Skip to content
Textbook Guides

Entrepreneurship: Successfully Launching New Ventures, 6th Edition Solution Manual

Ace your coursework with Entrepreneurship: Successfully Launching New Ventures, 6th Edition Solution Manual, designed to simplify complex topics.

Preview 31 of 348 pages

See the first 31 pages exactly as they appear in the document.

  1. Page 1
    Read page 1 as text

    First Screen From “Preparing Effective Business Plans” by Bruce R. Barringer Part 1: Strength of Business Idea For each item, circle the most appropriate answer and make note of the (-1), (0), or (+1) score. Low Potential (-1) Moderate Potential (0) High Potential (+1) 1. Extent to which the idea:  Takes advantage of an environmental trend  Solves a problem  Addresses an unfilled gap in the marketplace Weak Moderate Strong 2. Timeliness of entry to market Not timely Moderately timely Very timely 3. Extent to which the idea “adds value” for its buyer or end user Low Medium High 4. Extent to which the customer is satisfied by competing products that are already available Very satisfied Moderately satisfied Not very satisfied or ambivalent 5. Degree to which the idea requires customers to change their basic practices or behaviors Substantial changes required Moderate changes required Small to no changes required

  2. Page 2
  3. Page 3
    Read page 3 as text

    Part 2: Industry-Related Issues Low Potential ( - 1) Moderate Potenti al (0) High Potential (+1) 1. Number of competitors Many Few None 2. Stage of industry life cycle Maturity phase or decline phase Growth phase Emergence phase 3. Growth rate of industry Little or no growth Moderate growth Strong growth 4. Importance of industry’s products and/or services to customers “Ambivalent” “Would like to have” “Must have” 5. Industry operating margins Low Moderate High Part 3: Target Market and Customer-Related Issues Low Potential ( - 1) Moderate Potential (0) High Poten tial (+1) 1. Identification of target market for the proposed new venture Difficult to identify May be able to identify Identified 2. Ability to create “barriers to entry” for potential competitors Unable to create May or may not be able to create Can c reate 3. Purchasing power of customers Low Moderate High 4. Ease of making customers aware of the new product or service Low Moderate High 5. Growth potential of target market Low Moderate High

  4. Page 4
    Read page 4 as text

    Part 4: Founder- (or Founders-) Related Issues Low Potential ( - 1) Moderate Potential (0) High Potential (+1) 1. Founder or founders experience in the industry No experience Moderate experience Experienced 2. Founder or founders skills as they relate to the proposed new venture’s product or ser vice No skills Moderate skills Skilled 3. Extent of the founder or founders professional and social networks in the relevant industry None Moderate Extensive 4. Extent to which the proposed new venture meets the founder or founders personal goals and asp irations Weak Moderate Strong 5. Likelihood that a team can be put together to launch and grow the new venture Unlikely Moderately likely Very likely Part 5: Financial Issues Low Potential ( - 1) Moderate Potential (0) High Potential (+1) 1. Initial capital investment High Moderate Low 2. Number of revenue drivers (ways in which the company makes money) One Two to three More than three 3. Time to break even More than two years One to two years Less than one year 4. Financial performance of simil ar businesses Weak Modest Strong 5. Ability to fund initial product (or service) development and/or initial startup expenses from personal funds or via bootstrapping Low Moderate High

  5. Page 5
    Read page 5 as text

    Overall Potential Each part has five items. Scores will range from -5 to +5 for each part. The score is a guide — there is no established rule-of-thumb for the numerical score that equates to high potential, moderate potential, or low potential for each part. The ranking is a judgment call. Score (-5 to +1) Overall Potential of the Business Idea Based on Each Part Suggestions for Improving the Potential Part 1: Strength of Business Idea High potential Moderate potential Low potential Part 2: Industry-Related Issues High potential Moderate potential Low potential Part 3: Target Market and Customer-Related Issues High potential Moderate potential Low potential Part 4: Founder- (or Founders-) Related Issues High potential Moderate potential Low potential Part 5: Financial Issues High potential Moderate potential Low potential Overall Assessment High potential Moderate potential Low potential Summary — briefly summarize your justification for your overall assessment:

  6. Page 6
    Read page 6 as text

    Entrepreneurship Sixth Edition Bruce R. Barringer Duane Ireland New York, NY Instructor’s Resource Manual (Download only) for Entrepreneurship: Successfully Launching New Ventures Ram Subramanian

  7. Page 7
    Read page 7 as text

    i TABLE OF CONTENTS Part 1 C hapter Outlines, Answers to Boxed Features Questions, Answers to End - of - Chapter Questions , Analysis of “ You Be the VC ” Exercises , and Cases Chapter 1 Introduction to Entrepreneurship 1 Chapter 2 Recognizing Opportunities and Generating Ideas 2 3 Chapter 3 Feasibility Analysis 4 4 Chapter 4 Developing an Effective Business Model 6 7 Chapter 5 Industry and Competitor Analysis 8 7 Chapter 6 Writing a Business Plan 11 1 Chapter 7 Preparing the Proper Ethical and Legal Foundation 1 35 Chapter 8 Assessing a New Venture’s Financial Strength and Viability 161 Chapter 9 Building a New - Venture Team 183 Chapter 10 Getting Financing or Funding 202 Chapter 11 Unique Marketing Issues 224 Chapter 12 The Importance of Intellectual Propert y 246 Chapter 13 Preparing f or and Evaluating the Challenges of Growth 26 8 Chapter 14 Strategies for Firm Growth 28 8 Chapter 15 Franchising 3 08 P art 2 Sample Course Outlines 3 3 2 Part 3 Student and Instructor Resources 3 3 6

