Entrepreneurship, 5th Edition helps aspiring entrepreneurs understand the process of starting a new venture and appreciate the vital role of entrepreneurship in the economy. This accessible textbook explains the steps involved in starting a new company, and offers insights on engaging with startups as investors, bankers, accountants, lawyers, vendors, customers, and employees. Delving into the real-world trials and tribulations of entrepreneurship, the text covers every stage of the entrepreneurial process, from searching for an opportunity and molding it into an attractive product or service, to launching, growing, and eventually harvesting the new venture. The fully revised and updated fifth edition integrates core concepts of entrepreneurship and practical case studies—enabling students to develop an inclusive perspective on how businesses are born, grow, and succeed or fail. The authors explore the entrepreneurial competitiveness of nations throughout the world, describe the critical factors for starting a new enterprise and building it into a successful business, and demonstrate how to build a workable business model. Clear, straightforward chapters cover each essential area of entrepreneurship, including marketing, strategy, team building, financial projections, business planning, and more.
TABLE OF CONTENTS
Preface vii 1 The Power of Entrepreneurship 1 Entrepreneurship and Small Business in the United States 3 Entrepreneurial Revolution 4 Web: Three Revolutions Converge 9 Entrepreneurship Revolution Strikes Gold 10 Creative Destruction 11 Causes of the Entrepreneurial Revolution 12 Changes in the Entrepreneurial Framework Conditions 14 Churning and Economic Growth 18 Global Entrepreneurship Monitor 19 Principal Findings from GEM 20 Activity 20 Necessity, Opportunity, and Gender 20 Age Distribution of Early-Stage Entrepreneurial Activity 22 Growth Expectations and Job Creation 25 Entrepreneurship Ecosystems and the Importance of Support 27 Conclusion 29 Your Opportunity Journal 29 Web Exercise 30 Notes 30 Case: MightyWell 33 2 The Entrepreneurial Process 41 Critical Factors for Starting a New Enterprise 42 Evaluating Opportunities for New Businesses 47 Determining Resource Needs and Acquiring Resources 52 Profit Potential 56 Ingredients for a Successful New Business 58 Conclusion 59 Your Opportunity Journal 59 Web Exercise 60 Notes 60 Case: Vedavoo 62 3 Opportunity Recognition, Shaping, and Reshaping 70 From Glimmer to Action: How Do I Come Up with a Good Idea? 71 Is Your Idea an Opportunity? 76 The Opportunity Checklist 91 ‘‘I Don’t Have an Opportunity’’ 91 Conclusion 93 Your Opportunity Journal 93 Web Exercise 93 Notes 93 Case: ISlide, Inc. 95 4 Prototyping Your Ideas 102 What is Prototyping? 103 Types of Prototyping 106 Conclusion 114 Your Opportunity Journal 114 Web Exercise 114 Notes 114 Case: Balanced Snacking 115 5 The Importance of Business Models 120 Introduction 120 The Core (Steps 1, 2, and 3) 122 The Market (Steps 4, 5, 6, and 7) 125 Customer Segments (Step 4) 126 Marketing Channels (Step 5) 126 Distribution Channels (Step 6) 127 Revenue Streams (Step 7) 128 Product and Operations (Steps 8, 9, 10, and 11) 129 Resources (Step 8) 129 Partners (Step 9) 129 Key Metrics (Step 10) 130 Cost Drivers (Step 11) 130 The External Enviroment and Financial Strategy (Steps 12, 13, and 14) 132 Competitive Environment (Step 12) 132 Industry Attractiveness (Step 13) 132 Financial Strategy (Step 14) 132 Conclusion 133 Your Opportunity Journal 133 Web Exercise 133 Notes 133 Case: Zumba Fitness 134 6 Entrepreneurial Marketing 141 Why Marketing is Critical for Entrepreneurs 142 Entrepreneurs Face Unique Marketing Challenges 142 Acquiring Market Information 143 Marketing Strategy for Entrepreneurs 145 Segmentation, Targeting, and Positioning 145 The Marketing Mix 146 Value Proposition: Articulating the Entrepreneurial Strategy 159 Social Media 162 Guerrilla Marketing 163 Marketing Skills for Managing Growth 165 Understanding and Listening to the Customer 165 Building the Brand 166 Conclusion 166 Your Opportunity Journal 166 Web Exercise 167 Appendix: Customer Interview 167 General Outline: It Needs to Be Tailored to Meet Your Research Needs 167 Notes 168 Case: Theo Chocolate 169 7 Building The Founding Team 184 Power