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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Serie: The Portable MBA Series
- Sprache: Englisch
A totally updated and revised new edition of the most comprehensive, reliable guide to modern entrepreneurship
For years, the Portable MBA series has tracked the core curriculum of leading business schools to teach you everything you need to know about business-without the cost of earning a traditional MBA degree. The Portable MBA in Entrepreneurship covers all the ins and outs of entrepreneurship, using real-life examples and handy tools to deliver clear, honest, practical advice on starting a successful business.
If you're planning to start your own business, you'd best start with the facts. This reliable, information-packed resource shows you how to identify good business opportunities, create a business plan, do financial projections, find financing, and manage taxes. Other topics include marketing, selling, legal issues, intellectual property, franchising, starting a social enterprise, and selling your business.
- Completely updated with new examples, new topics, and full coverage of topical issues in entrepreneurship
- Includes customizable, downloadable forms for launching your own business
- Comes with Portable MBA Online, a new web site that gives readers access to forms, study guides, videos, presentations, and other resources
- Teaches you virtually everything you'd learn on entrepreneurship in today's best business schools
Whether you're thinking of starting your own business or you already have and just need to brush up on entrepreneurial basics, this is the only guide you need.
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Seitenzahl: 1129
Veröffentlichungsjahr: 2015
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Table of Contents
Cover
Title
Copyright
Complete List of Downloadable Materials for The Portable MBA in Entrepreneurship
Preface to the Fourth Edition
About the Contributors
1: The Entrepreneurial Process
Introduction
Critical Factors for Starting a New Enterprise
Evaluating Opportunities for New Businesses
Resources
Ingredients for a Successful New Business
Notes
2: Idea Generation
Paths of Idea Generation
The Entrepreneur and Creativity
A More Creative Mind for a Challenging World
Toward Idea Generation Mastery
New Eyes for New Futures
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
3: Opportunity Recognition, Shaping, and Reshaping
From Glimmer to Action: How Do I Come Up with a Good Idea?
Is Your Idea an Opportunity?
The Customer
The Competition
Vendors/Suppliers
Government
Global Environment
The Opportunity Checklist
Conclusion
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
4: Entrepreneurial Marketing
What Is Marketing?
Marketing Is Critical for Entrepreneurs
Entrepreneurs Face Unique Marketing Challenges
Market Research and Opportunity
Acquiring Market Information
Developing and Implementing Marketing Strategy
The Marketing Mix
Product Strategy
Pricing Strategy
Distribution Strategy
Marketing Communications Strategy
Marketing Skills for Managing Growth
Conclusion
Appendix A Customer Interview
General Outline
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
5: Business Planning
The Story of Your Business
Types of Plans
From Glimmer to Action: The Process
The Story Model
The Business Plan
Conclusion
Other Resources
For Further Reading
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
6: Building Your Pro Forma Financial Statements
Introduction
Common Mistakes
Financial Statement Overview
Building Your Pro Forma Financial Statements
Build-up Method
Comparable Method
Building Integrated Financial Statements
Income Statement
Balance Sheet
Cash Flow Statement
Integrating the Financial Statements
Putting It All Together
Conclusion
Additional Resource
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
7: Equity Financing: Informal Investment, Venture Capital, and Harvesting
Introduction
Valuation
Financing a New Venture
Informal Investors
Business Angels
Venture Capital
Harvesting Investments
Selling the Company
Summary
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
8: Debt and Other Forms of Financing
Getting Access to Funds—Starting with Internal Sources
Start with Credit Cards and Home Equity Lines
Cash Conversion Cycle
Working Capital—Getting Cash from Receivables and Inventories
Using Accounts Receivable as Working Capital
Inventory
Sources of Short-Term Cash—More Payables, Less Receivables
Asset-based Lending: Borrowing through Available Collateral
Obtaining Bank Loans through Accounts Receivable Financing
Obtaining Loans against Inventory
Obtaining Financing from Customer Prepayments
Choosing the Right Mix of Short-Term Financing
Traditional Bank Lending: Short-Term Bank Loans
Equipment Financing
Obtaining Early Financing from External Sources
Summary
Notes
9: External Assistance for Start-ups and Small Businesses
Why You Should Consider External Assistance Programs
External Assistance Available Nationwide to Anyone in the United States
Selling to the Government: The Art of Procurement
Selling Abroad: International Business in the Global Village
External Assistance for Special Groups, Locations, and Industries
External Assistance Available Primarily to State and Local Residents
Summary
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
10: Legal and Tax Issues
The Entrepreneurs
Leaving Your Present Position
Choosing an Attorney and Accountant
Choice of Legal Form
Choosing a Name
Stockholder and Operating Agreements
Legal and Tax Issues in Hiring Employees
Insurance
Raising Money
Conclusion
11: Intellectual Property
The Basics: What Is Protectable and How Should It Be Protected?
Patents
Trade Secrets
Trademarks
Copyright
Summing Up
International Protection for Intellectual Property
Patent Filing Deadlines
Licensing and Technology Transfer
The Internet
IP Agreements
Noncompetition Clauses
A Final Summation
12: Selling in an Entrepreneurial Context
Introduction
Mindset for Successful Selling: Good Selling versus Bad Selling
Linking the Entrepreneurial Mindset and Selling
Aligning the Buying and Selling Processes
Finding, Assessing, and Preparing to Pursue Sales Opportunities
Developing a Compelling Value Proposition
Pursuing Sales Opportunities
The Closing Process
Follow-Through and Customer Service
Developing Sales Skills
Revisiting the Motivation for Consultative Selling
Additional Resources
Notes
13: Beyond Start-up: Developing and Sustaining the Growing Organization
The Growth Challenge
Growth Stages
Four Domains for Managing Growth
Organization
Leadership
Strategy
Resources
Conclusions
Notes
14: Franchising
What Is Franchising?
Historical Background
Becoming a Franchisee versus Starting a Stand-alone Business
The Franchise Contract
Services Provided by the Franchisor
Territorial Rights
Term of the Agreement
Sale of the Business
Owner-Operator Clause
Death or Incapacity of the Franchisee
Arbitration
License Agreement Termination
Noncontractual Considerations of Buying a Franchise
Financing a Franchise
Multiple Outlet Ownership
A Brief Note on International Franchising
How Selling a Franchise Is Regulated
Limitations of Franchising
Conclusion
Downloadable Resources for this chapter available at www.wiley.com/go/portablembainentrepreneurship
Notes
15: Social Entrepreneurship
What Is Social Entrepreneurship?