  8. Page 8
    Read page 8 as text

    Part 2: Sample Course Outlines 332 PART 2 SAMPLE COURSE OUTLINES Sample Weekly Schedule Entrepreneurship Based on 15-Week Semester (Class Meets Twice a Week) Date Topic Assigned Reading Week 1 : Class 1 Introduction to Entrepreneurship Chapter 1 Week 1 : Class 2 Introduction to Ent repreneurship Case 1.1 or Case 1.2 You Be the VC 1.1 or You Be the VC 1.2 Chapter 1 Week 2 : Class 1 Recognizing Opportunities and Generating Ideas Chapter 2 Week 2 : Class 2 Recognizing Opportunities and Generating Ideas Case 2.1 or Case 2.2 Chapter 2 Week 3 : Class 1 Feasibility Analysis Chapter 3 Week 3 : Class 2 Feasibility Analysis You Be the VC 3.1 or You Be the VC 3.2 Chapter 3 Week 4 : Class 1 Developing an Effective Business Model Chapter 4 Week 4 : Class 2 Developing an Effective Business Mo del Case 4.1 or Case 4.2 Chapter 4 Week 5 : Class 1 Industry and Competitor Analysis Chapter 5 Week 5 : Class 2 Guest Speaker — To discuss the topic of developing the importance of a firm’s industry to its success; Local Successful Entrepreneur Week 6 : Class 1 Individual Exam #1 Chapters 1 – 5 Week 6 : Class 2 Writing a Business Plan Case 6.1 or Case 6.2 Chapter 6 Week 7 : Class 1 Preparing the Proper Ethical and Legal Foundation Chapter 7 Week 7 : Class 2 Preparing the Proper Ethical and Legal Founda tion Case 7.1 You Be the VC 7.1 or You Be the VC 7.2 Chapter 7 Week 8 : Class 1 Assessing a New Venture’s Financial Strength and Viability Chapter 8 Week 8 : Class 2 Assessing a New Venture’s Financial Strength and Viability Case 8.1 or Case 8.2 You Be t he VC 8.1 or You Be the VC 8.2 Chapter 8

  9. Page 9
    Read page 9 as text

    Part 2: Sample Course Outlines 333 Week 9: Class 1 Building a New-Venture Team Chapter 9 Week 9: Class 2 Building a New-Venture Team Case 9.1 or Case 9.2 Chapter 9 Week 10: Class 1 Getting Financing or Funding Chapter 10 Week 10: Class 2 Guest Speaker on Getting Funding or Financing; Local Venture Capitalist or Business Angel Case 10.1 Week 11: Class 1 Individual Exam #2 Chapters 6 – 10 Week 11: Class 2 Unique Marketing Issues Case 11.2 Chapter 11 Week 12: Class 1 The Importance of Intellectual Property Chapter 12 Week 12: Class 2 The Importance of Intellectual Property Case 12.1 or Case 12.2 Chapter 12 Week 13: Class 1 Preparing for and Evaluating the Challenges of Growth Chapter 13 Week 13: Class 2 Preparing for and Evaluating the Challenges of Growth You Be the VC 13.1 or You Be the VC 13.2 Case 13.1 Chapter 13 Week 14: Class 1 Strategies for Firm Growth Chapter 14 Week 14: Class 2 Strategies for Firm Growth Case 14.1 or Case 14.2 Chapter 14 Week 15: Class 1 Franchising Chapter 15 Week 15: Class 2 Franchising Case 15.1 or Case 15.2 Chapter 15 Final Exam Administered During Final Week Chapters 11 – 15 or comprehensive

  10. Page 10
    Read page 10 as text

    Part 2: Sample Course Outlines 334 Sample Weekly Schedule Entrepreneurship Based on 15-Week Semester (Class Meets Once a Week) Date T opic Assigned Reading Week 1 Introduction to Entrepreneurship Case 1.1 or Case 1.2 You Be the VC 1.1 or You Be the VC 1.2 Chapter 1 Week 2 Recognizing Opportunities and Generating Ideas Case 2.1 or Case 2.2 Chapter 2 Week 3 Feasibility Analysis Case 2 in the Case Appendix You Be the VC 3.1 or You Be the VC 3.2 Chapter 3 Week 4 Developing an Effective Business Model Case 4.1 or Case 4.2 Chapter 4 Week 5 Industry and Competitor Analysis Guest Speaker — To discuss the topic of developing the importance of a firm’s industry to its success; Local Successful Entrepreneur Chapter 5 Week 6 Individual Exam #1 Chapters 1 – 5 Writing a Business Plan Case 6.1 or Case 6.2 Chapter 6 Week 7 Preparing the Proper Ethical and Legal Foundation Case 7.1 You Be the VC 7.1 or You Be the VC 7.2 Chapter 7 Week 8 Assessing a New Venture’s Financial Strength and Viability Case 8.1 or Case 8.2 You Be the VC 8.1 or You Be the VC 8.2 Chapter 8 Week 9 Building a New - Venture Team Case 9.1 or Case 9.2 Ch apter 9 Week 10 Guest Speaker on Getting Financing or Funding; Local Venture Capitalist or Business Angel Case 10.1 Chapter 10 Week 11 Individual Exam #2 Chapters 6 – 10 Unique Marketing Issues Case 11.2 Chapter 11

  11. Page 11
    Read page 11 as text

    Part 2: Sample Course Outlines 335 Week 12 The Importance of Intellectual Property Case 12.1 or Case 12.2 Chapter 12 Week 13 Preparing for and Evaluating the Challenges of Growth You Be the VC 13.1 or You Be the VC 13.2 Case 13.1 Chapter 13 Week 14 Strategies for Firm Growth Case 14.1 or Case 14.2 Chapter 14 Week 15 Franchising Case 15.1 or Case 15.2 Chapter 15 Final Exam Administered During Final Week Chapters 11 – 15 or comprehensive

