Brief Contents SECTION I The Challenge of Entrepreneurship 17 Chapter 1 The Entrepreneurship 17 Chapter 2 Inside the Entrepreneurial From to Reality 55 SECTION II Building the Business Plan: Beginning Considerations 102 Chapter 3 Designing a Business Model and Building a Solid Plan 102 Chapter 4 Conducting a Feasibility Analysis and a Winning Business Plan 142 Chapter 5 of Business 180 Chapter 6 Franchising and the Entrepreneur 210 Chapter 7 Buying an Existing Business 246 SECTION III Building the Business Plan: Marketing and Financial Considerations 286 Chapter 8 Building a Guerrilla Marketing Plan 286 Chapter 9 E-Commerce and the Entrepreneur 331 Chapter 10 Pricing Strategies 373 Chapter 11 Creating a Financial Plan 406 Chapter 12 Managing Cash Flow 444 SECTION IV the Business Plan to Work: Sources of Funds 484 Chapter 13 Sources of Financing: Equity and Debt 484 Chapter 14 Choosing the Right Location and Layout 535 Chapter 15 Global Aspects of Entrepreneurship 585 Chapter 16 Building a New Venture Team and Planning for the Next Generation 623 Appendix: The Daily Perc Business Plan 667 Cases 689 Name 704 Subject 713 Scarborough, Norman M. Essentials of entrepreneurship and small business management 2014 digitalisiert durch: IDS Basel Bern
Contents Preface 12 40 Retiring Baby Boomers 40 SECTION I The Challenge of ON... Launch a 17 Are Still In College 41 Chapter 1 The Foundations of Power of "Small" Business 42 Entrepreneurship 17 Putting Failure into Perspective 43 The World Entrepreneur 18 How to the Pitfalls 45 an Entrepreneur? 20 Business in Depth 45 The Benefits of Entrepreneurship 25 Develop a Solid Business Plan 45 25 Manage Financial Resources 46 Opportunityto a Difference 25 Understand Financial Statements 46 YOU BE THE CONSULTANT Where Learn to Manage People Effectively 46 Do From? 26 Opportunity to Reach Your Potential 26 47 Profits 27 Maintain a Positive 47 Opportunity to Contribute to Society and Be Conclusion 47 for Your Efforts 27,,., Have. Questions 49 Beyond the The Potential Drawbacks of 50 Endnotes 51 Entrepreneurship 28 Uncertainty of Income 28 Risk of Losing Your Entire Investment 28 Chapter 2 Inside the Entrepreneurial Mind: From Ideas to 55 Long Hours and Hard Work 28 of Life the Business Gets Creativity. Innovation, and Established 29 Entrepreneurship 56 High Levels of Stress 29 to Survival 58 Responsibility 29 Can Creativity Be Taught? 60 29 Creative Thinking 60 Behind the Boom: What's Feeding the CONSULTANT Charles Entrepreneurial Fire 30 Darwin Was Right 63 YOU BE THE CONSULTANT College: Creativity 64 The Place to Launch How to Enhance Creativity 69 a Business 33 Enhancing Organizational Creativity 69 The Cultural Diversity of Enhancing Individual Creativity 73 Entrepreneurship 34 HANDS ON... HOW TO Be a Young Entrepreneurs 34 Successful Innovator 77 Women Entrepreneurs 35 The Creative Process 78 Enterprises 36 Step Preparation 78 Immigrant Entrepreneurs 37 Step 2. Investigation 79 Part-Time Entrepreneurs 37 80 Businesses 38 Step 4. Incubation 81 Businesses 38 Step 5. Illumination 82 Copreneurs 38 Step 6. Verification 82 39 Step 7. Implementation 82 5
CONTENTS Chapter 3 Techniques for the Creative Step 8. Translate Plans into Action Process 83 Plans 132 Brainstorming 83 MindMapping 85 Conclusion 135 Analysis 85 Step 9. Establish Accurate Controls Objective 136 Discussion Prototyping 87 ' Intellectual Property: Protecting Your 139 Endnotes 140 Ideas 88 Patents 88 Chapter 4 Conducting a Feasibility Analysis and Crafting a Winning Business Plan 142 Protect Your Intellectual Property 93 Conducting a Feasibility Analysis 144 Copyrights 94 Industry and Market Analysis 144 Protecting Intellectual Property 95 Product or Service Feasibility Analysis 149 YOU BE THE CONSULTANT Does Objective 95 Discussion Your Business Model GEL? 149 Questions 96 Beyond the 152 Classroom... 