Types of Social Entrepreneurship
Wicked Problems and Opportunity Spaces
Capital Markets for Social Entrepreneurs
Social Entrepreneurs and Their Stakeholders
Concluding Thoughts: Change Agent Now or Later?
Resources for Social Entrepreneurs
Notes
Glossary
Index
End User License Agreement
List of Illustrations
1: The Entrepreneurial Process
Exhibit 1.1 A Model of the Entrepreneurial Process
Exhibit 1.2 The 10 Ds
Exhibit 1.3 Uncertainity
Exhibit 1.4 Relationship of Investor to Entrepreneur
Exhibit 1.5 The Nine Fs
2: Idea Generation
Exhibit 2.1 Idea Generation Paths
Exhibit 2.2 Idea Classification Matrix
Exhibit 2.3 Attributes of Creative Individuals
Exhibit 2.4 Nine-Dot Exercise (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 2.5 The Fear Factor
Exhibit 2.6 Brain Orientation Comparison
Exhibit 2.7 Csikszentmihalyi’s Polarity of Creative Individuals
Exhibit 2.8 Select Improvisation Guidelines from The Second City
Exhibit 2.9 Observation Continuum
Exhibit 2.10 Observation Dimensions
Exhibit 2.11 Building Blocks of Idea Generation
Exhibit 2.12 Mind Map Example
3: Opportunity Recognition, Shaping, and Reshaping
Exhibit 3.1 IDEO
Exhibit 3.2 The Opportunity Space
Exhibit 3.3 Common Demographic/Psychographic Categories
Exhibit 3.4 Important Trends over the Past 50 Years
Exhibit 3.5 Market Size for Thai Fast Casual Restaurant
Exhibit 3.6 S Curve
Exhibit 3.7 Value Chain (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 3.8 Operating Systems Move to Dominant Design
Exhibit 3.9 Competitive Profile Matrix (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 3.10 The Entrepreneurial Firm International Expansion Process
Exhibit 3.11 Opportunity Checklist (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
4: Entrepreneurial Marketing
Exhibit 4.1 Understanding the Customer Choice Process
Exhibit 4.2 Marketing Mix Strategy for an Entrepreneur
Exhibit 4.3 Importance/Performance Analysis
Exhibit 4.4 New Product Development Process
Exhibit 4.5 Product Diffusion Curve (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 4.6 Pricing Decision for an Entrepreneur (Downloadable) Copyright © 2010 by Andrew Zacharakis and William D. Bygrave. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 4.7 Capabilities Needed to Compete in Electronic Channels
Exhibit 4.8 Marketing Communications Mix
Exhibit 4.9 Strategic Use of Advertising Media
5: Business Planning
Exhibit 5.1 Taglines
Exhibit 5.2 Business Plan Outline
Exhibit 5.3 Sample Business Plan Cover
Exhibit 5.4 Business Plan Table of Contents
Exhibit 5.5 Competitive Profile Matrix
Exhibit 5.6 Sample Source Information for Public/Private Companies
Exhibit 5.7 Customer Value Proposition
Exhibit 5.8 Competitive Map (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 5.9 Advertising Schedule
Exhibit 5.10 Magazine Advertisements
Exhibit 5.11 Operations Flow (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 5.12 Operating Cycle
Exhibit 5.13 Launch Timeline (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 5.14 Sample Critical Risk
Exhibit 5.15 Sources/Uses of Funds Table
6: Building Your Pro Forma Financial Statements
Exhibit 6.1 Revenues versus Costs
Exhibit 6.2 Financial Construction Checklist (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 6.3 Revenue Worksheet
Exhibit 6.4 Costs of Goods Worksheet
Exhibit 6.5 Operating Expenses Worksheet (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 6.6 Head Count Table
Exhibit 6.7 Income Statement
Exhibit 6.8 Comparable Analysis
Exhibit 6.9 Balance Sheet at End of First Year
Exhibit 6.10 Seasonality Projections (in Thousands)
Exhibit 6.11 The History Shoppe Cash Flow StatementMonth 1 Month 2 Month 3 Month 4 Month 5 Month 6
7: Equity Financing: Informal Investment, Venture Capital, and Harvesting
Exhibit 7.1 Price to Earnings
Exhibit 7.2 Expected IRR by Stage
Exhibit 7.3 Percent of Equity to Produce a 60 Percent IRR on a $4 Million Investment
Exhibit 7.4 XYZ Balance Sheet
Exhibit 7.5 Venture Capital–Backed Public Companies
Exhibit 7.6 Financing Filters
8: Debt and Other Forms of Financing
Exhibit 8.1 Sources of Outside Funding
Exhibit 8.2 Integrative Approach to Working Capital Management
9: External Assistance for Start-ups and Small Businesses
Exhibit 9.1 Growth in Minority-Owned Businesses, 1997–2002
Exhibit 9.2 SBIR and STTR Facts
10: Legal and Tax Issues
Exhibit 10.1 Comparison of Various Business Forms
Exhibit 10.2 Comparison of Stock Redemption Agreement and Stock Cross-purchase Agreement
Exhibit 10.3 Power of Employees/Independent Contractors to Create Contractual and Tort Liability for Principals
Exhibit 10.4 Comparison of Equity Sharing Methods (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
11: Intellectual Property
Exhibit 11.1 Patent Management Spreadsheet (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 11.2 Summary of IP Protection Methods
12: Selling in an Entrepreneurial Context
Exhibit 12.1 Aligning the Selling and Buying Processes
13: Beyond Start-up: Developing and Sustaining the Growing Organization
Exhibit 13.1 Levels of Growth
Exhibit 13.2 Growth Considerations at Three Levels
Exhibit 13.3 Post-Start-up Options
Exhibit 13.4 Growth Stages of an Entrepreneurial Firm
Exhibit 13.5 Four Domains for Managing Growth
Exhibit 13.6 Challenges and Key Imperatives in Four Domains for Managing Growth
Exhibit 13.7 Cash Conversion Period
Exhibit 13.8 The Entrepreneur versus Manager versus Entrepreneurial Leader
Exhibit 13.9 Transition from Entrepreneur to Entrepreneurial Leader
14: Franchising
Exhibit 14.1 Franchise Milestones
Exhibit 14.2 Traditional View of the Franchise Relationship
Exhibit 14.3 License Agreement Key Provision Impact Analysis (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 14.4 An Expanded View of the Franchise Relationship
Exhibit 14.5 The Generic Franchise Service Delivery System
Exhibit 14.6 Checklist for International Financing (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
15: Social Entrepreneurship
Exhibit 15.1 Popular Definitions of Social Entrepreneurship (or Social Entrepreneur)
Exhibit 15.2 Typology of Entrepreneurial Ventures
Exhibit 15.3 Number of Nonprofit Organizations in the United States, 1996 and 2006
Exhibit 15.4 Number of Nonprofit Organizations by State (2006)
Exhibit 15.5 The Meaning of
Entrepreneurial
for Nonprofit Organizations
Exhibit 15.6 Corporate Social Responsibility versus Social Entrepreneurship
Exhibit 15.7 Wicked versus Tame Problems (Downloadable) Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. To download this form for your personal use, please visit www.wiley.com/go/portablembainentrepreneurship.