  12. Page 12
    Read page 12 as text

    Part 3: Student and Instructor Resources 336 PART 3 STUDENT AND INSTRUCTOR RESOURCES This portion of the Instructor’s Manual contains resources that may be helpful to you and your students throughout the course of the semester. LIST OF USEFUL WEB SITES IN THE TEACHING OF ENTREPRENEURSHIP Entrepreneurship-Focused Periodicals Periodical Web Site Address Bloomberg Businessweek www.businessweek.com Economist http://www.economist.com/ Entrepreneur www.entrepreneur.com Fast Company www.fastcompany.com Harvard Business Review https://hbr.org Hom e Business Journal www.homebusinessjournal.net Home Business Magazine www.homebusinessmag.com/ Inc. www.inc.com Industry Week www.industryweek.com/ Minority Business Entrepreneur www.mbemag.com MIT Technology Review www.technologyreview.com San Jose Mercury News www.mercurynews.com/ Small Business Opportunities www.sbomag.com The Business Journals www.bizjournals.com The Wall Street Journal www.wsj.com Wired www.wired.com Entrepreneurship-Focused Web Sites (general information) Web Site Web S ite Address 3 Day Startup http://3daystartup.org/ All Business www.allbusiness.com America’s SBDC http://americassbdc.org/ Austin Startup http://austinstartup.com/ BizFilings www.bizfilings.com BizStats.com www.bizstats.com Bloomberg Business Week Small Business www.businessweek.com/smallbiz Both Sides of the Table http://www.bothsidesofthetable.com/ BusinessFinance.com www.businessfinance.com CEO (Collegiate Entrepreneurs’ Organization) http://www.c-e-o.org/

  13. Page 13
    Read page 13 as text

    Part 3: Student and Instructor Resources 337 College Startup http://w ww.colleges tartup.org Dorm Room Fund http://dormroomfund.com eCorner http://ecorner.stanford.edu/ Entr epreneurship.org www.entrepreneurship.org/ Entrepreneurship Education on the Web http://eweb.slu.edu Escape From Cubic le Nation http://www.escapefromcubiclenati on.com/ Global Entrepreneurship Monitor www.gemconsortium.org Global Student Entrepreneur Awards www.gsea.org Growththink www.growththink.com Hacker News https://news.ycombinator.com/ Harvard Business School Entrepreneurs http://www.hbs.edu/entrepre neurship/ Idea Café www.businessownersideacafe.com Immpreneur http://immpreneur.com Mixery www.mixery.com Morebusiness www.morebusiness.com National Association for the Self - Employed http://www.nase.org/ National Federation of Independent Business w ww.nfib.com OnStartups www.onstartups.com Paul Graham’s Essays http://www.paulgraham.com/articles.html Red Herring www.redherring.com SEC Filings www.sec.gov/edgar.shtml Small Business Advisor www.isquare.com Small Business Labs http://www.smallbizla bs.com/ Small Business Trends www.smallbiztrends.com Startup Company Lawyer http://www.startupcompanylawyer.com/ Startup Digest https://www.startupdigest.com/ Startup Nation http://www.startupnation.com/ Startup Weekend http://startupweekend.org/ Ste ve Blank www.steveblank.com STVP Educators Corner (Stanford) http://edcorner.stanford.edu TechCrunch http://techcrunch.com/ The Franchise King http://www.thefranchiseking.com/ The Lean Startup http://theleanstartup.com/ The Maverick CEO http://maveri ck - ceo.com/ TheSelfEmployed www.theselfemployed.com Under30CEO http://under30ceo.com/ UFunded www.ufunded.com U.S. Small Business Administration www.sba.gov Venture Beat http://venturebeat.com/ Venture Hacks http://venturehacks.com/ Yahoo! Finance h ttp://biz.yahoo.com/ic/index.html Young Ups tarts http://www.youngupstarts.com/

  14. Page 14
    Read page 14 as text

    Part 3: Student and Instructor Resources 338 Entrepreneurship-Focused Web Sites (specific information) Web Site Web Site Address A ngel Investor News www.angel - investor - news.com AngelList https://angel.co BizPlanIt www.bizplanit.com BizStats www.bizstats.com BPlans www.bplans.com BusinessFinance.com www.businessfinance.com Center for Business Planning www.businessplans.org Center for Rural Entrepreneurship http://www.energizingentrepreneurs.org/ Chic CEO http:/ /www.chic - ceo.com/ Cool Business Ideas www.coolbusinessideas.com CollabFinder www.collabfinder.com Collegiate Entrepreneurs Organization www.c - e - o.org CrunchBase www.crunchbase.com Duck Tape Marketing http://www.ducttapemarketing.com/ Dutiee (Social Startups) www.dutiee.com E2 Environmental Entrepreneurship www.e2.org EpicLaunch http://epiclaunch.com/ Evan Carmichael www.evancarmichael.com Fambiz.com (family business) www.fambiz.com FindLaw http://biz.findlaw.com Fit Small Business http://fitsma llbusiness.com/ FundersClub https://fundersclub.com/ Franchise.com www.franchise.com Franchise Direct www.franchisedirect.com Franchise Opportunities http://www.franchiseopportunities.com/ IRS — Small Business http://www.irs.gov/Businesses/Small - Busines ses - & - Self - Employed/Small - Business - and - Self - Employed - Tax - Center - 1 Knowledge @ Wharton http://knowledge.wharton.upenn.edu/ Ladies Who Launch www.ladieswholaunch.com Marketwatch From Dow Jones www.marketwatch.com Microsoft Business Hub http://www.microso ft.com/en - us/business/ Money Tree Report www.pwcmoneytree.com NASDAQ www.nasdaq.com National Business Incubation Association www.nbia.org National Inventor Fraud Center www.inventorfraud.com National Venture Capital Association www.nvca.org Quora www .quora.com Quirky www.quirky.com

