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Entrepreneurship, 4th Edition

Entrepreneurship, 4th Edition

Andrew Zacharakis, William D. Bygrave, Andrew C. Corbett

ISBN: 978-1-119-29880-9

Dec 2016

622 pages

In Stock

$167.95

Description

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Entrepreneurship, 4th Edition
 delves into the trials and tribulations of entrepreneurship so students will have the necessary tools to start their own businesses. It provides coverage on social enterprises and ethics due to the rise in green trends and corporate scandals. Up-to-date examples and references provide entrepreneurs with the most essential information.

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Preface vii

1 The Power of Entrepreneurship 1

Entrepreneurship and Small Business in the United States 2

Entrepreneurial Revolution 4

Web: Three Revolutions Converge 8

Entrepreneurship Revolution Strikes Gold 9

Creative Destruction 11

Causes of the Entrepreneurial Revolution 12

Changes in the Entrepreneurial Framework Conditions 14

Churning and Economic Growth 17

Global Entrepreneurship Monitor 19

Principal Findings from GEM 19

Activity 20

Necessity- and Opportunity-Driven Entrepreneurs 20

Age Distribution of Early-Stage Entrepreneurial Activity 23

Gender Distribution of Early-Stage Entrepreneurial Activity 23

Growth Expectations and Job Creation 24

Entrepreneurship Ecosystems and the Importance of Support 26

Conclusion 28

Your Opportunity Journal 29

Web Exercise 29

Notes 29

CASE: ALISON BARNARD 35

2 The Entrepreneurial Process 47

Critical Factors for Starting a New Enterprise 48

Personal Attributes 50

Environmental Factors 50

Other Sociological Factors 52

Evaluating Opportunities for New Businesses 54

The Opportunity 55

The Customer 56

The Timing 56

The Entrepreneur and the Management Team 58

Resources 58

Determining Resource Needs and Acquiring Resources 59

Startup Capital 61

Profit Potential 63

Ingredients for a Successful New Business 65

Conclusion 67

Your Opportunity Journal 67

Web Exercise 67

Notes 67

CASE: VERA BRADLEY 69

3 Opportunity Recognition, Shaping, and Reshaping 79

From Glimmer to Action: How Do I Come Up with a Good Idea? 80

Finding Your Passion 80

Idea Multiplication 82

Is Your Idea an Opportunity? 86

The Customer 86

The Competition 97

Suppliers and Vendors 100

The Government 101

The Global Environment 101

The Opportunity Checklist 101

“I Don’t Have an Opportunity” 101

Conclusion 103

Your Opportunity Journal 104

Web Exercise 104

Notes 104

CASE: JIM POSS 107

4 Understanding Your Business Model and Developing Your Strategy 121

What is Prototyping

Low-Fidelity Versus High-Fidelity Prototypes

Looks-Like and Works-Like Prototypes

Types of Prototyping

Paper Prototyping

3D Printing

Looks-Like Prototyping in Crowdfunding

Co-Creation

Prototyping Services

Minimum Viable Product

Conclusion 143

Your Opportunity Journal 143

Web Exercise 143

Notes 144

CASE: Balanced Snacking 146

5 Entrepreneurial Marketing 157

The Business Model 121

The Revenue Model 122

The Cost Model 125

The First-Mover Myth 127

Formulating a Winning Strategy 129

The People Are What Matters 130

Entry Strategy 132

Growth Strategy 135

Conclusion 143

Your Opportunity Journal 143

Web Exercise 143

Notes 144

CASE: ZUMBA FITNESS 146

Why Marketing Is Critical for Entrepreneurs 158

Entrepreneurs Face Unique Marketing Challenges 158

Acquiring Market Information 159

Marketing Strategy for Entrepreneurs 161

Segmentation, Targeting, and Positioning 161

The Marketing Mix 162

Value Proposition: Articulating the Entrepreneurial Strategy

Guerrilla Marketing 175

Marketing Skills for Managing Growth 176

Understanding and Listening to the Customer 176

Building the Brand 177

Conclusion 178

Your Opportunity Journal 178

Web Exercise 179

Appendix: Customer Interview 179

General Outline: It Needs to Be Tailored to Meet Your Research Needs 179

Notes 180

CASE: THEO CHOCOLATE182

6 Building the Founding Team 197

Power of the Team 198

Where Do You Fit? 199

How to Build a Powerful Team 203

Bootstrapping: Building the Team Based on Stage-of-Venture Life 205

Compensation 206

Equity 206

Salary 211

Other Compensation Considerations 211

External Team Members 212

Outside Investors 212

Lawyers 212

Accountants 213

Board of Advisors 214

Board of Directors 214

