managing entrepreneurial ventures
DESCRIPTION
Managing Entrepreneurial VenturesTRANSCRIPT
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 1
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 2
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 3
The Context of Entrepreneurship
• Entrepreneurship - the process of starting new businesses, generally in response to opportunities.
• Entrepreneurial ventures - organizations that pursue opportunities, are characterized by innovative practices, and have growth and profitability as their main goals.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 4
The Context of Entrepreneurship (cont.)
• Small business - an organization that is independently owned, operated, and financed; has fewer than 100 employees; doesn’t necessarily engage in any new or innovative practices; and has relatively little impact on its industry.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 5
Why Is Entrepreneurship Important?
• Innovation– Engage in the creative destruction process– Act as agents of change
• Number of New Startups– Increasing numbers of new firms
• Job Creation– New ventures create 60-80% of net new jobs
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 6
Exhibit A-1: Evaluating Potential Ideas
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 7
Start-Up and Planning Issues
• Feasibility study - an analysis of the various aspects of a proposed entrepreneurial venture designed to determine its feasibility.
• Venture capitalists - External equity financing provided by professionally managed pools of investor money.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 8
Appendix A-2: Feasibility Study
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 9
Appendix A-2: Feasibility Study (cont.)
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 10
Appendix A-2: Feasibility Study (cont.)
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 11
Venture Feasibility—Financing
• Venture capitalists - external equity financing provided by professionally managed pools of investor money.
• Angel investors - a private investor (or group of private investors) who offers financial backing to an entrepreneurial venture in return for equity in the venture.
• Initial Public Offering (IPO) - the first public registration and sale of a company’s stock.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 12
Appendix A-3: Possible Financing Options
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 13
Developing a Business Plan
• Business plan - a written document that summarizes a business opportunity and defines and articulates how the identified opportunity is to be seized and exploited.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 14
Elements of a Business Plan
• Executive summary• Analysis of opportunity• Analysis of context• Description of the business• Financial data and projections• Supporting documentation
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 15
Legal Forms of Organization
• Sole proprietorship - a form of legal organization in which the owner maintains sole and complete control over the business and is personally liable for business debts.
• General partnership - a form of legal organization in which two or more business owners share the management and risk of the business.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 16
Legal Forms of Organization (cont.)
• Limited Liability Partnership (LLP) - a form of legal organization consisting of general partner(s) and limited liability partner(s).
• Corporation - a legal business entity that is separate from its owners and managers.
• Closely held corporation - a corporation owned by a limited number of people who do not trade the stock publicly.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 17
Legal Forms of Organization (cont.)
• S corporation - a specialized type of corporation that has the regular characteristics of a C corporation but is unique in that the owners are taxed as a partnership as long as certain criteria are met.
• Limited Liability Company (LLC) - A form of legal organization that’s a hybrid between a partnership and a corporation.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 18
Legal Forms of Organization (cont.)
• Operating agreement - the document that outlines the provisions governing the way an LLC will conduct business.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 19
Exhibit A-4: Legal Forms of Business Organization
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 20
Exhibit A-4: Legal Forms of Business Organization (cont.)
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 21
Exhibit A-4: Legal Forms of Business Organization (cont.)
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 22
Exhibit A-5: Achieving a Supportive, Growth Oriented Culture
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 23
Human Resource Management Issues in Entrepreneurial Ventures
• Employee Recruitment Concerns– Locating high potential employees who:
• can perform multiple roles• are willing to “buy-in” (commitment)
– Filling critical skill gaps
• Employee Retention Issues– Potential for damage to client/customer relationships due
to loss of employees– Need to offer desirable benefits– Compensation: base pay and incentives
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 24
Leading Issues
• Personality Characteristics of Entrepreneurs– High level of motivation, abundance of self-confidence,
ability to be involved for the long term, high energy level, persistent problem solver, high degree of initiative, ability to set goals, and moderate risk-taker
• Proactive personality – a personality trait that describes individuals who are more prone to take actions to influence their environments.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 25
Leading Issues (cont.)
• Motivating Employees Through Empowerment– Empowerment
• Giving employees the power to make decisions and take actions on their own to solve problems
– Benefits of Empowerment• Improved flexibility and speed• Stronger work motivation• Higher morale• Better work quality• Higher job satisfaction • Lower turnover• Higher productivity• Improved quality
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 26
Leading Issues (cont.)
• Empowering Employees– Participative decision making– Delegation– Redesigning jobs
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 27
The Entrepreneur as Leader
• Leading Employee Work Teams– Empowered teams
• Have the authority to plan and implement process improvements
– Self-directed teams• Are nearly autonomous and responsible for many
managerial activities
– Cross-functional teams• Are composed of individuals from various specialties
who work together on various tasks
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 28
Controlling Issues (cont.)
• Managing Growth– Planning for growth– Organizing for growth– Financing growth– Finding people– Creating a growth-oriented
culture– Controlling for growth
• Managing Downturns– Recognizing crisis situations—
avoiding the boiled frog phenomenon
– Dealing with downturns, declines, and crises
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 29
Recognizing Crisis Situations
• “Boiled frog” phenomenon - a perspective on recognizing performance declines that suggests watching out for subtly declining situations.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 30
Exiting the Venture
• Why Leave?– Desiring to harvest the value of the venture– Facing serious organizational performance
problems– Desiring to pursue other interests/opportunities
• Business Valuation Methods– Asset valuations– Earnings valuations– Cash flow valuations
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 31
Exiting the Venture (cont.)
• Harvesting - exiting a venture when an entrepreneur hopes to capitalize financially on the investment in the venture.
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 32
Terms to Know• Entrepreneurship• Entrepreneurial ventures• Small business• Feasibility study• Venture capitalists• Angel investors• Initial public offering (IPO)• Business plan• Sole proprietorship• General partnership
• Limited liability partnership (LLP)
• Corporation• Closely held corporation• S corporation• Limited liability company
(LLC)• Operating agreement• Proactive personality• “boiled frog” phenomenon• Harvesting
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Management, Eleventh Edition by Stephen P. Robbins & Mary Coulter ©2012 Pearson Education, Inc, Publishing as Prentice Hall Appendix - 33