  15. Page 15
    Read page 15 as text

    Part 3: Student and Instructor Resources 339 ReadWrite http://readwrite.com/ RealTimeBoard hppp://realtimeboard.com SCORE https://www.score.org/ SEC Edgar Database www.sec.gov/edgar.shtml Service Corps of Retired Executives www.score.org Small Business State Ec onomic Profiles https://www.sba.gov/category/advocacy - navigation - structure/research - and - statistics/state - economic - profiles Springwise http://www.springwise.com/ Startup Lawyer www.startuplawyer.com The Capital Connection www.capital - connection.com The Center for Venture Research https://paulcollege.unh.edu/cvr VentureWell www.venturewell.org Unassumer www.unassumer.com U.S. Patent and Trademark Office www.uspto.gov/ Valuation Resources www.valuationresources.com Yahoo! IPO News http://biz.yahoo.com/reports/ipo.html YEC http://yec.co Entrepreneurship-Focused Blogs Blog Web Site Address A VC — Musings of a VC in NYC http://avc.blogs.com Ask the V C http://www.askthevc.com/wp/ Be Excellent http://www.sixdisciplines.com/_blog/The_ Six_Disciplines_Blog Ben Casnocha http://casnocha.com/blog Business Opportunity Blog www.businessopportunity.com Business Opportunities Weblog www.business - opportunities .biz Canadian Entrepreneur http://canentrepreneur.blogspot.com/ Dan Dodge on the Next Big Thing http://dondodge.typepad.com/ David Cancel http://davidcancel.com/ Dave McClure http://500hats.com/ Entrepreneurs - Journ ey www.entrepreneurs - journey.com Fel dThoughts www.feld.com For Entrepreneurs http://www.forentrepreneurs.com/ Guy Kawasaki’s Blog http://blog.guykawasaki.com/ Innovation Net http://venture2.typepad.com/innovationnet/ John Battelle’s Searchblog http://battellemedia.com Jordan Cooper’s Blog http://jordancooper.wordpress.com/ Pamela Slim http://pamelaslim.com/blog/ Paul Allen www.paulallen.net Paul Graham http://paulgraham.com/ Practice Trumps Theory http://practicetrumpstheory.com/

  16. Page 16
    Read page 16 as text

    Part 3: Student and Instructor Resources 340 Rajesh Set t y http://www.rajeshsetty.com/ Redeye VC http://redeye.firstround.com Seth Godin Blog www.sethgodin.com/sg/ Signal vs. Noise https://signalvnoise.com/posts Silicon Prairie News http://siliconprairienews.com/ Small Business Ideas Blog http://www.smallbusinessideasblog.com/ Start Up Blog http ://startupblog.wordpress.com/ Social Entrepreneurship Blog www.socialroi.com The Entrepreneurial Mind http://www.drjeffcornwall.com/ This Is Going To Be Big… http://www.thisisgoingtobebig.com/ Tony Wright http://www.tonywright.com/ Ventur e Beat www.ven turebeat.com VentureBlo g www.ventureblog.com YoungEntrepreneur www.youngentrepreneur.com/blog Xconomy http://www.xconomy.com/ Entrepreneurship-Focused Podcasts Podcast Web Site Address Entrepreneur on Fire http://www.entrepreneuronfire.com/ Got In vention Radio Podcast www.gotinvention.com/ Foundation http://foundation.bz HBR Idea Cast Access via iTunes Mixergy www.mixergy.com PRI: Social Entrepreneurship Access via iTunes Stanford Entrepreneurial Thought Leaders http://ecorner.stanford.edu/po dcasts.html Startups for the Rest of Us http://www.startupsfortherestofus.com/ This Week in Startups http://thisweekinstartups.com/ Entrepreneurs and Organizations to Follow on Twitter Entrepreneur Twitter Account Altucher, James — Author and Blogger @jaltucher Baer, J — Austin, TX Entrepreneur @JoshuaBaer Blank, Steve — Lean Startup Advocate @sgblank Brans o n, Richard @RichardBranson Conway, Ron — Angel Investor @RonConway Creative Sandbox @CreativeSandbox Cuban, Mark — Shark Tank Shark @mcuban Dorsey, Jack — Co - founder of Twitter @Jack Entrepreneur Magazine @EntMagazine Entrepreneurs @EntrepreneursQ Fast Company @FastCompany

  17. Page 17
    Read page 17 as text

    Part 3: Student and Instructor Resources 341 Feld, Brad — Venture Capitalist @bfeld Ferris, Tim — Author of 4 - Hour Workweek @Tferris FOXBusiness @FoxBusiness Gerber, Michael — Author @Micha e lEGerber Gladwell, Malcolm — Author @Gladwell Godin, Seth — Author @thisissethsblog Google for Entrepreneurs @googleforentrepreneurs Hsi e h, Tony — CEO of Twitter @tonyhsieh Inc Magazine @Inc Innovation America @Innovation Daily Innovation L LC @innovation John, Daymond — Shark Tank Shark @TheSharkDaymond Kauffman Foundation @KauffmanFDN Kawasaki, G — Entrepreneur and Author @GuyKawasaki Khan Academy @khanacademy Kickstarter @kickstarter Lean Startup Circle @LeanCircle Michaels, J — Fitness G uru Entrepreneur @JillianMichaels NFIB @NFIB O’Leary, Kevin — Shark Tank Shark @kevinolearytv Osterwalder, Alex — Author @AlexOsterwalder Ries, Eric — Lean Startup Advocate @ericries Start - Ups Co @Start_Ups_Co Suster, Mark — Venture Capitalist @msuster S XSW @sxsw T ED Talks @TEDTalks T echstars @techstars The Lean Startup @leanstartup 3 Day Startup @3DayStartup 30 Second MBA @30SecMBA Shark Tank @ABCSharkTank Startup America @StartupAmerica Startup Chronicle @StartUpChron Under30CEO @Under30CEO Ve nture Hacks @venturehacks Vaynerchuk, Gary — Entrepreneur @GaryVee VentureWell @venturewell WSJ @wsj WSJstartup @WSJstartup Wired @WIRED Women Entrepreneur @WomenEnt YCombinator Startups @YCstartups YoungEntrepreneur @YoungTrep YoungWorld Inventor s @YWInventors

  18. Page 18
    Read page 18 as text

    Part 3: Student and Instructor Resources 342 Entrepreneurship-Focused Scholarly Journals Journal Web Site Address Entrepreneurship & Regional Development http://www.tandfonline.com/toc/TEPN20/c urrent#.VJhzW4AGA Entrepreneurship Theory & Practice http://onlinelibrary.wiley.com/journal/10.1 111/(ISSN)1540-6520 Frontiers of Entrepreneurship Research http://www.babson.edu/Academics/centers/ blank-center/bcerc/Pages/frontiers-of- entrepreneurship-research.aspx Journal of Business Venturing http://www.journals.elsevier.com/journal- of-business-venturing/ Journal of Small Business Management http://onlinelibrary.wiley.com/journal/10.1 111/(ISSN)1540-627X Journal of Small Business Strategy http://smallbusinessinstitute.biz/page- 1259165? Small Business Economics http://www.springer.com/business+%26+m anagement/business+for+professionals/jour nal/11187 Strategic Entrepreneurship Journal http://onlinelibrary.wiley.com/journal/10.1 002/(ISSN)1932-443X The Journal of Product Innovation Management http://onlinelibrary.wiley.com/journal/10.1 111/(ISSN)1540-5885 Venture Capital — An International Journal of Entrepreneurial Finance http://www.tandfonline.com/toc/tvec20/cur rent#.VJhyA4AGA Company Information Web Site Web Site Address Annual Report Service www.annualreportservice.com CEO Express www.ceoexpress.com BRINT www.brint.com Business Wire www.businesswire.com Hoover’s Online www.hoovers.com PR Newswire www.prnewswire.com Thomas Register http://www.thomasnet.com/ The Wall Street Journal www.wsj.com