of the Team 185 Where Do You Fit? 187 How to Build a Powerful Team 190 Bootstrapping: Building the Team Based on Stage-of-Venture Life 193 Compensation 194 Equity 194 Salary 198 Other Compensation Considerations 199 External Team Members 200 Outside Investors 200 Lawyers 200 Accountants 201 Board of Advisors 201 Board of Directors 202 Keeping the Team Together 203 Burnout 204 Family Pressure 205 Interpersonal Conflicts 205 Conclusion 205 Your Opportunity Journal 206 Web Exercise 206 Notes 206 Case: Box, Inc.: Preserving Startup Culture in a Rapidly Growing Company 208 8 The Business Planning Process 218 The Planning Process 220 The Story Model 221 The Business Plan 222 The Cover 222 Executive Summary 223 Table of Contents 224 Industry, Customer, and Competitor Analysis 224 Company and Product Description 228 Marketing Plan 229 Operations Plan 233 Development Plan 234 Team 235 Critical Risks 237 Offering 239 Financial Plan 239 Appendices 239 Types of Plans 239 Style Pointers for the Written Plan and Oral Presentation 240 Conclusion 241 Your Opportunity Journal 242 Web Exercise 242 Notes 242 Case: Gravyty: The Art + Science of Better Nonprofit Fundraising 243 9 Building Your Pro Forma 275 Financial Statements 276 Common Mistakes 276 Financial Statement Overview 277 Building Your Pro Forma Financial Statements 278 Build-Up Method 279 Revenue Projections 280 Cost of Goods Sold 281 Operating Expenses 282 Preliminary Income Statement 284 Comparable Method 284 Building Integrated Financial Statements 287 Income Statement 288 Balance Sheet 290 Cash-Flow Statement 291 Putting It All Together 292 Conclusion 292 Your Opportunity Journal 293 Web Exercise 293 Notes 293 Case: Gravyty: Understanding Your Market and Building Realistic Proformas 294 10 Raising Money for Starting and Growing a Business 302 Bootstrapping New Ventures 303 Informal Investors 304 Business Angels 306 Searching for Business Angels 306 Types of Business Angels 307 Putting Together a Round of Angel Investment 308 Amount of Capital Needed to Start a Business 309 Financial Returns on Informal Investment 309 Crowdfunding 310 Venture Capital 311 Classic Venture Capital 312 Mechanism of Venture Capital Investing 312 Financial Returns on Venture Capital 314 Dealing with Venture Capitalists 315 Negotiating the Deal 316 Valuation 317 Earnings Capitalization Valuation 318 Present Value of Future Cash Flows 318 Market‐Comparable Valuation (Multiple of Earnings) 318 Asset‐Based Valuation 319 Example of Market‐Comparable Valuation 319 Asset‐Based Valuation Example 321 Harvesting Investments 322 Initial Public Offering 323 Pros and Cons of an IPO 323 The Process of Going Public 324 BFWS Goes Public 326 Selling the Company 326 Why Be Acquired? 326 Conclusion 327 Your Opportunity Journal 328 Web Exercise 328 Notes 328 Case: MetaCarta: Growing a Company, Do We Take the VC Money? 331 11 Debt and Other Forms of Financing 338 Getting Access to Funds—Start with Internal Sources 339 Start with Credit Cards and Home Equity Lines 340 Cash Conversion Cycle 340 Working Capital: Getting Cash from Receivables and Inventories 342 Using Accounts Receivable as Working Capital 342 The Sales Pattern 343 Cash versus Credit Sales 343 Credit Policies 344 Setting Credit Terms 344 Collection Policies 345 Setting Credit Limits for Individual Accounts 346 Inventory 347 Sources of Short‐Term Cash: More Payables, Less Receivables 348 Cash from Short‐Term Bank Loans 349 Cash from Trade Credit 349 Cash Obtained by Negotiating with Suppliers 349 Cash Available Because of Seasonal Business Credit Terms 350 Advantages of Trade Credit 350 Cash Obtained by Tightening Up Accounts Receivable Collections 350 Obtaining Bank Loans Through Accounts Receivable Financing 351 Pledging 351 Pledging with Notification 351 Factoring 352 Recourse 352 Obtaining Loans against Inventory 352 Obtaining “Financing” from Customer Prepayments 353 Choosing the Right Mix of Short‐Term Financing 353 Traditional Bank Lending: Short‐Term Bank Loans 353 Maturity of Loans 354 Interest Rates 354 Collateral 355 Applying for a Bank Loan 356 Restrictive Covenants 356 General Provisions 357 Routine Provisions 357 Specific Provisions 358 Equipment Financing 358 Obtaining Early Financing from External Sources 359 SBA‐Guaranteed Loans 359 Applying for an SBA Loan 359 Conclusion 360 Your Opportunity Journal 361 Web Exercise 361 Notes 361 Case: FEED Resource Recovery 362 12 Legal and Tax Issues, Including Intellectual Property 373 Why, When, and How to Choose an Attorney 374 Leaving Your Present Position 374 Corporate Opportunity 374 Recruitment of Fellow Employees 375 Noncompetition 375 Intellectual Property 376 The Basics: What is Protectable and How Should It Be Protected? 