Exhibit 15.8 United Nations Millennium Development Goals
Exhibit 15.9 Accepted Principles of Venture Philanthropy from the European Venture Philanthropy Association
Exhibit 15.10 New Profit Doubles a $1 Investment
Exhibit 15.11 Stakeholder Classification
Guide
Cover
Table of Contents
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THE PORTABLE MBA IN ENTREPRENEURSHIP
FOURTH EDITION
William D. Bygrave, DBA
Andrew Zacharakis, PhD
Copyright © 2010 by William D. Bygrave and Andrew Zacharakis. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.
Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com.
ISBN 978-0-470-48131-8
Complete List of Downloadable Materials for The Portable MBAin Entrepreneurship
Online Only:
Chapter 2 Web Site Material:
Ideaspace Exercise
Chapter 4 Web Site Material:
Customer Interview
Chapter 6 Web Site Material:
Pro Forma Financial Statements
Chapter 7 Web Site Material:
BFSW Cap Table
Chapter 9 Web Site Material:
Where to Find SBDC’s
Online and in Manuscript:
Downloadable Exhibit 2.4:
Nine-Dot Exercise
Downloadable Exhibit 3.7:
Value Chain Exercise
Downloadable Exhibit 3.9:
Competitive Profile Matrix
Downloadable Exhibit 3.11:
Opportunity Checklist
Downloadable Exhibit 4.5:
Product Diffusion Curve
Downloadable Exhibit 4.6:
Pricing Decision for an Entrepreneur
Downloadable Exhibit 5.8:
Competitive Map
Downloadable Exhibit 5.11:
Operations Flow
Downloadable Exhibit 5.13:
Launch Timeline
Downloadable Exhibit 6.2:
Financial Construction Checklist
Downloadable Exhibit 6.5:
Operating Expenses Worksheet
Downloadable Exhibit 10.4:
Comparison of Equity Sharing Methods
Downloadable Exhibit 11.1:
Patent Management Spreadsheet
Downloadable Exhibit 14.3:
License Agreement Key Provision Impact Analysis
Downloadable Exhibit 14.6:
Checklist for International Franchising
Downloadable Exhibit 15.7:
Wicked versus Tame Problems
Preface to the Fourth Edition
As we write the fourth edition, the United States and world have gone through economic upheaval. Unemployment, foreclosures, government bailouts to the financial and auto sectors have created volatility and uncertainty. Yet, while the period has been bleak, we expect the future to be bright. The one truth for the United States—and for more and more nations as entrepreneurship has taken hold globally—is that world-changing new ventures often are born at the depth of economic upheavals. During the Great Depression, Boeing emerged and changed the nature of aerospace; IBM was founded during the Long Depression (1872–1896); and many great companies opened shop during recessions, including Hyatt and Burger King during the 1957–1958 recession, FedEx during the 1973 oil embargo, and CNN and MTV during the 1980–1981 recession. Thus, entrepreneurship is even more important to economic recovery and ongoing health for countries worldwide. We hope that this book will inspire the next generation of great entrepreneurs and companies.
Today, U.S. small businesses—firms with 500 or fewer employees—employ slightly more than 50 percent of the labor force and generate approximately half of the nonfarm private gross domestic product (GDP). If the small business sector of the U.S. economy were a nation, its GDP would rank third in the world behind the non-small-business sector of the United States and the entire economy of Japan, and far ahead of the entire economies of China, Germany, the United Kingdom, France, and Italy.
Not only are small businesses the engine for job creation, they are also a powerful force for innovation. They employ 39 percent of all high-tech workers and produce approximately 14 times more patents per employee than large firms. Since the publication of the third edition, a multitude of new, world-changing companies have been started. Facebook, Skype, and Twitter, among others, are changing the way we communicate and interact with each other. And large existing companies that are entrepreneurial continue to create and rejuvenate their businesses. No example is better than Apple, which since 2003 has launched the iPhone and iTouch. Close to 50 million units have been sold in its first 18 months.
No doubt about it, entrepreneurship is what America does best, bar none. No other advanced industrial nation comes close. U.S. entrepreneurial companies created the personal computer, biotechnology, fast food, and overnight package delivery industries; transformed the retailing industry; overthrew AT&T’s telecommunications monopoly; revitalized the steel industry; invented the integrated circuit and the microprocessor; founded the nation’s most profitable airline; and the list goes on.
Is it any wonder that more and more people are choosing to be entrepreneurs? Entrepreneurship courses and programs have proliferated in the past 10 years. It is estimated that more than 2,000 U.S. colleges and universities, or about two-thirds of the total, have at least one course in entrepreneurship. It is possible to study entrepreneurship in certificate, associates, bachelors, masters, and PhD programs. Every business student, regardless of their career plans, needs to understand the role of entrepreneurship in the economy. Today, a business education without an entrepreneurship component is as incomplete as medical training without obstetrics.
