Fundamentals for Becoming a Successful Entrepreneur

Description

Introduction: Why This Book, What It Is All About, and Who We Are xi
The Why xi
The What xiii
The Who xvi
Chapter 1: What Is This Thing Called Entrepreneurship? 1
Introduction 1
The Entrepreneur 1
Entrepreneurial Dreams and Their Outcomes 2
There Is No One Narrative 4
Collective Dreams 6
Why Entrepreneurship Became Important 6
Challenging Assumptions—Entrepreneurship Is for All 7
Entrepreneurial Environments 9
National Innovation Systems for Entrepreneurs 10
Incubators and Accelerators 11
Entrepreneurs: Made or Born 12
Who Is an Entrepreneur? 12
The Entrepreneurial Personality 13
Entrepreneurial Mindset 14
Defining Entrepreneurship: It All Depends 16
Opportunity Recognition 17
Entrepreneurial Goals 19
Different Goals for Different Folks 20
Other Definitional Issues 20
The Self-Employed as Entrepreneurs 22
The Context for Self-Employed Entrepreneurs 22
A False Dichotomy 25
Do Goals Differentiate? 26
A Mini-Case Example 27
Opportunity and the Entrepreneur 28
Exercises 29
Advanced Exercises 30
References 31
Chapter 2: What Is Being Successful: Well It All Depends 33
Why Examine Success? 33
Case Example from Finland and Sweden 33
Defining Success 37
Defining Failure 37
Measurement Issues in Defining Success (and Failure) 39
Success in the Entrepreneurial Context 40
How Some Firm Founders See Success 41
How Entrepreneurship Researchers View Success 42
An Ancient Narrative on Obtaining Success 44
Success and Opportunity 44
Tying Success to Entrepreneurial Goals 45
Is Success Wealth? 46
The True Secret to Success: Networking 47
Rules for Networking 49
Finally, Success Is Having Fun 50
Case Example from Italy 51
Conclusion 54
Exercises 55
References 55
Chapter 3: Getting a Good Idea and Making It Work 57
Overview 57
The Idea 57
Idea Generation 58
Concept Benefits: Needs, Wants, and Fears 59
Examples of Needs, Wants, and Fears 61
Thinking out of the Box: Not Everything Needs a Hammer 62
The Role of Creativity 63
The Concept 65
The Conceptual Event 66
A Case Example of the Conceptual Event 67
The Entrepreneur as a Dreamer 68
Generating Ideas 70
Creating a Viable Business Concept and Business Model 71
Looking for Trends and Counter Trends as Concept Sources 72
Brainstorming: The Good and The Ugly 74
Timing: It Is Not First to Market 74
Designing a Concept for Profitability and Growth 75
Building a Viable Business Concept 76
More Thoughts on Concept Development 78
Some Commentary on Franchises 79
The Concept Feasibility Worksheet Exercise 80
Exercise: Can You Describe the Concept? 82
References 84
Chapter 4: The Basics About Marketing You Have to Know 85
An Overview 85
Why Know Your Market? 86
What Is Marketing? 87
Basic Marketing Terminology 87
Marketing Research: Doing the Work Upfront 91
Market Research: Start Personally 92
Examples of Walking Around Research 96
Developing Effective Marketing Strategies 97
Mobile Devices and Marketing 99
The Internet: The Best and Worst for a Venture 99
Using the Internet and Cell Phone Apps 101
Selling: The Challenge 102
Typical Problems in Selling Anything 102
Selling to the Internet Generation 104
Marketing in the Social Media Age 105
Advertising 106
Public Relations 107
Branding 108
Exercises 109
References 109
Chapter 5: It Is All About Building a Better Mousetrap: Product and Service Development 111
Overview 111
Product/Service Innovation 112
Entrepreneurs Versus Inventors 113
Stage-Gate Model of Product Development 114
