Entrepreneurship & small business management [Second edition] 9780133767186, 1292078677, 9781292078670, 0133767183

Table of contents :
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