Unit 1 Entrepreneurial Pathways: SPANX—Idea to Entrepreneurial Opportunity......Page 155
UNIT 2 Who Are Your Customers?......Page 160
 Chapter 5 Creating Business from Opportunity......Page 161
  Apple and the Personal Computer......Page 162
  Business Definition......Page 163
  Your Company’s Core Values......Page 164
   Your Company’s Mission Is to Satisfy Customers......Page 165
   Your Company’s Culture Defines the Work Environment......Page 166
   The Decision Process......Page 167
  Your Competitive Advantage......Page 168
   You Have Unique Knowledge of Your Market......Page 169
   Is Your Competitive Advantage Strong Enough?......Page 170
   Checking Out the Competition......Page 171
  The Most Chocolate Cake Company......Page 172
   Competitive Strategy: Business Definition and Competitive Advantage......Page 174
  Feasibility Revisited: The Economics of One Unit as a Litmus Test......Page 175
   Cost of Goods Sold and Gross Profit......Page 176
   Your Business and the Economics of One Unit......Page 177
   Hiring Others to Make the Unit of Sale......Page 179
   Going for Volume......Page 180
 Chapter 6 Exploring Your Market......Page 191
  Markets and Marketing Defined......Page 192
   Research Your Market Before You Open Your Business......Page 193
   Getting Information Directly from the Source: Primary Research......Page 194
   Getting Information Indirectly: Secondary Research......Page 195
  Market Research Helps You Know Your Customer......Page 196
   Customer Research......Page 198
   Industry Research: The 50,000-Foot Perspective......Page 200
   Make Market Research an Integral Part of Your Business......Page 201
   Owning a Perception in the Customer’s Mind......Page 202
   Home Depot: Teaching Customers So They Will Return......Page 203
   Successful Segmenting: The Body Shop......Page 204
   Applying Market Segmentation Methods......Page 205
   The Product Life Cycle......Page 207
  Market Positioning: Drive Home Your Competitive Advantage......Page 208
  Developing a Marketing Plan......Page 209
 Unit 2 Opportunity Assessment: Kitchen Arts & Letters, Inc.—An Independent Bookstore Defies Industry Odds......Page 218
UNIT 3 Integrated Marketing......Page 222
 Chapter 7 Developing the Right Marketing Mix and Plan......Page 223
  The Four Marketing Factors......Page 224
   Create Your Total Product or Service Concept......Page 225
   Ford’s Focus on Success: The Mustang......Page 226
   How to Build Your Brand......Page 227
  Place: Location, Location, Location!......Page 229
  The Fifth P: Philanthropy......Page 230
   Gaining Goodwill......Page 231
   Teach for America and Upromise......Page 232
  Developing a Marketing Plan......Page 233
   Marketing Analysis......Page 234
   Calculate Your Breakeven Point......Page 235
 Chapter 8 Pricing and Credit Strategies......Page 247
  Pricing: Image, Value, and Competition Together......Page 248
   Strategies and Tactics for Effective Pricing......Page 249
   Pricing Techniques for Manufacturers......Page 252
   Pricing Techniques for Retailers......Page 253
   Keystoning—The Retailer’s Rule of Thumb......Page 254
   Pricing Techniques for Service Businesses......Page 255
   Types of Credit......Page 256
   Credit’s Impact on Pricing......Page 258
  Managing the Credit Process......Page 259
   Credit Regulation......Page 260
  Discounts, Incentives, and Other Price Adjustments......Page 261
 Chapter 9 Integrated Marketing Communications......Page 271
   Reinforce the Company’s Unique Selling Proposition......Page 272
   Create a Promotional Strategy Using Promotions Opportunity Analysis......Page 273
   Determine a Promotional Budget......Page 275
  The Advertising Advantage......Page 276
   Advertising Agencies and Freelancers......Page 277
   Types of Advertising......Page 278
   The Media......Page 279
   Broadcast Media......Page 280
   Print Media......Page 281
   Outdoor Advertising (Out-of-Home Advertising)......Page 283
   Advertising Measurement: Beyond Reach and Frequency......Page 285
   Collateral Materials: Print and Multimedia......Page 287
   Advertising Specialties......Page 288
   Mall Carts or Kiosks......Page 289
  Alternative Marketing......Page 290
   Other Media Venues......Page 291
   Data Collection, Coding, and Mining......Page 292
   Marketing Communications Driven by Databases......Page 293
  E-Active Marketing......Page 294
   Generating Publicity......Page 297
   Telling the Story......Page 298
   Public Relations......Page 299