The Portable MBA in Entrepreneurship is a book for would-be entrepreneurs, people who have started small firms and who want to improve their entrepreneurial skills, and others who are interested in entrepreneurship, such as bank loan officers, lawyers, accountants, investors, and consultants—indeed, anyone who wants to get involved in the birth and growth of an enterprise. The chapters are written by leading authorities on new business creation, including professors, entrepreneurs, and consultants with extensive experience in teaching the art and science of starting and growing a venture. These authors practice what they teach. They have started businesses, served on boards of venture capital funds, been on boards of directors and boards of advisers of entrepreneurial companies, raised start-up and expansion capital, filed patents, registered companies, and, perhaps most important of all, have created new products and many new jobs. What’s more, they are tireless champions of entrepreneurship. They believe that entrepreneurs are crucial to America’s economic well-being.
We would like to thank all the chapter authors for their contributions, as well as our research assistants, Mark Itskovitz, R. Gabriel Shih, and HenryMcGovern. We hope you enjoy this book.
WILLIAM D. BYGRAVEANDREW ZACHARAKISArthur M. Blank Center for EntrepreneurshipBabson CollegeMay 2009
About the Contributors
Abdul Ali is the President’s Term Chair and an associate professor of marketing at Babson College. Earlier he taught at the University of Maryland in College Park and at Syracuse University. He served as Chair of the Marketing Division for six years (2000 to 2006) at Babson College. Dr. Ali’s teaching and research interests include new product management, entrepreneurial marketing, marketing research methods, marketing strategy, and marketing high-tech products. His work has appeared in Management Science, the Journal of Product Innovation Management, Managerial and Decision Economics, the Journal of Business Research, and Marketing Letters. He and two co-authors produced A Casebook for Business Statistics: Laboratories for Decision Making, published by John Wiley & Sons. He also co-authored a chapter each on entrepreneurial marketing in two books edited by William Bygrave and Andrew Zacharakis.
William D. Bygrave, D.Phil., MBA, is a professor emeritus at Babson College. Dr. Bygrave joined the Center for Entrepreneurial Studies at Babson College in 1985 and directed it from 1993 to 1999. He was also the director of the annual Babson College–Kauffman Foundation Entrepreneurship Research Conference in 1994–1995 and 2001–2003. He teaches and researches entrepreneurship, specifically financing of start-up and growing ventures. In 1997, he and Michael Hay at the London Business School started the Global Entrepreneurship Monitor (GEM), which examines the entrepreneurial competitiveness of nations. He is a member of the board of trustees of Babson College.
Dr. Bygrave has founded a venture-capital-backed high-tech company, managed a division of a New York Stock Exchange–listed high-tech company, co-founded a pharmaceutical database company, and been a member of the investment committee of a venture capital firm. He was the 1997 winner of the Ernst & Young Entrepreneur of the Year award in the supporter category for New England.
He has written more than 100 papers on topics that include venture capital, entrepreneurship, nuclear physics, hospital pharmaceuticals, and philosophy of science. He is also co-editor of Entrepreneurship (2007); The Venture Capital Handbook (1999); The Portable MBA in Entrepreneurship (third edition, 2003); The Portable MBA in Entrepreneurship Case Studies (second edition, 1997); Realizing Enterprise Value (1993); and Frontiers of Entrepreneurship Research; he was also an editor of Entrepreneurship Theory and Practice. He has served on the review boards of three entrepreneurship journals. Translations of his books have been published in Chinese, Japanese, Spanish, and Bahasa Indonesia. Areas of expertise include entrepreneurship, new venture creation, informal investment, and venture capital.
Elizabeth J. (Betsy) Gatewood, PhD, has been the director of the University Office of Entrepreneurship & Liberal Arts at Wake Forest University since 2004. She served as the Jack M. Gill Chair of Entrepreneurship and director of the Johnson Center for Entrepreneurship & Innovation at Indiana University from 1998 to 2004. She was the executive director of the Gulf Coast Small Business Development Center Network, an organization providing training and consulting services to entrepreneurs and small business owners in the 32 counties of the greater Houston region, from 1989 to 1998. Dr. Gatewood founded the Center for Business and Economic Studies at the University of Georgia and served as its director from 1983 to 1989.
She is a member of the Diana Project, a research study of women business owners and equity capital access, which won the FSF-NUTEK International Award for scientific work of outstanding quality and importance in the field of entrepreneurship. Dr. Gatewood serves on the board of directors of Delta Apparel, Inc. (AMEX:DLA) and on the Advisory Board for Spring Mill Ventures, a venture capital firm of the Village Ventures network. She is a past chair of the Entrepreneurship Division of the Academy of Management. She received the 1996 Advocate Award for outstanding contributions to the field of entrepreneurship from the Academy of Management. She holds a BS in psychology from Purdue University and an MBA with a concentration in finance and a PhD in business administration with a specialty in strategy from the University of Georgia.
H. David Hennessey, PhD, is Professor of Marketing and International Business at Babson College. After gaining his undergraduate degree in economics and business administration at Norwich University, Northfield, Vermont, and an MBA from Clark University, Worcester, Massachusetts, Dr. Hennessey worked as a senior marketing analyst for the American Can Company. He then became marketing director for Interpace Corporation, based in New Jersey. He completed his PhD at New York University and joined Babson College in 1982. He has taught courses on global marketing, marketing strategy, sales management strategy, and foundations of management and entrepreneurship, and written numerous articles and case studies. He has co-authored Global Marketing Strategies (6th edition, 2004, with Jean-Pierre Jeannet); Global Marketing: An Interactive Approach (2nd edition, 2006, with Jean-Pierre Jeannet and Kate Gillespie); Global Account Management (2004, with Jean-Pierre Jeannet); and How to Write a Marketing Plan (3rd edition, 1996, with Robert J. Kopp).
Dr. Hennessey has had executive and MBA teaching experience in programs at Babson College, Ashridge, IMD International, Rotterdam School of Management (RSM) Erasmus, and Helsinki School of Economics and Business Administration, as well as in Costa Rica, France, Holland, Germany, Switzerland, Finland, Hong Kong, and Japan. Participants are from many companies—for example, Electrolux, Unilever, IBM, Procter & Gamble, Investment Company Institute (ICI), Novartis, BBC, Cable and Wireless, BT Group, Compaq, Unisys, Philips, and Nokia.
Professor Hennessey is the faculty director of the Evening MBA program at Babson College. He served as faculty director for the Irving Oil marketing program and the GTECH Corporation growth program.