  19. Page 19
    Read page 19 as text

    Chapter 1: Introduction to Entrepreneurship 1 CHAPTER 1 INTRODUCTION TO ENTREPRENEURSHIP LEARNING OBJECTIVES After studying this chapter students should be ready to: 1. Describe entrepreneurship, corporate entrepreneurship, and the characteristics of entrepreneurial firms. 2. Discuss three main reasons people decide to become entrepreneurs. 3. Identify four main characteristics of successful entrepreneurs. 4. Explain five common myths regarding entrepreneurship. 5. Discuss the three types of start-up firms. 6. Discuss the changing demographics of entrepreneurs in the United States. 7. Discuss the positive effects of entrepreneurship and entrepreneurial firms on economies and societies. 8. Explain the entrepreneurial process. 9. Learn how understanding entrepreneurship and the entrepreneurial process can facilitate your career success. CHAPTER OVERVIEW This chapter (1) introduces the book, (2) provides an overview of the entrepreneurial process, and (3) introduces a conceptual model that shows how the entrepreneurial process typically unfolds. The model, which is shown at the top of the next page, depicts the entrepreneurial process as a 10-step process, beginning with the decision to become an entrepreneur. The chapters of the book follow the model. We hope that this approach provides your students a nice visual way of understanding how the entrepreneurial process unfolds. The chapter focuses on why people become entrepreneurs, the characteristics of successful entrepreneurs, the changing demographics of entrepreneurs, and the importance of entrepreneurship to the economy and society. The three boxed features, which appear in every chapter, are introduced. The chapter ends with a brief discussion of each of the major sections of the book. The chapter, like the rest of the book, is written in an upbeat yet realistic manner.

  20. Page 20
    Read page 20 as text

    Chapter 1: Introduction to Entrepreneurship 2 Basic Model of the Entrepreneurial Process The Model Parallels the Chapters in the Book CHAPTER OUTLINE CHAPTER OUTLINE I. Introduction to Entrepreneurship II. What Is Entrepreneurship and Why Is It Important? III. Why Do People Become Entrepreneurs? A. Be Their Own Boss B. Pursue Their Own Ideas C. Pursue Financial Rewards IV. Characteristics of Successful Entrepreneurs A. Passion for the Business B. Product/Customer Focus C. Tenacity Despite Failure D. Execution Intelligence V. Common Myths About Entrepreneurs A. Myth 1: Entrepreneurs Are Born, Not Made B. Myth 2: Entrepreneurs Are Gamblers C. Myth 3: Entrepreneurs Are Motivated Primarily by Money D. Myth 4: Entrepreneurs Should be Young and Energetic E. Myth 5: Entrepreneurs Love the Spotlight VI. Types of Start-Up Firms VII. Changing Demographics of Entrepreneurs A. Women Entrepreneurs B. Minority Entrepreneurs C. Senior Entrepreneurs D. Millennial Entrepreneurs VIII. The Positive Effects of Entrepreneurship and Entrepreneurial Firms

  21. Page 21
    Read page 21 as text

    Chapter 1: Introduction to Entrepreneurship 3 A. Economic Impact of Entrepreneurial Firms B. Entrepreneurial Firms’ Impact on Society C. Entrepreneurial Firms’ Impact on Larger Firms IX. The Entrepreneurial Process A. Decision to Become an Entrepreneur (Chapter 1) B. Developing Successful Business Ideas (Chapters 2 – 6) C. Moving from an Idea to an Entrepreneurial Firm (Chapters 7 – 10) D. Managing and Growing an Entrepreneurial Firm (Chapters 11 – 15) X. Developing Skills for your Career CHAPTER NOTES I. Introduction to Entrepreneurship  There is tremendous interest in entrepreneurship around the world.  Although the highest rates of entrepreneurial start-up activity occur in low- income countries, where good jobs are not plentiful, the rates are also impressive in high-income countries. According to the GEM Study, 1 out of every 8 ½ (11.9%) of American adults is actively engaged in starting a business or is the owner/manager of a business that is less than three-and-a- half years old. II. What Is Entrepreneurship and Why Is It Important?  Entrepreneurship is defined as the process by which individuals pursue opportunities without regard to resources they currently control for the purpose of exploiting future goods and services.  We want to note here that established firms with an orientation toward acting entrepreneurially practice corporate entrepreneurship.  All firms fall on a conceptual continuum that ranges from highly conservative to highly entrepreneurial. III. Why Do People Become Entrepreneurs? A. Be Their Own Boss. Many entrepreneurs want to be their own boss because either they have had a long-term ambition to own their own business or they have become frustrated working in traditional jobs. B. Pursue Their Own Ideas. Some people are naturally alert, and when they recognize ideas for new products or services, they have a desire to see those ideas realized. C. Pursue Financial Rewards. People start their own firms to pursue financial rewards. This motivation, however, is typically secondary to the first two and often fails to live up to its hype.