 Chapter 10 Marketing Globally......Page 311
  Reasons to Market Globally......Page 312
   Market Expansion......Page 313
   Access to Resources......Page 315
   Location-Specific Advantages......Page 316
   Importing......Page 317
   Exporting......Page 318
   Strategic Alliances......Page 322
   International Licensing......Page 323
   International Facilities......Page 324
   Economic Risk......Page 325
   Organizational Capacity......Page 326
   Legal and Regulatory Barriers......Page 328
   Cultural and Ethnic Considerations......Page 329
   Market Research, Analysis, Planning, and Readiness......Page 330
   Customer and Partner Identification and Relationship Building......Page 331
   Financing......Page 332
  Trade Agreements Influence Global Marketing......Page 335
 Chapter 11 Smart Selling and Effective Customer Service......Page 345
  Selling Skills Are Essential to Business Success......Page 346
   The Principles of Selling......Page 347
   Electronic Mail, Blogs, and Social Networks......Page 349
   Focus on the Customer......Page 350
   The Eight-Step Sales Call......Page 351
   Analyze Your Sales Calls to Become a Star Salesperson......Page 352
   Use Technology to Sell......Page 353
   The Costs of Losing a Customer......Page 355
   Customer Complaints Are Valuable......Page 356
  Customer Relationship Management Systems......Page 357
   Why Does CRM Matter?......Page 358
   Components of CRM for the Small Business......Page 359
   How Technology Supports CRM......Page 360
 Unit 3 Integrated Marketing: Empact—Making an Impact for Entrepreneurs......Page 369
UNIT 4 Show Me the Money: Finding, Securing, and Managing It......Page 372
 Chapter 12 Understanding and Managing Start-Up, Fixed, and Variable Costs......Page 373
  What Does It Cost to Operate a Business?......Page 374
   Brainstorm to Avoid Start-Up Surprises......Page 375
   Keep a Reserve Equal to One-Half the Start-Up Investment......Page 376
   Predict the Payback Period......Page 377
   Estimate Value......Page 378
  Calculating Critical Costs......Page 379
   Calculating EOU When You Sell Multiple Products......Page 380
   Fixed Operating Costs Can Change Over Time......Page 382
   Allocate Fixed Operating Costs Where Possible......Page 383
   Three Reasons to Keep Good Records Every Day......Page 384
   Recognizing Categories of Costs......Page 387
 Chapter 13 Using Financial Statements to Guide a Business......Page 397
  Scorecards for the Entrepreneur: What Do Financial Statements Show?......Page 398
   Parts of an Income Statement......Page 399
   A Basic Income Statement......Page 400
   An Income Statement for a More Complex Business......Page 401
  The Balance Sheet: A Snapshot of Assets, Liabilities, and Equity at a Point in Time......Page 403
   The Balance Sheet Shows Assets and Liabilities Obtained through Financing......Page 405
   The Balance Sheet Shows How a Business Is Financed......Page 406
   Analyzing a Balance Sheet......Page 407
   Income Statement Ratios......Page 409
   Balance-Sheet Analysis......Page 412
 Chapter 14 Cash Flow and Taxes......Page 433
   The Income Statement Does Not Show Available Cash......Page 434
   The Cyclical and Seasonal Nature of Cash Flow......Page 436
   Forecasting Cash Flow: The Cash Budget......Page 439
   Managing Inventory to Manage Cash......Page 442
   The Life Cycle of Accounts Receivable......Page 444
   Negotiating Payment......Page 445
  Capital Budgeting and Cash Flow......Page 446
   The Burn Rate......Page 447
   The Future Value of Money......Page 448
   The Present Value of Money......Page 449
   Filing Tax Returns......Page 451
   Make Tax Time Easier by Keeping Good Records......Page 452
 Chapter 15 Financing Strategy: Debt, Equity, or Both?......Page 463
  Going It Alone versus Securing Financing......Page 464
  What Is the Best Type of Financing for You and Your Business?......Page 465
  Gifts and Grants......Page 466
   Debt Financing: Pros and Cons......Page 467
   Equity Financing: Pros and Cons......Page 469
  Where and How to Find Capital That Works for You......Page 470
   Financial Institutions and Dimensions of Credit......Page 473
   Community Development Financial Institutions (CDFIs)......Page 475
   Venture Capitalists......Page 476
   Angels......Page 477
   Financing for Rural/Agricultural Businesses......Page 478
  Accessing Sources Through Online Networking......Page 479
   How Stocks Work......Page 480
   How Bonds Work......Page 481