Joseph S. Iandiorio is a partner in the law firm of Iandiorio Teska & Coleman in Waltham, Massachusetts. The firm specializes in patents, trademarks, copyrights, trade secrets, licensing, litigation of intellectual property matters, employee and consultant contracts, confidential disclosure agreements, and other related areas of intellectual property. Mr. Iandiorio has over 45 years of experience, including a period as an examiner in the U.S. Patent and Trademark Office. He is actively involved in fostering the creation and growth of small businesses and high-technology companies. He was chosen as the Small Business Administration’s Lawyer Small Business Advocate of the Year. He has been director and treasurer of the Massachusetts Technology Development Corporation, a venture capital fund; chairman and director of the Smaller Business Association of New England; a member of the Massachusetts Small Business Advisory Council and of the Science and Technology Advisory Board; and a member of the board of trustees of National Small Business United.
Donna J. Kelley, PhD, is an associate professor of entrepreneurship at Babson College, and holds the David H. Park 1991 Term Chair in Entrepreneurship. Donna teaches courses in entrepreneurship, corporate entrepreneurship, and entrepreneurship in Asia. She has published research on innovation and entrepreneurial activities in technology-based start-ups and large established organizations in the United States and Asia. Her research has been published in the Journal of Business Venturing, Entrepreneurship: Theory & Practice, the Journal of Product Innovation Management, IEEE Transactions on Engineering Management, Human Resource Management, and others.
Dr. Kelley received her PhD from Rensselaer Polytechnic Institute. Her early career involved work as a chemist in the graphics and industrial/consumer cleaning products industries. Her entrepreneurship experience involves founding a health fitness business and joining the management team of a computer hardware start-up, responsible for finance and operations. She was also a founding team member and a founding board member of a Chinese-immersion public charter school. She is a board member of the Global Entrepreneurship Research Association (GERA), the oversight organization for the Global Entrepreneurship Monitor (GEM), and she was a member of the GEM Korea research team.
Richard P. Mandel, JD, is associate professor of law at Babson College, where he teaches a variety of courses in business law and taxation and serves as associate dean of the Undergraduate School. He has previously served as acting dean of the Undergraduate School at Babson and as chair of its Finance Division. Mr. Mandel is also of counsel to the law firm of Bowditch and Dewey, of Worcester, Boston, and Framingham, Massachusetts, where he specializes in the corporate, tax, and securities law issues of small businesses. Mr. Mandel has written a number of articles regarding the legal issues of small businesses and is a frequent contributor to the Portable MBA series. He holds an AB in political science and meteorology from Cornell University and a JD from Harvard Law School.
Edward P. Marram, PhD, is senior lecturer at Babson College. His academic experience includes serving as director of the Entrepreneurial Center at Babson College, where he was instrumental in developing cooperative programs with the Entrepreneurial Department, the Executive Center, the Olin School of Engineering, and Intel, as well as others. He has taught entrepreneurship at Babson College, Harvard University, Olin School of Engineering, and Northeastern University, as well as at INSEAD in Fontainebleau, France, and at Flanders School of Business in Belgium; he has served as entrepreneur-in-residence at Babson College since 1990. In 1989 he was made a Price-Babson College Fellow and in 1992 was awarded the Edwin M. Appel Prize “For Bringing Entrepreneurial Vitality to Academics in the True Spirit of the Price-Babson College Fellows Program.” Dr. Marram has taught business practices to faculty, graduate students, and entrepreneurs in the United States, in South America, and in both Eastern and Western Europe, and has lectured on entrepreneurial education to Polish faculty members and entrepreneurs at the University of Warsaw, worked with Slovenian entrepreneurs and educators, and developed executive training programs in Scotland and at INSEAD in France.
Dr. Marram’s business/entrepreneurial experience includes being the founder, chief executive officer, and chairman of the board of Geo-Centers, Inc., a high-technology professional services firm, until its acquisition by SAIC, Inc. in October 2005. During his tenure as head of Geo-Centers, the company grew to over $200 million in revenue. Under Dr. Marram’s leadership, Geo-Centers established an in-house Research and Development Center to provide, for the global scientific community, a place for cuttingedge collaborations with the world’s finest scientists and engineers with a mission to transition research into applications and products.
He holds BS and MS degrees from the University of Massachusetts and a PhD in physics from Tufts University.
Heidi Neck, PhD, is the Jeffry A. Timmons Professor of Entrepreneurial Studies at Babson College. She is the faculty director of the Babson Symposium for Entrepreneurship Educators (SEE), where she works to improve the pedagogy of entrepreneurship education because venture creation is the economic growth engine of society. Her research interests include social entrepreneurship, entrepreneurship education, and creativity. She has contributed numerous book chapters, published research monographs, and refereed articles in such journals as the Journal of Small Business Management, Entrepreneurship Theory and Practice, and the International Journal of Entrepreneurship Education. She is on the editorial board of Entrepreneurship Theory and Practice and Academy of Management Learning & Education. Recognized for her contributions to innovative teaching and curriculum developments, she has received numerous awards, including Babson’s Deans’ Award for Excellence in Teaching and the Gloria Appel Prize for entrepreneurial vitality in academe. Dr. Neck completed her PhD in strategic management and entrepreneurship from the University of Colorado at Boulder in 2001. She holds a BS in marketing from Louisiana State University and an MBA from the University of Colorado, Boulder.
Mark P. Rice, PhD, currently the Frederic C. Hamilton Professor for Free Enterprise at Babson College, served as the Murata Dean of the F.W. Olin Graduate School of Business at Babson College from 2001 to 2007. He also has an appointment as Professor of Technology Entrepreneurship at Babson’s sister school, the Olin College of Engineering. His research on corporate innovation and entrepreneurship has been published widely in academic and practitioner journals, including Sloan Management Review, Organization Science, R&D Management, the Journal of Marketing Theory and Practice, IEEE Engineering Management Review, Academy of Management Executive, and California Management Review. Dr. Rice consults and teaches in the areas of innovation management, sales/marketing development, technology strategy, new business incubation, and entrepreneurship. He is co-author of Radical Innovation: How Mature Companies Can Outsmart Upstarts, which was published by Harvard Business School.