  22. Page 22
    Read page 22 as text

    Chapter 1: Introduction to Entrepreneurship 4 IV. Characteristics of Successful Entrepreneurs A. Passion for the Business. The number one characteristic shared by successful entrepreneurs is passion for the business. This passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. B. Product/Customer Focus. An entrepren eur’s keen focus on products and customers typically stems from the fact that most entrepreneurs are, at heart, craftspeople. C. Tenacity Despite Failure. Because entrepreneurs are typically trying something new, the failure rate associated with their efforts is naturally high. Developing a new business may require a certain degree of experimentation before a success is attained. Setbacks and failures inevitably occur during the process. The litmus test of entrepreneurs is their ability to persevere through setbacks and failures. D. Execution Intelligence. The ability to effectively execute a business idea means developing a business model, putting together a new-venture team, raising money, managing finances, leading employees, and so on. V. Common Myths About Entrepreneurs A. Myth 1: Entrepreneurs Are Born, Not Made. This myth is based on the mistaken belief that some people are genetically predisposed to be an entrepreneur. B. Myth 2: Entrepreneurs Are Gamblers. Entrepreneurs are usually moderate risk takers, as are most people. C. Myth 3: Entrepreneurs Are Motivated Primarily by Money. It is naïve to think that entrepreneurs don’t seek financial rewards. As discussed previously, however, money is rarely the primary reason entrepreneurs start new firms. D. Myth 4: Entrepreneurs Should Be Young and Energetic. Although it is important to be energetic, investors often site the strength of the entrepreneurs (in terms of business experience, skill, and talent) as their most important criterion in the decision to fund a new venture. E. Myth 5: Entrepreneurs Love the Spotlight. While some entrepreneurs are flamboyant, the vast majority of them do not seek or attract public attention. Typically those that are working on proprietary products or services avoid public notice.

  23. Page 23
    Read page 23 as text

    Chapter 1: Introduction to Entrepreneurship 5 VI. Types of Start-Up Firms A. Salary-Substitute Firms. Are small firms that afford their owner or owners a similar level of income to what they would earn in a conventional job. 1. Examples of salary-substitute firms are dry cleaners, convenience stores, restaurants, accounting firms, and hairstyling salons. B. Lifestyle Firms. Provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so. 1. Examples of lifestyle firms include ski instructors, golf pros, and tour guides. C. Entrepreneurial Firms. Bring new products and services to market by creating and seizing opportunities. 1. Examples of entrepreneurial firms are Dropbox, Facebook, and Uber. VII. Changing Demographics of Entrepreneurs A. Women Entrepreneurs. Although men are still more likely to start businesses than women, the number of women-owned businesses is increasing. According to a study commissioned by American Express and OPEN, there were 11.3 million women-owned businesses in the United States in 2016. B. Minority Entrepreneurs. There has been a substantial increase in minority entrepreneurs in the United States. In 2012 (the most recent stats available), there were 8 million minority-owned firms. 1. The average gross receipts for minority-owned firms was $58,119. C. Senior Entrepreneurs. The number of seniors (those 50 years of age and older) starting businesses is substantial and growing. In 2015, 5.4 percent of new businesses were started by people 62 years and older. D. Millennial Entrepreneurs. A desire to pursue an entrepreneurial career is high among young people. According to a Bentley University survey, 66 percent of millennials have a desire to start their own businesses. VIII. The Positive Effects of Entrepreneurship and Entrepreneurial Firms A. Economic Impact of Entrepreneurial Firms. For two reasons, entrepreneurial behavior has a strong impact on an economy’s strength and stability.

  24. Page 24
    Read page 24 as text

    Chapter 1: Introduction to Entrepreneurship 6 1. Innovation. Innovation is the process of creating something new, which is central to the entrepreneurial process. Small innovative firms are 16 times more productive than larger innovative firms in terms of patents per employee. 2. Job creation. According to the SBA, small businesses create a substantial number of net new jobs in the United States. Firms with 500 or fewer employees created more than 7 million out of the 11 million new jobs created during the recent economic recovery. B. Entrepreneurial Firms’ Impact on Society. The innovations of entrepreneurial firms have a dramatic impact on society. Think of all the new products and services that make our lives easier, enhance our productivity at work, improve our health, and entertain us. Many of these products and services were conceived and brought to market by entrepreneurial firms. C. Entrepre neurial Firms’ Impact on Larger Firms . In addition to the impact entrepreneurial firms have on the economy and society, entrepreneurial firms have a positive impact on the effectiveness of larger firms. 1. For example, some entrepreneurial firms are original equipment manufacturers, producing parts that go into products that larger firms manufacture and sell. 2. Thus, many exciting new products are not solely the result of the efforts of larger companies with strong brand names. They were produced with the cutting-edge component parts or research development efforts provided by entrepreneurial firms. 3. The evidence shows that many entrepreneurial firms have built their entire business models around producing products and services that help larger firms be more efficient or effective. IX. The Entrepreneurial Process  Figure 1.3 in the book (and reproduced earlier in this review) models the entrepreneurial process. This process is the guide or framework we use to develop this book’s contents. A. Decision to Become an Entrepreneur (Chapter 1). As discussed earlier, people become entrepreneurs to be their own boss, to pursue their own ideas, and to realize financial rewards. B. Developing Successful Business Ideas (Chapters 2 – 6). Many new businesses fail not because the ent repreneur didn’t work hard but because there was no real opportunity to begin with.

  25. Page 25
    Read page 25 as text

    Chapter 1: Introduction to Entrepreneurship 7 1. Developing a successful business idea includes opportunity recognition, feasibility analysis, developing an effective business model, industry and competitor analysis, and writing a business plan. C. Moving from an Idea to an Entrepreneurial Firm (Chapters 7 – 10). This is a critical stage in the entrepreneurial process. 1. This section deals with preparing the proper ethical and legal foundation, assessing a new venture’s financ ial strength and viability, building a new- venture team, and getting financing or funding. D. Managing and Growing an Entrepreneurial Firm (Chapters 11 – 15). Given today’s competitive environment, all firms must be managed and growth properly maintained to ensure their ongoing success. This is the final stage of the entrepreneurial process. 1. This section deals with unique marketing issues, the importance of intellectual property, preparing for and evaluating the challenges of growth, strategies for growth, and franchising. X. Developing Skills for your Career A. Whether you want to be an entrepreneur or not, the contents of this book address a number of “employability” skills that are critical to have a successful career in organizations. Key among these skills are ethics and social responsibility, critical thinking, collaboration, and data literacy. BOXED FEATURES: QUESTIONS FOR CRITICAL THINKING Note: Each boxed feature in the textbook is followed by four questions. The questions can be used for individual or group assignments or can be used to stimulate classroom discussion. The following are suggested answers for the questions at the end of each boxed feature. What Went Wrong? Prim: How a Lack of Passion and Resolve Can Kill a Business 1. Why is passion s uch a critical part of entrepreneurial success? Prim’s founders were apparently passionate about building a company but not the laundry business specifically. In what ways is this combination problematic? Answer: The number one characteristic shared by successful entrepreneurs is a passion for their business. The passion typically stems from the entrepreneur’s belief that the business will positively influence people’s lives. Prim’s founder may have mistakenly developed a passion for starting a business rather than a