Keeping the Team Together 215

Burnout 216

Family Pressure 217

Interpersonal Conflicts 217

Conclusion 217

Your Opportunity Journal 218

Web Exercise 218

Notes 218

CASE: BOX, INC. 221

7 The Business Planning Process 235

The Planning Process 237

The Story Model 239

The Business Plan 240

The Cover 240

Executive Summary 241

Table of Contents 241

Industry, Customer, and Competitor Analysis 242

Company and Product Description 246

Marketing Plan 247

Operations Plan 251

Development Plan 252

Team 253

Critical Risks 255

Offering 257

Financial Plan 257

Appendices 257

Types of Plans 257

Style Pointers for the Written Plan and Oral Presentation 258

Conclusion 259

Your Opportunity Journal 260

Web Exercise 260

Notes 260

CASE: P’KOLINO 261

8 Building Your Pro-Forma Financial Statements 305

Common Mistakes 306

Financial Statement Overview 307

Building Your Pro-Forma Financial Statements 308

Build-Up Method 308

Revenue Projections 309

Cost of Goods Sold 311

Operating Expenses 312

Preliminary Income Statement 314

Comparable Method 315

Building Integrated Financial Statements 317

Income Statement 318

Balance Sheet 320

Cash-Flow Statement 321

Putting It All Together 321

Conclusion 323

Your Opportunity Journal 323

Web Exercise 324

Notes 324

CASE: P’KOLINO FINANCIALS 325

9 Financing Entrepreneurial Ventures Worldwide 337

Entrepreneurial Financing for the World’s Poorest 338

Microfinancing 338

Microcredit for the Poorest of the Poor 339

Entrepreneurs and Informal Investors 339

Amount of Capital Needed to Start a Business 341

Characteristics of Informal Investors 344

Financial Returns on Informal Investment 344

Supply and Demand for Startup Financing 345

Crowdfunding

Venture Capital 346

Classic Venture Capital 347

Importance of Venture Capital in the U.S. Economy 349

Mechanism of Venture Capital Investing 351

Financial Returns on Venture Capital 353

Venture Capital in Europe 355

Conclusion 357

Your Opportunity Journal 357

Web Exercise 358

Notes 358

CASE: CROWDFUNDING: A TALE OF TWO CAMPAIGNS 360

10 Raising Money for Starting and Growing Businesses 379

Jim Poss, BigBelly Solar 379

Bootstrapping New Ventures 380

Valuation 381

Earnings Capitalization Valuation 381

Present Value of Future Cash Flows 382

Market-Comparable Valuation (Multiple of Earnings) 382

Asset-Based Valuation 383

Example of Market-Comparable Valuation 383

Asset-Based Valuation Example 385

Financing a New Venture 386

Informal Investors 387

Business Angels 389

Searching for Business Angels 391

Types of Business Angels 391

Putting Together a Round of Angel Investment 392

Venture Capital 394

Candidates for Venture Capital 394

Ideal Candidates for Venture Capital 395

Actual Venture-Capital-Backed Companies 395

Dealing with Venture Capitalists 397

Negotiating the Deal 398

Follow-On Rounds of Venture Capital 399

Harvesting Investments 400

Initial Public Offering 400

Pros and Cons of an IPO 401

The Process of Going Public 403

BFWS Goes Public 405

Selling the Company 405

A Strategic Acquisition: Food Should Taste Good 405

Why Be Acquired? 407

Conclusion 408

Your Opportunity Journal 409

Web Exercise 409

Notes 410

CASE: METACARTA: GROWING A COMPANY, DO WE TAKE THE VC MONEY? 413

11 Debt and Other Forms of Financing 423

Getting Access to Funds —Start with Internal Sources 423

Start with Credit Cards and Home Equity Lines 424

Cash Conversion Cycle 425

Working Capital: Getting Cash from Receivables and Inventories 426

Using Accounts Receivable as Working Capital 427

The Sales Pattern 428

Cash versus Credit Sales 428

Credit Policies 428

Setting Credit Terms 429

Collection Policies 430

Setting Credit Limits for Individual Accounts 431

Inventory 432

Sources of Short-Term Cash: More Payables, Less Receivables 433

Cash from Short-Term Bank Loans 433

Cash from Trade Credit 434

Cash Obtained by Negotiating with Suppliers 434

Cash Available Because of Seasonal Business Credit Terms 434

Advantages of Trade Credit 435

Cash Obtained by Tightening Up Accounts Receivable Collections 435

Obtaining Bank Loans Through Accounts Receivable Financing 436

Pledging 436

Pledging with Notification 436

Factoring 436

Recourse 437

Obtaining Loans against Inventory 437

Obtaining ‘‘Financing’’ from Customer Prepayments 438 Choosing the Right Mix of Short-Term Financing 438 Traditional Bank Lending: Short-Term Bank Loans 438