Using Stage-Gate Model 116
Types of Innovation 120
Focus Innovation 121
Innovation Impact 123
To Innovate or Not: That Is the Big Question 123
Commercialization Is Key 125
Defining New: In the Eye of the Beholder 125
Building on the Past 127
Reinventing an Industry’s Products: Examples 127
E-Commerce: Using Innovation in Marketing and Distribution 128
Industry Change as Opportunity for Product/Development 130
Examples of Industrial Change Fostering New Models 130
Spotting New Trends for New Products/Services 132
Basic Conditions for Successful Products and Services 133
Case Study of New Product Development in a New Venture 134
Patents, Trade Secrets, and Copyrights 138
Exercise 138
References 139
Chapter 6: Finding Team Members and Building an Entrepreneurial Organization 141
Overview 141
Building the Venture One Person at a Time 142
The Entrepreneurial Team 142
Other Issues to Consider 144
Outsourcing 145
Finding New Employees 146
Big Hiring Errors 147
Characteristics of a Good Hire 148
A Mini-Case Example 150
Whom to Hire or Not, Whom to Fire or Not 151
Saying “No” to an Applicant 152
Firing an Employee 152
To Be a Family Firm or Not to Be 154
What Is Firm Owning Family? 154
Family Goals Impact Hiring 155
Long-Term Impact of Hiring Family Members 156
Compensation, Benefits, and Stock Options 156
Building an Entrepreneurial Team Structure 158
A Line Structure for Entrepreneurial Teams 159
Project Approach to an Entrepreneurial Team Structure 161
Informal Structure: Key to a Successful Entrepreneurial Team 161
New Firm Governance 162
Legal Structure Decisions 163
Final Thoughts on Entrepreneurial Management 165
Exercises 166
References 166
Chapter 7: Everything You Really Need to Know About Entrepreneurial Finance 169
Entrepreneurial Finance: An Introduction 169
Building an Entrepreneurial Financial Strategy 170
Entrepreneurial Finance: Not Just Venture Capital and IPO 171
Building a Sustainable Revenue Model 172
Cash Flow: A Numerical Scorecard 174
Determining Cash-Flow Needs 175
Timing and Cash Flow 177
Money Comes in Four Forms 179
Finding Money and Investors 182
More Money Sources 183
The Myth of Needing Deep Pockets 185
Understanding Investors and Bankability 186
Capital 189
Debt Financing 191
Banks 192
Venture Capital 192
Angel Investors 193
What Investors Look for in Any Venture 193
Bootstrap Financing 194
Advantages to Bootstrapping 195
Crowd Funding 196
Exercises 198
References 199
Chapter 8: How to Grow or Not to Grow Your Venture: That Is the Management Challenge 201
Growing Your Venture: An Introduction 201
What Is Business Growth? 201
Developing a Workable Growth Strategy 202
Growth and Success 203
Mini-Case on Growth by Replication 204
Describing Growth Versus Defining Growth 206
Some Descriptions and Issues 207
Growth and Competition 216
Growth as Metamorphosis 218
Conclusion 221
Exercise 221
References 222
Chapter 9: Planning: Should You, When Do You, and How Do You? 223
Overview of Plans and Planning 223
Why Plan? 225
Hooked on a Feeling 227
When Do You Plan? 228
How Long Will It Take? 229
For Whom Do You Plan? 230
What Goes into a Business Plan? 232
Detail Content of a Written Business Plan 232
Executive Summary Content 233
Marketing Plan Content 235
About Competition 237
Management and Organizational Plan 238
Financial Plan Content 240
General Comments Concerning Plans 242
Final Words on Planning and Success 242
Mini-Case on Chocolate Pralines 243
Index 247

