New Venture Management The Entrepreneur's Roadmap (Entrepreneurship Series)

by Kuratko, Donald F.; Hornsby, Jeffrey S.

• ISBN13: 9780136130321
• ISBN10: 0136130321
• Edition: 1st
• Format: Paperback
• Copyright: 2007-12-31
• Publisher: PEARSON EDUCATION

Summary

Welcome to the Entrepreneurial Revolution. In this time of rapid change and amazing opportunity, the Prentice Hall Entrepreneurship Series has been created to provide direction, guidance, and insight to faculty members and students interested in pursuing an entrepreneurial path. This evolving series features top scholars in the field sharing their perspectives on the most critical issues and challenges in the emerging field of entrepreneurship. The books in the series are purposely designed to emphasize flexibility and innovation in the entrepreneurship curriculum and classroom. As a central theme, entrepreneurship is approached as a way of thinking and acting that can be applied in all walks of life. The series addresses both the contexts for (e.g., start-up firms, family businesses, high growth ventures, non-profits, corporations, the public sector) and the facilitators of entrepreneurship (e.g., creativity, planning, opportunity recognition, resources, networks, teams). The series has been developed and will continually evolve to present readers with a range of state-of-the-art perspectives that speak to individual aspects of entrepreneurship. We hope you enjoy your entrepreneurial journey! Book jacket.