Maturity of Loans 439

Interest Rates 439

Collateral 440

Applying for a Bank Loan 441

Restrictive Covenants 441

General Provisions 442

Routine Provisions 442

Specific Provisions 443

Equipment Financing 443

Obtaining Early Financing from External Sources 443

SBA-Guaranteed Loans 444

Applying for an SBA Loan 444

Conclusion 446

Your Opportunity Journal 447

Web Exercise 447

Notes 447

CASE: FEED RESOURCE RECOVERY 449

12 Legal and Tax Issues, Including Intellectual Property 463

Why, When, and How to Choose an Attorney 463

Leaving Your Present Position 464

Corporate Opportunity 464

Recruitment of Fellow Employees 464

Noncompetition 465

Intellectual Property 466

The Basics: What Is Protectable and How Should It Be Protected? 467

Patents 467

Trade Secrets 472

Trademarks 474

Copyright 476

International Protection for Intellectual Property 477

Choice of Legal Form 479

Control 480

Personal Liability 481

Taxation 482

Initial Investment of the Founders 483

Administrative Obligations 484

Choosing a Name 484

Stockholders’ and Operating Agreements 485

Negotiating Employment Terms 485

Disposition of Equity Interests 485

Legal and Tax Issues in Hiring Employees 488

Employees as Agents of the Company 488

Employment Discrimination 489

Employment Agreements 489

Raising Money 489

Conclusion 491

Your Opportunity Journal 491

Web Exercise 492

Notes 492

CASE: TESSERA 493

13 Entrepreneurial Growth 501

Making the Transition from Startup to Growth 502

Looking Forward: The Choice to Grow, or Not,…or Sell 502

A Model of Driving Forces of Growth 504

The Growth Process 505

Execution 505

Instituting Controls 507

Tracking Performance 508

Managing the Cash Cycle 510

Leveraging the Value Chain 512

Maintaining the Entrepreneurial Organization 513

Opportunity Domain 513

Organizational Resources and Capabilities 516

Obtaining Financial Resources for the Growing Company 517

Intangible Resources and Capabilities 517

Leadership 519

Starting the Delegation Process 519

First-Level Management 520

From Delegation to Decentralization 521

Professional Management and Boards 521

Coordinating the Driving Forces 522

Leading People; Developing Entrepreneurs 522

Conclusion 523

Your Opportunity Journal 524

Web Exercise 524

Notes 525

CASE: LAZYBONES 526

14 Social Entrepreneurship 535

Introduction 535

The Rise in Social Entrepreneurship 536

Social Entrepreneurship Defined 538

A Social Entrepreneurship Typology 538

1Traditional Venture 540

Social Consequence 540

Social Purpose Venture 540

Enterprising Nonprofit 541

Hybrid Ventures 542

Choosing Your Venture Type 545

Measuring Impact 547

Conclusion 548

Your Opportunity Journal 549

Web Exercise 549

Notes 550

CASE: YEAR UP: WORKFORCE TRAINING FOR URBAN YOUTH 552

Glossary 569

Index 579

  • NEW – New Chapter Added Chapter 4 on Prototyping written by Erik Noyes
  • NEW - New cases throughout the book on: Balanced Snacking—looks at the growing popularity of the Direct-to-Consumer business model, Theo Chocolate—which highlights effective entrepreneurial marketing, and Box—which examines effective teams.
  • EXPANDED - Expanded Chapters 3,6, & 10: Expanded discussion on strategy and business model (Ch 3), customer value proposition and social media marketing (Ch 6), and expanded discussion of crowdfunding (Ch 10).
  • UPDATED - Updated examples throughout book, focusing on new internet (Web 2.0, 3.0, mobile aps, etc.) examples.
  • UPDATED - Updated statistics such as GEM data on entrepreneurial activity.
  • Opportunity Journal: Students can reflect on the lessons learned and think about how to apply the lessons to their future careers.
  • LivePlan and Business Plan Pro, the best-selling business plan development programs are available with Entrepreneurship in value-priced packages to give students access to the leading resources to develop their business plans.
  • Social Entrepreneurship Coverage: Chapter 15 on Social Entrepreneurship presents the latest examples and most relevant businesses to explore this growingfield.
  • Balance of Concepts and Cases: The text presents concepts underlying how businesses are born, grow and succeed or fail, along with a variety of real-life cases to illustrate these concepts. 
  • End of Chapter Cases: Each chapter is accompanied by a case study of entrepreneurs in action.