 Unit 4 Show Me the Money: Finding, Securing, and Managing It—Lee’s Ice Cream......Page 493
UNIT 5 Operating a Small Business Effectively......Page 498
 Chapter 16 Addressing Legal Issues and Managing Risk......Page 499
   Sole Proprietorship......Page 500
   Partnership......Page 502
   Corporation......Page 503
   Tips for Entrepreneurs Who Want to Start a Nonprofit Organization......Page 505
   Working with an Attorney......Page 508
   A Successful Contract Should Achieve the Four A’s......Page 509
   A Contract Is No Substitute for Trust......Page 510
  The Law of Agency......Page 511
  Bankruptcy......Page 512
   Trademarks and Service Marks......Page 514
   Electronic Rights......Page 516
   Patents......Page 517
   Basic Coverage for Small Business......Page 518
   How Insurance Companies Make Money......Page 519
   Disaster Recovery Plans......Page 520
  Licenses, Permits, and Certificates......Page 521
 Chapter 17 Operating for Success......Page 531
  Operations Permit Businesses to Deliver on Their Promises......Page 532
  The Production-Distribution Chain......Page 533
  Supply Chain Management......Page 534
   Managing Inventory......Page 535
   Managing the Chain: Analyzing and Selecting Vendors......Page 537
  The Idea-To-Product Process......Page 538
  Job Shops......Page 539
   Just-in-Time Manufacturing......Page 540
   Product Design and Costs......Page 541
   Making versus Buying......Page 542
  Organization-Wide Quality Initiatives......Page 543
   Benchmarking......Page 544
   Six Sigma......Page 545
   Malcolm Baldrige Award......Page 546
   Capture the Potential of the Telephone......Page 547
   Electronic Storefront (Web Site)......Page 548
 Chapter 18 Location, Facilities, and Layout......Page 559
  The Importance of Physical Location......Page 560
  Key Factors in Deciding on a Location......Page 561
   Options and Criteria for Manufacturing Facilities......Page 562
   Options and Criteria for Retail Businesses......Page 563
   Options and Criteria for Service and Professional Businesses......Page 564
   Evaluating Location Alternatives......Page 565
   Facilities Design and Layout......Page 570
   Special Considerations for Home-Based Businesses......Page 573
   Special Considerations for Web-Based Businesses......Page 574
 Chapter 19 Human Resources and Management......Page 583
   What Do Managers Do?......Page 584
  Adding Employees to Your Business......Page 585
   Growing Your Team......Page 592
   Creating and Managing Organizational Culture......Page 593
   Determining Organizational Structure......Page 594
   Communicating Effectively......Page 596
  Human Resources Fundamentals......Page 597
   Organizational Development......Page 598
   Labor Law and HR Compliance......Page 599
   Performance Management......Page 600
   Firing and Laying Off Employees......Page 603
 Unit 5 Operating a Small Business Effectively: ONLC Training Centers—Virtual IT Training in a Classroom......Page 614
UNIT 6 Leadership, Ethics, and Exits......Page 618
 Chapter 20 Leadership and Ethical Practices......Page 619
   Leadership Styles That Work......Page 620
   How Entrepreneurs Pay Themselves......Page 621
   Manage Your Time Wisely......Page 622
  Ethical Leadership and Ethical Organizations......Page 623
   Establishing Ethical Standards......Page 624
   Corporate Ethical Scandals......Page 626
   Doing the Right Thing in Addition to Doing Things Right......Page 627
   Complying with the Law......Page 628
   Encourage Your Employees to Be Socially Responsible......Page 629
 Chapter 21 Franchising, Licensing, and Harvesting: Cashing in Your Brand......Page 637
   Continuing the Business for the Family......Page 638
  Growth through Licensing and Franchising......Page 639
   Franchising Revisited from the Franchisor Perspective......Page 640
   Do Your Research before You Franchise......Page 641
   How to Value a Business......Page 642
   The Science of Valuation......Page 643
  Creating Wealth by Selling a Profitable Business......Page 644
   Harvesting Options......Page 645
  Exit Strategy Options......Page 647
   Investors Will Care about Your Exit Strategy......Page 648
 Unit 6 Cashing in the Brand: Honest Tea—From Start-Up to Harvest......Page 656
Appendix 1 Sample Student Business Plan—University Parent......Page 662
Appendix 2 BizBuilder Business Plan......Page 690
Appendix 3 Resources for Entrepreneurs......Page 697
Appendix 4 Useful Formulas and Equations......Page 703
Glossary......Page 704
Index......Page 712