Today’s start-to-finish guide to starting your successful business: how to find, evaluate, and exploit your best opportunity!

• Covers every piece of the entrepreneurial puzzle: the individual, team, opportunity, concept, revenue model, resource acquisition, launch, execution, and growth
• Includes essential coverage other guides skip, including family funding, legal issues, and crucial linkages between concept/launch and operations
• Presents chapters on applying entrepreneurial techniques in social ventures/non-profits, technology-based ventures, the arts and humanities, and as a self-employed professional

This is the complete, modern guide to every facet of creating a successful new venture, from identifying and evaluating opportunities to effectively exploiting them. Using examples from real-life entrepreneurs, Alan L. Carsrud guides you all nine key pieces of the entrepreneurial puzzle: the individual, entrepreneurial team, opportunity, business concept, revenue model, resource acquisition, launch, execution, and growth.

Carsrud thoroughly discusses entrepreneurial mindsets, motivation, attitudes, and leadership, and covers the entire process of starting a company from business idea through the first four years of operations. You’ll learn how to:

• Recognise, define, test and exploit business opportunities
• Develop business ideas into business concepts with revenue models that create value and can be profitably sustained
• Determine your concept’s feasibility through industry, market, trend, economic, breakeven, and risk analyses
• Establish a proper ethical and legal foundation for the business concept
• Succinctly and effectively demonstrate your concept’s viability to a potential funder
• Organise and manage human and social capital — including resources provided by your family

Throughout, Carsrud offers entrepreneurship techniques and approaches you can use in many ways: to build your own profitable new venture, create a successful non-profit, make a public agency more effective, transform your current organisation, or succeed as a self-employed professional.

This is the complete, up-to-date guide to creating a successful new venture. Using real-life examples, it helps you assemble every piece of the puzzle: you, your team, your opportunity, your business concept and revenue model, your resources, and your successful launch, execution, and growth.

The authors illuminate entrepreneurial mindsets, motivation, attitudes, and leadership, and cover the entire process of starting a company, from idea through your first four years of operations. You’ll learn how to recognize, define, test, and exploit opportunities; transform ideas into revenue models that earn sustainable value; demonstrate viability to funders; establish a strong ethical and legal foundation for your concept; and build a thriving team to execute on it.

You can use this guide’s entrepreneurship techniques and approaches in many ways: to build a profitable new venture, to succeed as a self-employed professional, to make a non-profit or public agency more successful, or even to transform your current organization!

Entrepreneurship: From dreams to outcomes
Defining success for yourself—and achieving it

Designing concepts for profitability and growth
Planning your high-potential business, step by step

Innovating in product/service development and marketing
Delivering something new that your market will value

Building your entrepreneurial venture, one person at a time
Developing great teams—and avoiding common hiring mistakes

Mastering the essentials of entrepreneurial finance
Revenue models, financing options, metrics, and growth

Malin Brännback, D.Sc. is Chaired Professor of International Business and Dean at Åbo Akademi University from where she also received her doctoral degree in management science in 1996. She also holds a B.Sc. in pharmacy granted in 1986, also from Åbo Akademi University. After completing her doctoral degree she was appointed Associate Professor in Information systems at University of Turku. In 2000 she was recruited to Turku School of Economics and Business Administration as Professor in Marketing and became the founding head of the Innomarket research group. Innomarket’s focus was to support start-up biotechnology companies in their commercialization processes. In 2003 she was appointed Chaired Professor in International Business at Åbo Akademi University. She has served as Vice-Rector of the university as well. Currently she is Docent at the Turku School of Economics where she taught prior to returning to Åbo and she is Docent at the Swedish School of Economics and Business Administration in Helsinki (Hanken). She has been visiting Professor in Entrepreneurship at Stockholm Business School (Stockholm University) since 2012. She has been on the boards of several biotechnology and IT start-up firms. She has held a variety of teaching and research positions in such fields as Information Systems, International Marketing, Strategic Management and Pharmacy.

She has 200 publications in areas such as entrepreneurship, biotechnology, marketing, and knowledge management. She has co-authored seven books with Alan Carsrud which include: Entrepreneurship (2007), Greenwood Publishing; Understanding the Entrepreneurial Mind: Opening the Black Box (2009), Springer Verlag; Understanding Family Businesses: Undiscovered Approaches, Unique Perspectives, and Neglected Topics (2012), Springer Verlag; and Handbook of Research Methods and Applications in Entrepreneurship and Small Businesses (2014), Edward Elgar. In addition, she has published three case books with Alan Carsrud on family business with Springer Verlag. She, Alan, and Niklas Kiviluoto recently published Understanding the Myth of High Growth Firms: The Theory of the Greater Fool (2014), Springer Verlag. She is on the review board of the Journal of Small Business Management. Her current research interests are in entrepreneurial intentionality, entrepreneurial cognition and entrepreneurial growth and performance in technology entrepreneurship, as well as social media use as well as the role of culture and language in business.

Malin resides just outside Åbo (Turku), Finland in the South-west Finnish archipelago with her husband (Patrik), their three children (Anton, Anna, and Axel), and their two dogs. She is an avid and accomplished chef along with her husband. She enjoys any food with lemons and wine (especially Italian). She loves to knit, can throw a mean clay pot on a wheel, and enjoys working in her garden when it is not freezing (yes there are hot summers in Finland). She adores sitting in the sun on Santorini in the summer as well as enjoying a long weekend in Rome with her husband.