Professor Rice previously served as director of the nationally recognized RPI Incubator Program and as co-founder and director of the Severino Center for Technological Entrepreneurship at Rensselaer Polytechnic Institute. He has been a director and chairman of the National Business Incubation Association, which honored him in 1998 with its Founder’s Award. With Dr. Jana Matthews, he co-authored Growing New Ventures—Creating New Jobs: Principles and Practices of Successful Business Incubation.
In 2002 Dr. Rice received the Edwin M. and Gloria W. Appel Entrepreneurship in Education Prize. He holds BS and MS degrees in mechanical engineering and a PhD in management from Rensselaer Polytechnic Institute.
Joel M. Shulman, PhD, CFA, CMA, is an associate professor of entrepreneurship at Babson College. He has a PhD in finance along with Chartered Financial Analyst (CFA) and Certified Management Accountant (CMA) designations. He previously directed the Shulman CFA Review Program, which provided training for more than 12,000 investment professionals in over 100 countries throughout the world. He is the author or a co-author of numerous academic articles and books, including Getting Bigger by Growing Smaller, Encyclopedia of Business, Leasing for Profit, Alternatives to Conventional Financing, Planning Cash Flow, How to Effectively Manage Corporate Cash, A Manager’s Guide to Financial Analysis, The Job of Corporate Controller, and How to Manage and Evaluate Capital Expenditures. Dr. Shulman has consulted for small entrepreneurial firms and large corporations, including Coldwell Banker, Ford Motor Company, Freddie Mac, Kmart, Merrill Lynch, Salomon Brothers, Sears, and Unisys. He has also consulted for the World Bank, assisting with the development of capital markets in Central Asia and republics of the former Soviet Union.
Kathleen Seiders, PhD, is an associate professor of marketing and Hillenbrand Distinguished Fellow at the Carroll School of Management, Boston College. Prior to her academic career, she had a 10-year career in food retailing. Her research has been published in journals that include the Journal of Marketing, Sloan Management Review, Academy of Management Executive, the Journal of Retailing, Annals of Internal Medicine, and the Journal of Public Policy & Marketing. She received best article awards for “Understanding Service Convenience” (JM) and “Obesity and the Role of Food Marketing” (JPP&M). Dr. Seiders is president of the Academic Council of the American Marketing Association. She has appeared on 60 Minutes and CBS Morning News, and has commented on many topics for NPR’s Marketplace, All Things Considered, and Morning Edition.
Stephen Spinelli Jr., PhD, a leading authority on entrepreneurship, is president of Philadelphia University. He joined the university in September 2007 and launched a strategic planning process aimed at distinguishing the institution as the model for professional university education in the twenty-first century. Under his leadership, Philadelphia University’s commitment to active, collaborative, and real-world education grounded in the liberal arts has shaped its signature learning approach and formed the basis of its developing College of Design, Engineering and Commerce, where a unique curriculum is being created around achieving innovation. A dedicated educator, Dr. Spinelli teaches a popular MBA course in entrepreneurship.
Previously, Dr. Spinelli spent 14 years at Babson College, where he was vice provost for entrepreneurship and global management, chair of the Entrepreneurship Division, director of the Arthur M. Blank Center for Entrepreneurship, the Alan Lewis Chair in Global Management, and chair of the entrepreneurship task force.
He has consulted for major corporations, and his work has appeared in numerous professional journals. He has been featured in the Chronicle of Higher Education, the Wall Street Journal, BusinessWeek, the Financial Times, and Entrepreneur. He has authored business cases and co-authored Business Plans That Work, Franchising: Pathway to Wealth Creation, How to Raise Capital, Never Bet the Farm, Entrepreneurship: The Engine of Growth, and New Venture Creation for the 21st Century.
Dr. Spinelli co-founded Jiffy Lube International and was chairman/CEO of American Oil Change Corporation, pioneering the quick-lube industry. He holds a PhD in economics from Imperial College, University of London; an MBA from Babson College; and a BA in economics from McDaniel College.
Kirk Teska is the managing partner of the Waltham, Massachusetts–based intellectual property law firm Iandiorio Teska & Coleman. The firm specializes in patents, trademarks, copyrights, trade secrets, licensing, litigation of intellectual property matters, employee and consultant contracts, confidential disclosure agreements, government contracts, and other related areas of intellectual property. Mr. Teska has 18 years of intellectual property law experience. He secures and litigates patents in nearly all areas of engineering, including optics, circuits, mechanical systems, processor-based systems, composites, computer software, the Internet, and business methods.
Mr. Teska taught patent law at the Franklin Pierce Law Center and for nine years has taught classes as an adjunct professor at Suffolk University Law School. He is a regular columnist for Mass High Tech and Lawyers Weekly, where his columns “Patent Watch” and “IP Litigation Watch” appear monthly.
Mr. Teska has written articles for and has been published in Trial magazine, the Computer Law Reporter, the Boston Business Journal, Mass High Tech, Bottom Line Business, Proceedings, the Journal of the Patent and Trademark Office Society, IEEE Spectrum, New England In-House, the ACC Docket, Mechanical Engineering magazine, Contract Management magazine, and The Freeman|Ideas on Liberty. He was also a director of the Smaller Business Association of New England (SBANE) and a past chairman of the IEEE Entrepreneurs’ Network.
His book Patent Savvy was published in the fall of 2007 by Nolo Press.
Andrew Zacharakis, PhD, is the John H. Muller Jr. Chair in Entrepreneurship and the director of the Babson College Entrepreneurship Research Conference, the leading academic conference on entrepreneurship worldwide. He previously served as chair of the entrepreneurship department and as acting director of the Arthur M. Blank Center for Entrepreneurship at Babson College. In addition, he served as president of the Academy of Management, Entrepreneurship Division, an organization with 1,800 members. His primary research areas include the venture capital process and entrepreneurial growth strategies. Dr. Zacharakis is the co-author of five books: The Portable MBA in Entrepreneurship, Business Plans That Work, How to Raise Capital, Entrepreneurship:The Engine of Growth, and a textbook titled Entrepreneurship. He has been interviewed in newspapers nationwide, including the Boston Globe, the Wall Street Journal, and USA Today. He has also appeared on the Bloomberg Small Business Report and been interviewed on National Public Radio.