  26. Page 26
    Read page 26 as text

    Chapter 1: Introduction to Entrepreneurship 8 passion for the business they started. This is problematic because once the initial excitement of starting the business was over (and the business started experiencing challenges), the founders were left with the day - to - day grind of running the business and may have found that they weren’t as interested in the (laundry) business as they originally thought they would be. One way to check whether one’s passion is real is to work in the industry your firm will participate in (over an extended perio d of time, if possible) to see if you like it. Some franchise organizations, for example, require prospective franchisees to work in one of the company’s franchise outlets for a period of time, just to ensure that they like the work before they become fran chisees. As illustrated throughout the book, starting a business is a rewarding yet challenging process. There will be many ups and downs . A person’s passion for the business that he or she starts is what sustains one during the challenging periods. 2. How could Prim’s co - founders have better anticipated that laundry services would eventually see Prim as siphoning off their own business and be reluctant to work with them? Answer: Students will vary in terms of their answer to this question. One thing Pr im’s co - founders could have done prior to starting the business is complete a thorough feasibility analysis. This topic is addressed in Chapter 3. By talking to laundry services in advance, the founders may have gained an awareness that their business mode l was not viable. 3. Rather than employ its own drivers to pick up and deliver laundry for its customers, Prim relied on the use of third - party delivery services. In what ways do you think this approach could have limited Prim’s growth in other markets ? Answer: Prim was not developing core competencies in the logistics of its operations. At its heart, Prim was a pick up and delivery service. It picked up its customers ’ laundry, took the laundry to a laundry service to have washed and folded, and then r eturned the laundry to the customer. If Prim had developed unique capabilities in performing this ta s k, it could have extended its pick up and delivery service to other industries. Instead, Prim outsourced this service so it developed no core competencies in this area. 4. San Francisco, the city in which Prim launched, has several innovative laundry services. These services include LaundryLocker, where you drop your clothes in a public locker ; Sfwash, a delivery service where you pay by the pound ; and Su dzee, which requires special lockable bags. Spend some time studying LaundryLocker ( https://laundrylocker.com ), Sfwash ( https://sfwash.com ), and Sudzee ( http://sudzee.com ). Select the service that you think has the most potential and explain the rationale for your selection. Compare the service to Prim’s approach.

  27. Page 27
    Read page 27 as text

    Chapter 1: Introduction to Entrepreneurship 9 Answer: L aundry Locker’s customers place their laundry in a locker and the customers a re notified by text when the laundry is finished and returned to the locker (within two business days). S f wash picks up your laundry (at your home or business) and returns it to the same address. The pick up and delivery times are done within agreed upon w indows of time. Sudzee offers two options. It offers home pick up and return, similar to Sfwash. It also offers a service where customers can place their laundry in a large secure container in a Sudzee bag. Sudzee will notify the customer when the laundry is done. The laundry can be retrieved from the container via a secure four - digit code. Pricing seems to be similar across the companies. Sudzee seems to be the best — capturing the advantages of both Sfwash, which offers a pick up and delivery service, and L au ndry Locker, which offers a dropoff and retrieval service as explained. It also beats out Prim, which offered only the pick up and delivery service. Savvy Entrepreneurial Firm Start-Up Incubators and Accelerators: A Smart Way of Gaining Access to Mentors, Partners, Investors, and Other Critical Start-Up Resources 1. If you were starting a new venture, do you think you would benefit from participating in a business incubator or accelerator program? If so, what do you think the primary benefits would be? Answer: Most students will say they would benefit from participating in a business incubator or accelerator program. The obvious benefits are gaining access to mentors and advisors. Start-up incubators and accelerators are also fertile places for entrepreneurs to meet potential co-founders, business partners, and equity investors. 2. Find an example of a start-up incubator or accelerator at the college or university you are attending or in the town you live in or a nearby city. Describe the program. Which one of the programs mentioned in this feature does it resemble the most? Answer: Answers will vary for this question. Many university entrepreneurship programs support a start-up incubator or accelerator, as do many towns and cities. The incubators and accelerators will vary in terms of the programs and terms they offer, but the benefits are similar across locations. 3. If you have a promising business idea, what can you do while you’re in college to improve your chances of being admitted to a prestigious start-up incubator or accelerator program when you graduate? Answer: Answers will vary to this question. Most students will say that involvement in the following college activities will boost their chances of being accepted into an incubator:

  28. Page 28
    Read page 28 as text

    Chapter 1: Introduction to Entrepreneurship 10  Coursework in entrepreneurship.  Participation in entrepreneurship - related activities, such as pitch competitions and business plan competitions, and winning awards in those activities.  Participating in a college or university - sponsored incubator.  Networkin g (to the extent that the student could ask several high - profile entrepreneurs or investors to write letters of support).  Make good headway on a business idea, so the student is partway down the runway prior to apply ing for admittance to the incubator. 4. Make a list of the types of mentors that a participant in a start - up incubator or accelerator program might encounter . Answer: There are a number of partnership opportunities that are likely to emerge from participating in an accelerator program. They include:  Identifying a potential co - founder for a business.  Identifying potential channel partners.  Identifying potential investors.  Identifying potential advisory board members and other mentors and advisors. Partnering for Success Partnering with College Students via Campus Ambassador and Campus Rep Programs 1. As part of your college experience, do you think you would benefit from participating in a campus ambassador or campus rep program? Why or why not? Answer: Most students will say they would benefit from participating in a campus ambassador or campus rep program. These are more like paid internships and so the obvious benefits are gaining access to prospective employers and gaining experience at the same time. In addition, such positions also help to defray living costs. 2. In what ways would participating in a campus ambassador or campus rep program help you prepare to own your own business someday? Answer: The main way is that a campus ambassador or a campus rep becomes an evangelist for the product. T his helps when marketing the product of one’s own business. It also helps in creating a network which would be useful in helping a start-up succeed. 3. Why do you think companies such as Apple, Flex Watches, and Her Campus Media sponsor campus ambassador or campus rep programs? How do the companies benefit?