Table of Contents

Preface	p. xvii
About the Authors	p. xix
Introduction	p. 1
New Ventures: The Quiet Giant	p. 1
Introduction	p. 1
New Ventures: Energizing Economies	p. 1
The Global Impact of New Ventures	p. 3
Entrepreneurs and New Ventures	p. 4
Entrepreneurial Motivation	p. 7
Advantages to Starting a New Venture	p. 9
Independence	p. 9
Financial Opportunities	p. 9
Community Service	p. 9
Job Security	p. 9
Family Employment	p. 9
Challenge	p. 10
Disadvantages of Starting a New Venture	p. 10
Sales Fluctuations	p. 10
Competition	p. 11
Increased Responsibilities	p. 11
Financial Losses	p. 11
Employee Relations	p. 11
Laws and Regulations	p. 12
Risk of Failure	p. 12
New Venture Failure	p. 13
Specific Causes of Failure	p. 13
Failure: A Look at the Record	p. 13
The New Venture Survival Rate	p. 14
Avoiding New Venture Management Traps	p. 14
Summary	p. 16
Review and Discussion Questions	p. 16
Endnotes	p. 18
New Venture Opportunities	p. 19
New or Acquired Ventures: The Pathways	p. 19
Introduction	p. 19
Approaches to New Venture Creation	p. 19
New-New Approach	p. 19
New-Old Approach	p. 22
Market Analysis	p. 23
Gathering of the Facts	p. 23
Organization of the Facts	p. 25
Analysis of the Facts	p. 25
Implementation of an Action Plan	p. 26
The Entrepreneur	p. 26
The Financial Picture	p. 28
Other Key Factors	p. 30
Buying an Ongoing Venture	p. 31
Advantages of Buying an Ongoing Venture	p. 31
Less Fear about Successful Future Operation	p. 31
Time and Effort Can Be Reduced	p. 32
Buy at a Good Price	p. 32
Key Questions to Ask	p. 33
Why Is the Business Being Sold?	p. 33
What Is the Current Physical Condition of the Business?	p. 33
What Is the Condition of the Inventory?	p. 34
What Is the State of the Company's Other Assets?	p. 34
How Many of the Employees Will Remain?	p. 35
What Type of Competition Does the Business Face?	p. 35
What Is the Status of the Firm's Financial Picture?	p. 37
Determining the Price	p. 39
Assessing the Price	p. 39
Book Value	p. 39
Replacement Value	p. 39
Liquidation Value	p. 39
Past Earnings	p. 40
Cash Flow	p. 40
Asset Pricing	p. 40
One Acceptable Formula?	p. 41
Negotiating the Deal	p. 44
Summary	p. 46
Review and Discussion Questions	p. 47
Endnotes	p. 49
Franchising: The Hybrid	p. 51
Introduction	p. 51
The Nature of Franchising	p. 51
Product or Service Franchise	p. 51
Business Franchise	p. 52
Conversion Franchising	p. 53
How a Franchise Works	p. 53
The Growth of Franchising	p. 54
Advantages of Franchising	p. 58
Training and Guidance	p. 58
Brand-Name Appeal	p. 58
A Proven Track Record	p. 59
Financial Assistance	p. 59
Disadvantages of Franchising	p. 59
Franchise Fees	p. 60
Franchisor Control	p. 61
Unfulfilled Promises	p. 61
Evaluating the Opportunities	p. 62
Learn of Opportunities	p. 64
Investigate the Franchisor	p. 64
Seek Professional Help	p. 64
The Decision: It's Up to the Entrepreneur	p. 66
Trends in Franchising	p. 66
Franchising Your Business	p. 67
Summary	p. 69
Review and Discussion Questions	p. 69
Endnotes	p. 71
New Venture Planning	p. 73
Successful Business Plans: The Roadmap	p. 73
Introduction	p. 73
The Nature of a Business Plan	p. 73
Importance of a Business Plan	p. 75
What Is a Business Plan?	p. 76
The Components of a Business Plan	p. 77
Preparing the Business Plan	p. 79
Helpful Hints	p. 89
Updating Your Business Plan	p. 91
Practical Example	p. 91
Summary	p. 92
Review and Discussion Questions	p. 92
Endnotes	p. 94
Legal Forms of Ventures: The Structure	p. 95
Introduction	p. 95
Forms of Business Organization	p. 95
Sole Proprietorship	p. 96
Advantages of Proprietorships	p. 96
Disadvantages of Proprietorships	p. 97
The Partnership	p. 99
Types of Partnerships	p. 99
Advantages of Partnerships	p. 103
Disadvantages of Partnerships	p. 105
The Corporation	p. 107
Organizing the Corporation	p. 108
The Corporate Structure	p. 109
Advantages of Corporations	p. 109
Disadvantages of Corporations	p. 111
The S Corporation	p. 114
The Limited Liability Company	p. 114
Summary	p. 115
Review and Discussion Questions	p. 118
Endnotes	p. 119
New Venture Marketing	p. 121
Market Research: The Niche	p. 121
Introduction	p. 121
Determining Market Niches	p. 121
Relevant Price Range	p. 122
Competition	p. 124
Examining the Current Market Niche	p. 126
Market Niche Analysis: An Example	p. 126
Market Niche Danger Signals	p. 128
Marketing Research	p. 128
How to Conduct Marketing Research	p. 130
Secondary Sources	p. 130
Primary Sources	p. 131
Other Data Collection Methods	p. 134
Using Research Data	p. 135
Internet Marketing	p. 136
Co-Marketing Deals and Banner Ads	p. 136
Become a Popular Link	p. 136
Sponsor Contests, Specials, and Other Interactive Features	p. 137
Summary	p. 137
Review and Discussion Questions	p. 137
Endnotes	p. 139
Strategic Pricing: The Hook	p. 141
Introduction	p. 141
Pricing Considerations	p. 141
The Nature of the Product	p. 141
The Competition	p. 142
The Marketing Strategy	p. 142
The Customer and Value Perceptions	p. 143
General Conditions	p. 143
Key Pricing Factors	p. 143
The Cost of Goods	p. 144
Competitive Prices	p. 144
Pricing Strategies	p. 145
Combination Strategies	p. 153
How New Ventures Set Prices	p. 154
Wholesalers	p. 154