Dr. Zacharakis has taught seminars at leading corporations, such as Boeing, MetLife, Lucent, and Intel. He has also taught executives in countries worldwide, including Spain, Chile, Costa Rica, Mexico, Australia, China, Turkey, and Germany. He received a BS (finance/marketing), University of Colorado; an MBA (finance/international business), Indiana University; and a PhD (strategy and entrepreneurship/cognitive psychology), University of Colorado. Professor Zacharakis actively consults with entrepreneurs and small business start-ups. His professional experience includes positions with the Cambridge Companies (investment banking/venture capital), IBM, and Leisure Technologies.
1The Entrepreneurial Process
William D. Bygrave
How This Chapter Fits into a Typical MBA Curriculum
The entrepreneurial process is an introductory lecture at the start of a new venture course in MBA programs. It gives an overview of the importance of entrepreneurship in the economy. Then it sets the table for the semester by giving an outline of the content of the course, which comprises the entrepreneurial process from conception to birth of a new venture and its early growth. This chapter includes understanding entrepreneurial attributes and skills, finding and evaluating opportunities, and gathering resources to convert opportunities into businesses. Students learn how to weigh up entrepreneurs and their plans for new businesses.
In this book, as in most MBA new ventures courses, the focus is on entrepreneurs and how they start new companies. Major areas of concentration include the following: searching the environment for new venture opportunities; matching an individual’s skill with a new venture; evaluating the viability of a new venture; and financing, starting up, and operating a new venture.
Who Uses This Material in the Real World—and Why It Is Important
Would-be entrepreneurs hoping to start a new venture and novice entrepreneurs with fledgling businesses get a summary of the essential ingredients of successful entrepreneurship from reading this chapter. The book gives them deep insights into how to start and grow a viable business. The material is important because this book is a manual on best entrepreneurial practices spelled out by leading experts who teach and mentor entrepreneurs.
Introduction
This is the age of entrepreneurship. It is estimated that as many 500 million persons worldwide were either actively involved in trying to start a new venture or were owner-managers of a new business in 2008.1 More than a thousand new businesses are born every hour of every working day in the United States. Entrepreneurs are driving a revolution that is transforming and renewing economies worldwide. Entrepreneurship is the essence of free enterprise because the birth of new businesses gives a market economy its vitality. New and emerging businesses create a very large proportion of innovative products and services that transform the way we work and live, such as personal computers, software, the Internet, biotechnology drugs, and overnight package deliveries. They also generate most of the new jobs. Since the mid-1990s, small businesses have created 60 to 80 percent of net new jobs. In 2005—the most recent year with data—companies with fewer than 500 employees created 979,102 net new jobs or 78.9 percent, while large companies with 500 or more employees added 262,326 net new jobs or 21.1 percent.
If the small business sector of the U.S. economy were a nation, its GDP would rank third in the world behind the U.S. medium-and big-business sector and the entire economy of Japan, and far ahead of the economies of Germany, the United Kingdom, France, Italy, and China.2
There has never been a better time to practice the art and science of entrepreneurship. But what is entrepreneurship? Early in the 20th century, Joseph Schumpeter, the Moravian-born economist writing in Vienna, gave us the modern definition of an entrepreneur as the person who destroys the existing economic order by introducing new products and services, by creating new forms of organization, or by exploiting new raw materials. According to Schumpeter, that person is most likely to accomplish this destruction by founding a new business but may also do it within an existing one.
But very few new businesses have the potential to initiate a Schumpeterian gale of creation-destruction as Apple computer did in the computer industry. The vast majority of new businesses enter existing markets. In The Portable MBA in Entrepreneurship, we take a broader definition of entrepreneurship than Schumpeter’s. Ours encompasses everyone who starts a new business. Our entrepreneur is the person who perceives an opportunity and creates an organization to pursue it. And the entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities and creating organizations to pursue them. Our entrepreneur’s new business may, in a few rare instances, be the revolutionary sort that rearranges the global economic order as WalMart, Fedex, and Microsoft have done, and amazon.com, eBay, and Google are now doing. But it is much more likely to be of the incremental kind that enters an existing market.
The Changing Economy
General Motors (GM) was founded in 1908 as a holding company for Buick. On December 31, 1955, General Motors became the first American corporation to make over $1 billion in a year. At one point it was the largest corporation in the United States in terms of its revenues as a percent of GDP. In 1979, its employment in the United States peaked at 600,000. In 2008 GM reported a loss of $30.9 billion and burned through $19.2 billion of cash. In a desperate attempt to save the company in February 2009, GM announced plans to reduce its total U.S. workforce from 96,537 people in 2008 to between 65,000 and 75,000 in 2012. By March 2009, GM, which had already received $13.4 billion of bailout money from the U.S. government, was asking an additional $16.6 billion. The Obama Administration forced GM’s CEO, Rick Wagoner, to resign; his replacement, Fritz Henderson, said that bankruptcy was a real possibility. On June 1, GM filed for bankruptcy.
Wal-Mart was founded by Sam Walton in 1962. For the year ended January 31, 2008, Wal-Mart had record sales of $374.5 billion, record earnings of $22 billion, and record free cash flow of $5.4 billion. During 2008, Wal-Mart added 191 supercenters in the United States and opened its 3,000th international unit. Wal-Mart is the world’s largest corporation, with 1.4 million associates in the United States.
We’re all working together; that’s the secret. And we’ll lower the cost of living for everyone, not just in America, but we’ll give the world an opportunity to see what it’s like to save and have a better lifestyle, a better life for all. We’re proud of what we’ve accomplished; we’ve just begun.
—Sam Walton (1918–1992)
An entrepreneur is someone who perceives an opportunity and creates an organization to pursue it.
The entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities.
Is the birth of a new enterprise just happenstance and its subsequent success or demise a haphazard process? Or can the art and science of entrepreneurship be taught? Clearly, professors and their students believe that it can be taught and learned because entrepreneurship is the fastest growing new field of study in American higher education. It was estimated that more than 2,000 U.S. colleges and universities—approximately two-thirds of the total—were teaching entrepreneurship in 2009.
That transformation in higher education—itself a wonderful example of entrepreneurial change—has come about because a whole body of knowledge about entrepreneurship has developed during the past three decades or so. The process of creating a new business is well understood. Yes, entrepreneurship can be taught. However, we cannot guarantee to produce a Bill Gates or a Donna Karan, any more than a physics professor can guarantee to produce an Albert Einstein, or a tennis coach a Venus Williams. But give us students with the aptitude to start a business, and we will make them better entrepreneurs.