  29. Page 29
    Read page 29 as text

    Chapter 1: Introduction to Entrepreneurship 11 Answer: The companies benefit because they get low cost grassroots marketing. Also, when a company’s target market is young people, this allows for peer - to - peer selling. Finally, i t helps these companies in their recruitment process. 4. What types of start - ups would benefit the most from starting campus ambassador programs? Answer: It is likely that such programs help companies that sell a product or a service to consumers and n ot businesses. In addition, if the target demographic is young people, these programs help in grassroots marketing. REVIEW QUESTIONS 1-1. Do you anticipate that entrepreneurship will continue spreading throughout the world, or do you think its appeal will subside over time? Answer: All indicators point to entrepreneurship continuing to spread throughout the world. The primary reasons are: (1) the downsizing of large firms, which have placed a large number of people off the job market that would rather start their own firm than work for another large firm; (2) the push for improved efficiency and effectiveness on the part of firms and individuals, which has provided entrepreneurs the opportunity to meet needs; (3) the rapid pace of change that is taking place worldwide, which provides entrepreneurs additional opportunities to meet needs; and (4) the increasing recognition that entrepreneurship is the engine that fuels economic growth and prosperity worldwide. Most students will argue that there is no reason to think the appeal of entrepreneurship will subside over time. The need to solve problems and meet unmet needs is universal worldwide. 1-2. What key insights does the GEM study provide us about entrepreneurship? Answer: The key insight provided by the GEM study is that entrepreneurial activity is taking place across the world. In addition, although the highest rates of entrepreneurial start-up activities occur in low-income countries, where good jobs are not as plentiful, the rates are also impressive in high-income countries such as France, United Kingdom, and the United States. The GEM study also identifies whether its respondents are starting a new business to take advantage of an attractive opportunity or because of necessity to earn an income. The majority of people in high-income countries are drawn to entrepreneurship to take advantage of attractive opportunities. The reverse is true of people in low- income countries, who tend to be drawn to entrepreneurship primarily because of necessity.

  30. Page 30
    Read page 30 as text

    Chapter 1: Introduction to Entrepreneurship 12 1-3. What does evidence show us about the rate of failure associated with entrepreneurial ventures? Answer: One criticism of entrepreneurship, which is often repeated in the press, is that the majority of new businesses fail. It simply isn’t true. The often used statistic that 9 out of 10 businesses fail in their first few years is an exaggeration. According to the Bureau of Labor Statistics, over half the businesses started are still in existence five years later. 1-4. What is entrepreneurship? Answer: The standard definition for entrepreneurship is that it’s “the process by which individuals pursue opportunities without regard to resources they currently control. ” It can occur at the individual level, the team or group level, or at the corporate level. There are other definitions of entrepreneurship. Fred Wilson, a venture capitalist, defines entrepreneurship as “the art of turning an idea into a business.” Both definitions focus on behaviors. In general, entrepreneurship is associated with the task of identifying opportunities and putting useful ideas into practice. 1-5. In what ways is an entrepreneur who just launched a restaurant different from someone who just took a job as the general manager of a restaurant owned by a major restaurant chain? Answer: Entrepreneurial firms, which are the focus of this book, bring new products and services to market by seizing opportunities. The person who just launched a restaurant is bringing a new product or service to market, and is assuming the risk associated with doing that. The person who just took a job as the general manager of a restaurant isn’t bringing something new to market. Although the person is assuming employment risk, he/she isn’t assuming the risk of owning a business. 1-6. What are the three main attributes of firms that pursue high levels of corporate entrepreneurship? Answer: Entrepreneurial firms are typically proactive, innovative, and not averse to taking risks. 1-7. What are the three primary reasons people become entrepreneurs? Answer: The three primary reasons that people become entrepreneurs and start their own firms are to (1) be their own boss, (2) pursue their own ideas, and (3) realize financial rewards.

  31. Page 31
    Read page 31 as text

    Chapter 1: Introduction to Entrepreneurship 13 1-8. Of the three primary reasons people become entrepreneurs, which one is given most commonly and why? Answer: Be their own boss. The reason this is the most common motivation for becoming an entrepreneur is either because some people have a long-standing ambition to be their own boss or because they become frustrated working in traditional jobs. For many people, a traditional job may be too confining and they yearn for the freedom that entrepreneurship brings. 1-9. Why is passion such an important characteristic of successful entrepreneurs? Answer: The passion that an entrepreneur feels for his or her business typically stems from a belief that the business will positively influence people’s lives. It is important that this passion exist because the process of starting and building a new firm is demanding. 1-10. What is it about passion that makes it particularly compatible with the entrepreneurial process? Answer: Passion is particularly important because, although rewarding, the process of starting a firm or building a business is demanding. Absent passion, the demands would outweigh the potential rewards for people who are not passionate about what they’re doing. 1-11. Why is product/customer focus an important characteristic of successful entrepreneurs? Answer: Although all parts of the entrepreneurial process are important, ultimately if a new business does not have a successful product that is directed toward a receptive market the business will fail. A product/market focus also involves the diligence to spot product opportunities and to see them through to completion. 1-12. What is it about “tenacity” that makes it such an important characteristic for entrepreneurs? Answer: Because entrepreneurs are typically trying something new, the possibility of failure exists. The litmus test for entrepreneurs is the tenacity that they have to persevere through setbacks and failures. 1-13. What are the five common myths of entrepreneurship? Answer: The five common myths of entrepreneurship are as follows:

317 more pages in the full document

Unlock it once and it stays in your library, ready to chat with or turn into flashcards.

Unlock the full document

More Entrepreneurship study materials

See all

Study this document with CramX

Once it is in your library, every tool can work from it.