Alan L. Carsrud, Ph.D., Ec.D. was reared in his family’s Texas and Ohio ranching and farm business. His father was a clinical psychologist and Alan followed initially in his footsteps. He holds a Ph.D. and M.A. in Social Psychology from the University of New Hampshire, a B.A. in Psychology and Sociology from Texas Christian University. He did post-doctoral work in Applied Industrial Psychology at The University of Texas at Austin. He holds an honorary doctorate in micro-economics from Åbo Akademi University in Finland. Today he is Managing Director of Carsrud & Associates, a consulting firm for entrepreneurs and family-owned and managed firms. His consulting clients have included government agencies like NASA and the Republic of Palau, the Los Angeles Unified School District, large firms like IBM and Ernst and Young, as well as numerous family and entrepreneurial firms in the United States, Finland, Australia, Turkey, India, Mexico, Japan, and Chile. He has been involved in over 200 start-ups in industries such varied as retail, wineries, accounting, food, airlines, biotechnology, internet, computer technologies, and even university based entrepreneurship programs.

He is current academic position is Visiting Research Professor and Docent at Åbo Akademi University in Turku (Åbo), Finland. His prior academic positions include holding the inaugural Loretta Rogers Chair in Entrepreneurship at the Ted Rogers School of Management at Ryerson University in Toronto, Canada; Clinical Professor of Entrepreneurship, Professor of Industrial & Systems Engineering, Professor of Hospitality Management and Founding Executive Director of the Eugenio Pino & Family Global Entrepreneurship Center at Florida International University. He has been Senior Lecturer and Academic Coordinator of the Price Center at the Anderson School at UCLA and Senior Lecturer in Electrical Engineering at the Samueli School at UCLA. He has also been on the graduate faculties of the Australian Graduate School of Management, Bond University (Australia), Durham University (UK), Anahuac University (Mexico), Nanyang Technological University (Singapore), University of Southern California, Pepperdine University, The University of Texas at Austin, Texas A&M University, and the State University of New York at Brockport.

He is a Fellow of the Family Firm Institute (FFI) and has served on the board of directors of FFI and the United States Association for Small Business and Entrepreneurship. He is Associate Editor of the Journal of Small Business Management, and co-founded Entrepreneurship and Regional Development. He also is on the Review Boards of the Family Business Review and the International Journal of Entrepreneurship and Innovation. He founded the UCLA Venture Development and Global Access Programs, which help create new, technology-based ventures in Australia, Chile, Finland, France, Italy, Mexico and the United States. In addition, he created the Family and Closely-Held Business Program at UCLA. He has published over 230 articles and chapters on entrepreneurship, family business, social psychology, mental retardation, and clinical psychology. He has co-authored with Dr. Brännback seven books on entrepreneurship and family business and they have three additional books under contract.

Alan resides outside Austin, Texas in the Texas Hill Country with his husband of 14 years, Danny, and their three cats (no he is not a cat lady yet, as that takes four cats) and a half dozen hummingbirds. He and Danny are an avid collectors of Australian aboriginal art, Cuban surrealist paintings, Mexican cubist works, Chinese and Japanese antiques, various antiquities, as well as African sculptures and masks. When not working with Malin on various books and research articles he is usually found on the patio tending his rose bushes with a glass of wine, or a Chilean pisco sour, in hand.

Today’s Start-to-Finish Guide to Starting Your Successful Business

How to find, evaluate, and exploit your best opportunity

Covers crucial topics other books ignore, including family funding and planning effective operations

Helps you apply entrepreneurial techniques anywhere…including social ventures, non-profits, and self-employment

“Finally a book on entrepreneurship for the rest of us. A book not bound by the myths of the Silicon Valley, but rather a book that speaks to the entrepreneurial spirit in all of us. Brännback and Carsrud have put together a very practical book that is perfect for students, aspiring entrepreneurs or ‘any person with a desire to pursue an opportunity and to achieve a goal.’ This is a book for real people looking to create real businesses and real careers that meet their goals, not create mythical ‘ventures.’ This book is going on the syllabus.”

—DAVID L. DEEDS, PH.D., Sandra Schulze Professor of Entrepreneurship, Opus College of Business, The University of St. Thomas, Minneapolis, MN

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