Critical Factors for Starting a New Enterprise
We will begin by examining the entrepreneurial process (see Exhibit 1.1). What we are talking about here are the factors—personal, sociological, and environmental—that give birth to a new enterprise. A person gets an idea for a new business through either a deliberate search or a chance encounter. Whether he decides to pursue that idea depends on factors such as his alternative career prospects, family, friends, role models, the state of the economy, and the availability of resources.
Exhibit 1.1 A Model of the Entrepreneurial Process
Source: Carol Moore, “Understanding Entrepreneurial Behavior,” in J. A. Pearce II and R. B. Robinson, Jr., eds., Academy of Management Best Paper Proceedings, Forty-sixth Annual Meeting of the Academy of Management, Chicago (1986).
There is almost always a triggering event that gives birth to a new organization. Perhaps the entrepreneur has no better career prospects. For example, Melanie Stevens was a high school dropout who, after a number of minor jobs, had run out of career options. She decided that making canvas bags in her own tiny business was better than earning low wages working for someone else. Within a few years she had built a chain of retail stores throughout Canada. Sometimes the person has been passed over for a promotion, or even laid off or fired. Howard Rose had been laid off four times as a result of mergers and consolidations in the pharmaceutical industry, and he had had enough of it. So he started his own drug packaging business, Waverly Pharmaceutical.
Tim Waterstone founded Waterstone’s book stores after he was fired by W. H. Smith. Ann Gloag quit her nursing job and used her bus driver father’s $40,000 severance pay to set up Stagecoach bus company with her brother; they exploited legislation deregulating the UK bus industry. Jordan Rubin was debilitated by Crohn’s disease when he invented a diet supplement that restored his health; he founded a company, Garden of Life, to sell that diet. Noreen Kenny was working for a semiconductor company and could not find a supplier to do precision mechanical work; she launched her own company, Evolve Manufacturing Technologies, to fill that void. The Baby Einstein Company was started by Julie Aigner-Clark when she discovered that there were no age-appropriate products available to help her share her love of art, classical music, language, and poetry with her newborn daughter.
For other people, entrepreneurship is a deliberate career choice. Babson College specializes in teaching entrepreneurship to undergraduates and MBA students. Many of them have chosen the school because they know that they want to start their own ventures rather than work for someone else. Some of them launch their ventures while they are still students and continue full-time with them as soon as they graduate. Others go and work for someone else for a few years to gain experience before they launch their ventures. A recent survey of Babson alums found that 40 percent of those who had studied entrepreneurship in college had launched one or more full-time businesses.
Origins of Home Depot
Bernie Marcus was president of the now-defunct Handy Dan home improvement chain, based in California, when he and Arthur Blank were abruptly fired by new management. That day and the months that followed were the most pivotal period in his career, he says. “I was 49 years old at the time and I was pretty devastated by being fired. Still, I think it’s a question of believing in yourself. Soon after, we [Blank and Marcus] started to realize that this was our opportunity to start over,” says Marcus.
Marcus and Blank happened upon a 120,000-square-foot store called Homeco, operating in Long Beach, California. The two instantly realized that the concept—an oversize store, packed with merchandise tagged with low prices—had a magical quality. They wanted to buy the business, but it was essentially bankrupt. Marcus and Blank talked Homeco owner Pat Farah into joining them in Atlanta and the trio, along with Ron Brill, began sketching the blueprint for Home Depot.
Source: Bernie Marcus and Arthur Blank with Bob Andleman, Built from Scratch. New York: Times Business, Random House, 1999.
A survey by ACNielsen International Research in July 2005 found the following:
Approximately 58 percent of Americans say they’ve dreamed of starting a business and becoming their own boss.
The most common reason for wanting to start a business is to increase one’s personal income (66 percent of respondents), followed by increased independence (63 percent).
The primary barriers to starting a business are insufficient financial resources (cited by 49 percent of respondents) and satisfaction with their current situation (29 percent).
Source:http://www.forbes.com/businesswire/feeds/businesswire/2005/07/21/businesswire20050721005296r1.html.
Where do would-be entrepreneurs get their ideas? More often than not it is through their present line of employment or experience. A 2002 study of the Inc. 500—comprising “America’s [500] fastest growing companies”—found that 57 percent of the founders got the idea for their new venture in the industry they worked in and a further 23 percent in an industry related to the one in which they were employed. Hence, 80 percent of all new high-potential businesses are founded in industries that are the same as, or closely related to, the one in which the entrepreneur has previous experience. That is not surprising, because it is in their present employment that they will get most of their viable business ideas.
Some habitual entrepreneurs do it over and over again in the same industry. Joey Crugnale, himself an Inc. 500 Hall of Famer and an Inc. Entrepreneur of the Year, became a partner in Steve’s Ice Cream during his early twenties. He eventually took over Steve’s Ice Cream and created both a national franchise of some 26 units and a new food niche, gourmet ice creams. In 1982, Crugnale started Bertucci’s, where gourmet pizza was cooked in wood-fired brick, and built it into a nationwide chain of 90 restaurants. Then he founded Naked Restaurants as an incubator to launch his innovative dining concepts. The first one, the Naked Fish, opened in 1999 and brought his wood-fired grill approach to a new niche: fresh fish and meats with a touch of Cubanismo. The second, Red Sauce, which opened in 2002, serves moderately priced authentic Italian food somewhat along the lines of Bertucci’s.
Others do it over and over again in related industries. In 1981, James Clark, then a Stanford University computer science professor, founded Silicon Graphics, a computer manufacturer with 1996 sales of $3 billion. In April 1994, he teamed up with Marc Andreessen to found Netscape Communications. Within 12 months, its browser software, Navigator, dominated the Internet’s World Wide Web. When Netscape went public in August 1995, Clark became the first Internet billionaire. Then in June 1996, Clark launched another company, Healthscape, to enable doctors, insurers, and patients to exchange data and do business over the Internet with software incorporating Netscape’s Navigator.
Much rarer is the serial entrepreneur such as Wayne Huizenga, who ventures into unrelated industries: first in garbage disposal with Waste Management, next in entertainment with Blockbuster Video, then in automobile sales with AutoNation. Along the way he was also the original owner of the Florida Marlins baseball team, which won the World Series in 1997.
