BUS206: Chapter 7 Managing Entrepreneurial Ventures

define entrepreneurship

the process of capitalizing on opportunities by starting new businesses for the purposes of changing, revolutionizing, transforming, or introducing new products or services

what are entrepreneurial ventures (EVs)?

organizations that pursue opportunities, are characterized by innovative practices, and have growth and profitability as their main goals

what are small businesses?

an independent business that does not necessarily engage in any new or innovative practices and that has relatively little impact on its industry

what are the types of entrepreneurship?

opportunity-based, necessity, serial, portfolio, and social

define opportunity-based entrepreneurs

individuals who start an EV to pursue an opportunity

define necessity entrepreneurs

individuals who start an EV out of necessity

define a serial entrepreneur

an individual who has sold or closed an original business, founded another business, sold or closed that business, and continues this cycle of entrepreneurship neurial behavior

define a portfolio entrepreneur

an individual who retains an original business and builds a portfolio of additional businesses through inheriting, establishing, or purchasing them

define a social entrepreneur

an individual that seeks out opportunities to improve society by using practical, innovative, and sustainable approaches

why is entrepreneurship important?

it leads to job creation, innovation, several new startups, and global entrepreneurship

what happens in the entrepreneurial process?

entrepreneurs assess the potentional for the EV, deal with startup issues, plan the venture, organize the venture, launch the venture, and manage the various processes of the venture

what needs to be managed in an entrepreneurial venture?

processes, people, and growth because they are crucial for long-term success

what are the seven sources of opportunity that entrepreneurs might look for externally?

the unexpected, the incongruous, the process need, industry and market structures, demographics, changes in perception, and new knowledge

define the unexpected opportunity

when situations or events are unanticipated, opportunities can be found for entrepreneurs to pursue

define the incongruous opportunity

when conventional wisdom about the way things should be no longer holds true, entrepreneurs are willing to think outside the box

define the process need opportunity

opportunities arise in the tiny steps toward a monumental breakthrough

define industry and market structure opportunities

when changes occurs in the industry and market structures, they become open targets for EVs

define opportunites from demographics

many opportunities can be realized by anticipating and meeting the changing needs of the population (demographic trends)

define opportunities from changes in perception

when peoples attitudes and values change it can create opportunities

define new knowledge opportunities (significant source)

when new knowledge is discovered entrepreneurs can try to do something with it without telling its competitors

what occurs in a feasibility study?

evaluates the practicality and potential success of a project or venture by analyzing various factors, including market demand, financial viability, technical requirements, and legal considerations

what do entrepreneurs do after they have the info from a feasibility study?

they must assess the competition and identify if the potential EV will compete successfully

what are possible funding forces for EVs?

entrepreneur’s personal savings, loans from banks, venture capitalists, angel investors (private), initial public offering, business development programs, and advertising

what planning do entrepreneurs need to do?

they must develop and write a business plan (extensive)

define a business plan

a written document that summarizes a businesses opportunity and defines and articulates how the identified opportunity is to be seized and exploited, requires careful planning and creative thinking

why is a good business plan valuable?

it pulls together all of the elements of the entrepreneur’s vision into a single coherent document

what additional planning considerations do entrepreneurs need to address?

they should think about the desired organizational values, vision, mission, and culture

what six major areas are covered in a good business plan?

executive summary (1-2 pages, clear and concise, memo format), analysis of opportunity, analysis of the context (broad external changes), description of the business, financial data and projections (scenarios), and supporting documentation

define executive summary

summarizes the key points that the entrepreneur wants to make about the proposed EV

define analysis of opportunity

entrepreneur presents the details of the perceived opportunity, includes (1) sizing up the market by describing demographics of the target market, (2) describing and evaluating industry trends, and (3) identifiying and evaluating competitors

define analysis of context

describes broad external changes and trends taking place in the economic, political-legal, technological, and global environments

define description of the business

entrepreneur thoroughly describes how the EV is going to be organized, launched, and managed

define financial data and projections

outlines info that covers at least three years and contains projected income statements, cash flow analysis, and cost controls

define supporting documentation

entrepreneur should back up descriptions with charts, graphs, tables, and photographs, important component of an effective business plan

what are the six ways to organize an entrepreneurial venture (including the variations)?

sole proprietorship, general partnership, limitied liability partnership (LLP), C corporation, S corporation, and limited liability company (LLC)

what are the two primary factors affecting the decision on a form of legal ownership for a venture?

taxes and legal liability

what legal form would entrepreneurs prefer, sole proprietorship or a limited liability company (LLC)

limited liability company (LLC) because of lower liability and flexibile taxation

what is one of the most difficult things for an entrepreneur to do?

letting go and allowing someone else to make decisions as the company grows

what human resource management issues do entrepreneurs face?

employee recruitment and employee retention

what is employee recruitment?

finding and hiring competent and qualified workers

what is employee retention?

an EVs effort to keep its employees, rewards/recognition (more engaged employees mean more motivation)

what qualities must entrepreneurs have?

leadership and risk-taking

define proactive personality

individuals who are more prone to take actions to influence their environment

define employee empowerment

giving employees the power to make decisions and take actions on their own, important motivational approach that leads to flexibility and speed among staff