Retailers	p. 155
Service Enterprises	p. 159
Manufacturers	p. 163
Summary	p. 165
Review and Discussion Questions	p. 166
Endnotes	p. 167
New Venture Financing	p. 169
Start-Up Capital: The Injection	p. 169
Introduction	p. 169
Basic Types of Capital	p. 169
Debt Capital	p. 171
Equity Capital	p. 172
Sources of Capital	p. 173
Personal Savings	p. 173
Friends and Relatives	p. 174
Venture Capitalists	p. 174
Informal Investors	p. 175
Internal Funds	p. 175
Trade Credit	p. 176
Banks	p. 176
Other Private Sources of Capital	p. 179
Small Business Administration	p. 180
State and Local Development Companies	p. 181
Small Business Investment Companies	p. 184
Small Business Innovation Research Program	p. 185
Minority Business Development Agency	p. 186
Summary	p. 187
Review and Discussion Questions	p. 187
Endnotes	p. 188
Financial Statements: The Scorecard	p. 191
Introduction	p. 191
Financial Statements	p. 191
The Balance Sheet	p. 191
Understanding the Balance Sheet	p. 192
Why the Balance Sheet Always Balances	p. 196
The Income Statement	p. 198
Understanding the Income Statement	p. 199
Keeping Proper Records	p. 201
Sales and Cash Receipts Journal	p. 201
Cash Disbursement, Purchases, and Expense Journal	p. 201
Managing the Books	p. 202
Computers, Software, and Financial Preparation	p. 203
Early Warning Signs of Financial Trouble	p. 205
Summary	p. 205
Review and Discussion Questions	p. 206
Endnotes	p. 208
Financial Analysis: The Gauges	p. 209
Introduction	p. 209
Balance Sheet Analysis	p. 209
Current-Position Ratios	p. 211
Long-Run-Position Ratios	p. 212
Income Statement Analysis	p. 214
Income Statement Ratios	p. 215
Combination Ratios	p. 217
Limitations of Financial Statement Analysis	p. 221
Financial Budgeting	p. 222
Sales Budget	p. 222
Cash Budget	p. 223
Other Budgetary Considerations	p. 225
Summary	p. 226
Review and Discussion Questions	p. 226
Endnotes	p. 229
New Venture Growth Management	p. 231
Human Resources: The People	p. 231
Introduction	p. 231
The Challenge of Managing Human Resources	p. 231
Increasing Regulatory Concerns	p. 232
Staffing	p. 236
Assessing Staffing Needs	p. 236
Human Resource Recruiting	p. 237
Screening Potential Employees	p. 238
Selecting and Orienting Employees	p. 240
Principles of Effective Staffing	p. 240
Performance Management	p. 241
Training	p. 241
Performance Appraisal	p. 243
Management by Objectives	p. 245
Compensation	p. 247
Employee Discipline and Counseling	p. 249
The Employee Handbook: A Key Tool for Employee Accountability	p. 249
The Current State of Human Resource Management Practices	p. 251
Critical Issues for the Future	p. 254
Employee Morale	p. 254
Improving Employee Performance	p. 256
Summary	p. 257
Review and Discussion Questions	p. 258
Endnotes	p. 259
Growing Ventures: The Future	p. 261
Introduction	p. 261
Unique Challenges of Growing Ventures	p. 261
The Distinction of Smaller Size	p. 261
The One-Person-Band Syndrome	p. 262
Time Management	p. 263
Community Obligations	p. 263
Continuing Management Education	p. 264
Other Issues in the Formative Years	p. 264
Key Elements of Growth	p. 266
Control	p. 266
Responsibility	p. 266
Effective Delegation	p. 266
Tolerance of Failure	p. 267
Change	p. 267
Flexibility	p. 267
The Transition from Entrepreneur to Manager	p. 268
Balancing the Focus (Entrepreneur and Manager)	p. 269
Outside Managerial Assistance	p. 271
The Challenge of Ethical Practices in Growing Ventures	p. 272
Ethical Codes of Conduct	p. 273
Ethical Leadership by Entrepreneurs	p. 275
The Quality Movement	p. 276
Involve Top Management	p. 276
Focus on Customer Needs	p. 276
Train Employees	p. 277
Empower Employees and Generate New Ideas	p. 278
Recognize Employees	p. 278
Conquer Fear	p. 278
The Continuous-Improvement Challenge	p. 278
Teamwork	p. 279
The Challenges of Global Expansion	p. 281
Why Globalize for Growth?	p. 281
Researching the Global Market	p. 283
Globalizing Your Product: Adaptation	p. 283
Global Threats and Risks	p. 285
Summary	p. 286
Review and Discussion Questions	p. 287
Endnotes	p. 289
Green Fuel Alternatives	p. 293
Executive Summary	p. 293
Potential	p. 293
Funding Need	p. 293
Management	p. 293
Business Description	p. 295
General Description of Business	p. 295
Industry Background	p. 296
Competition Analysis	p. 297
Products and Services	p. 297
Strategy to Differentiate	p. 298
Key Dynamics	p. 298
Marketing	p. 299
Economics	p. 299
Market Analysis	p. 299
Barriers to Entry	p. 301
Product	p. 301
Customers	p. 303
Competition	p. 303
Niche	p. 304
Marketing Strategy	p. 304
Management Segment	p. 306
Legal Structure	p. 306
Ownership	p. 306
Management Team	p. 306
Company Advisors	p. 307
Operations	p. 308
Plant Operations	p. 308
Facilities and Equipment	p. 309
Organizational Plan	p. 310
Critical Risks	p. 310
Soybean Oil Demand	p. 310
Soybean Rust Fungus	p. 311
Biodiesel Problems	p. 311
Marketer Influence	p. 311
Exit Strategies	p. 311
Financial Segment	p. 312
Start-Up Proposal	p. 312
Financing Plan	p. 312
Financial Assumptions	p. 312
Start-Up Budgeting	p. 314
Financial Appendix	p. 314
Endnotes	p. 324
Name Index	p. 325
Subject Index	p. 326
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