377 Patents 377 Trade Secrets 383 Trademarks 385 Copyright 387 International Protection for Intellectual Property 388 Choice of Legal Form 390 Control 390 Personal Liability 391 Taxation 392 Initial Investment of the Founders 394 Administrative Obligations 394 Choosing a Name 395 Stockholders’ and Operating Agreements 395 Negotiating Employment Terms 395 Disposition of Equity Interests 396 Legal and Tax Issues in Hiring Employees 398 Employees as Agents of the Company 398 Employment Discrimination 399 Employment Agreements 400 Raising Money 400 Conclusion 401 Your Opportunity Journal 401 Web Exercise 402 Notes 402 Case: Wefunder: Leading the Growth of a New Industry 403 13 Entrepreneurial Growth 411 Making the Transition from Start‐up to Growth 412 Looking Forward: The Choice to Grow, or Not,… or Sell 412 A Model of Driving Forces of Growth 414 The Growth Process 415 Execution 416 Instituting Controls 417 Tracking Performance 418 Managing the Cash Cycle 420 Leveraging the Value Chain 422 Maintaining the Entrepreneurial Organization 423 Opportunity Domain 423 Organizational Resources and Capabilities 426 Obtaining Financial Resources for the Growing Company 427 Intangible Resources and Capabilities 428 Leadership 429 Starting the Delegation Process 430 First‐Level Management 431 From Delegation to Decentralization 431 Professional Management and Boards 432 Coordinating the Driving Forces 432 Leading People; Developing Entrepreneurs 433 Conclusion 433 Your Opportunity Journal 434 Web Exercise 434 Notes 434 Case: Esporte Interativo 436 14 Social Entrepreneurship 442 Introduction 443 The Rise in Social Entrepreneurship 443 Social Entrepreneurship Defined 445 A Social Entrepreneurship Typology 445 Hybrid Ventures 449 Choosing Your Venture Type 451 Measuring Impact 453 Conclusion 455 Your Opportunity Journal 455 Web Exercise 456 Notes 456 Case: InnerCity Weightlifting 457 Glossary G-1 Index I-1
NEW TO THIS EDITION
Updated examples and statistics throughout the text
New case studies of Mighty Well, Inner City Weightlifting, Gravyty, and Esporte Interativo
Coverage of social marketing, data analytics, and personal leadership style
Revised sections on GEM, the business planning g process, and the Babson Model Wheel
FEATURES
Presents balanced exposition of concepts and cases
Covers all stages of the entrepreneurial process, from pre-startup through harvest
Features an Opportunity Journal for students to reflect on the lessons and consider how to apply them to their future careers
Includes real-world, end-of-chapter case studies of entrepreneurs in action
Provides extensive teaching resources, including sample syllabi, chapter outlines, case lecture notes, PowerPoint slides, discussion questions, a test bank, and classroom activities
Offers a companion website which contains additional case studies, instructor’s manual, test bank, and image bank
An ever-expanding collection of previously administered exams, quizzes, and other assessment measures in a wide range of courses made available for current students as study aids.
Why should I use previously administered tests to study?
* become familiar with how material will be tested
* see the format of the test
* practice test-taking skills
* simulate a timed exam
* gain more experience with course content
·What is a SOLUTION MANUAL (SM)?
A Solutions Manual contains all the answers to the questions in the book with detailed explanations and examples.
· What is an INSTRUCTOR’S SOLUTION MANUAL (ISM) OR INSTURCTOR’S MANUAL (IM)?
An Instructor’s Manual is the guide that your teacher may use when making lesson plans and contain extra questions and answers, lab assignments, and more.
Note:
All solutions manual and Test Banks be in soft copy [Adobe Acrobat Reader (PDF )or Word format .Docx]
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