97 Endnotes 98 152 SECTION II Building the Business Considerations 102 Designing a Financial Feasibility Analysis 153 The Elements of a Business Plan 156 YOU BE THE CONSULTANT Battle of the Plans 157 Business Model Title Contents 159 and Building a Solid Executive Summary 159 Strategie Plan 102 Vision and Mission Statement 160 Building a Competitive Advantage 104 Company History 160 The Strategie Management Process 107 Business and Industry Profile 160 Step Develop a Vision and Translate Goals and Objectives into a Mission Statement Business Strategy Step 2. Assess the Company's Strengths and Description of the Company's Product or Service Marketing Strategy 162 the Environment Significant,,,. Opportunities and Threats Facing Market Cla,ms the Business 111 Showing Interest 163 YOU BE THE CONSULTANT The Best Analysis 165 Little Pizza Chain No One Description Management Team 165 114 Plan of Operation 166 HANDS ON... HOW TO Beat the Pro Forma (Projected) Financial Big Guys 115 Statements 166 Step 4. Identify the Key Factors for Success in The Loan or Investment Proposal the Business 117 HANDS ON... HOW TO a 119 Lean Start-up 169 Step 6. Create Company Goals and Business Plan 170 Step 7. Strategie Options and Select, A. the Appropriate 124 ETHICSAND ENTREPRENEURSHIP Cascade Collateral 170 Triple Bottom Character 170 Line Conditions YOU BE THE CONSULTANT Making the Business Plan Strategies Etched in Chocolate 131 Presentation 172 and Investors Look for in a
Chapter 6 CONTENTS Conclusion 172 YOU CONSULTANT Business Plan Format 173 You Buy This Franchise? 219 Chapter Summary by Chapter The Drawbacks of Buying a Objective 175 Discussion Franchise 220 Questions 176 Beyond the Franchise Fees and Ongoing Royalties 220 Endnotes Strict Adherence to Standardized Chapter 5 of Business Operations 221 Ownership 180 Restrictions on Purchasing 222 HANDS ON... HOW TO Up Product Line 222 with the Perfect for Your and Renewal 222 Business 183 Training Programs 223 The Sole Proprietorship 185 Market Saturation 223 Advantages a Proprietorship 185 223 The Disadvantages of a Proprietorship Franchising and the Law 223 The Partnership 187 Franchise 227 The Advantages ofthe Partnership 189 EvaluateYourself 227 The Disadvantages of the Partnership Research Your Market 228 Limited Partnerships 192 Franchise Options 229 YOU BE THE CONSULTANT Making Get a Copy of the Franchisor's UFDD 229 Work 193 Talk to Existing Franchisees 230 Limited Partnerships 194 Ask the Franchisor Some Tough Corporations 195 Questions 232 How to Incorporate 195 Make Your Choice 232 The Advantages Corporation 197 Trends Shaping Franchising 232 The Disadvantages of the Corporation Changing Face of Franchisees 232 Other Forms of Ownership 201 HANDS ON... HOW TO Select the The S Corporation 201 Franchise For 233 The Limited Liability Company 203 International Opportunities 234 The Professional Corporation 204 Nontraditional Locations 235 YOU BE THE CONSULTANT Which BE THE CONSULTANT Russia: A Form Best? 204 Rising Star for Franchisors 236 The Joint Venture 205 Conversion Franchising 237 Franchising 237 Objective 207 Discussion Area Development and Master Questions 207 Beyond the Franchising 238 208 Endnotes 209 Cobranding 239 Franchising and the Entrepreneur 210 Serving Boomers 239 Couples and Aging Baby Conclusion 239 Types of Franchising 212 The Benefits of Buying a Franchise Objective 240 Discussion A Business System 214 Questions 240 Beyond the Management Support 214 Classroom... 241 Endnotes 242 Brand-Name Appeal 215 Standardized Quality of Goods and Services Chapter 7 Buying an Existing Business 246 Programs 216 Buying an Existing Business 247.,.. The Advantages of Buying an Existing Financial 216. Proven Products, Processes, and Business Formats Business 247 Disadvantages of Buying an Existing Business 249 Power 218 YOU BE THE CONSULTANT The Site Selection and Territorial Protection Greater Chance for Success 218 252 Business:
CONTENTS The Steps in Acquiring a Business 253 The Value of Market Research 293 Analyze Your Skills, Abilities, and How to Conduct Market Research 295 Interests 253 Plotting a Guerrilla Marketing Strategy: Develop a List of Criteria 254 How to a Prepare a List of Potential Candidates 254 Competitive Edge 298 Investigate and Evaluate Potential Guerrilla Marketing Principles 298 Process 254 YOU BE THE CONSULTANT Tweet Explore Financing Options 255 The World's Shortest Recipe Negotiate a Reasonable Deal with the Book 307 TO Make Social Ensure a Transition 256 Media Work for Your Business 312 Evaluating an Existing Business: The Due YOU BE THE CONSULTANT A Diligence Process 256 Company With Soul 317 Motivation 258 Conclusion 324 AssetValuation 258 Market Potential 259 Objective 324 Discussion 260 Questions 325 Beyond the., Financial 261 327 Endnotes 327 YOU BE THE CONSULTANT The Saga Chapter 9 E-Commerce and the of Selling My Business: Part 2 264 Entrepreneur 331 Methods for Determining the Value of a Factors to Consider before Launching Business 265 into E-Commerce 333 Balance Sheet Techniques: Net Worth = Assets - Liabilities 266 Earnings Approach 269 E-Commerce Market Approach 273 Myth 2. Online Customers Are Easy to YOU BE THE CONSULTANT The Saga Please 337 of Selling My Business: Part 3 274 Web Understanding the Seller's Side 275 Easy 338 Structuring the Deal 276 YOU BE THE CONSULTANT Selling Exit Strategies 277 339 Negotiating the Deal 279 Myth 4. Privacy Not an Important on Web 340 TO a,.,... Myth 5. Strategy? I Don t Need a Strategy to Successful 281 Will Take Care of 340 Objective 282 Discussion Myth The Most Important Questions 283 Beyond the E-Commerce Effort Technology 341 Classroom... 284 Endnotes 284 Myth 7. Service Not as Important Online as in a Traditional Retail Store 342 SECTION III Building the 8. Than Plan: Marketing Financial Counts 343 286 into E-Commerce 344 Chapter 8 a E-Success 344 Guerrilla Marketing Plan 286 CONSULTANT Building a Guerrilla Marketing Plan 287 345 Pinpointing the Target Market 289 Designing a Killer Web Site 354 Determining Customer Needs and Wants YOU BE THE CONSULTANT A Total through Market Research 291 Makeover 355 YOU BE THE CONSULTANT Tracking Web Results 363 Giving Women Control Ensuring Web Privacy and Security 364 Their Lives 292
CONTENTS Security 364 Projected Financial Statements for a Small TO Increase Business 412 Your Web Sites Conversion Rate 365 Ratio Analysis 416 Twelve Key Ratios Objective 367 Discussion YOU BE THE CONSULTANT Questions 369 Beyond the The of Debt: Part 1 420 Classroom... 370 Endnotes 370 YOU BE THE CONSULTANT Chapter 10 Pricing Strategies 373 The of Debt: Part 2 423 Chapter Three Potent Forces: Interpreting Business Ratios 428 and Value 375 BE THE CONSULTANT All YOU BE THE CONSULTANT The Eden's Garden: Benefits of Pricing 376 376 All These Mean? 432 Competition and Prices 377 Analysis 434 Focus on Value 379 CONSULTANT All... Not Paradise in Eden's Garden: Pricing Strategies and 383 Introducing a New Product 383 Calculating the Break-Even Point 436 YOU BE THE CONSULTANT the Adding a Profit 437 Price Right? 384 Break-Even Point in Units 437 Pricing Established Goods and Services 386 Constructing a Break-Even Chart 438 ENTREPRENEURSHIP The Ethics CONSULTANT Dynamic Pricing 388 Where Do We Break Even? 439 CONSULTANT A Good Using Break-Even Analysis 439 Not? 390 Pricing Strategies and Methods for Retailers 392 Markup 392 Objective 440 Discussion Questions 441 Beyond the 442 Endnotes 442 Manufacturers 394 Chapter 12 Cash Flow 444 Direct Costing and Pricing 394 Cash Management 445 Computing the Break-Even Selling Price 395 Cash and Profits Are Not the Same 448 TO Calculate The Cash Budget 449 Your Company's Pocket Price Step Determining an Adequate Minimum Band 397 Cash Balance 451 Pricing Strategies and Methods for Step 2: Forecasting 452 Service 398 Step 3: Forecasting Cash Receipts 453 The of Credit on Pricing 399 YOU BE THE CONSULTANT Credit Cards 400 Season 454 Trade Credit 402 Credit 402 Step 4: Forecasting Cash 457 End-of-Month Cash Objective 402 Discussion YOU BE THE CONSULTANT In Questions 403 Beyond the Search of a Cash Flow Forecast 459 Classroom... 404 Endnotes 404 The "Big Three" of Cash Management 461 Creating a Financial Plan 406 Basic Financial Statements 407 The Balance Sheet 407 Accounts Receivable 461 Accounts Payable 466 HANDS ON... HOW TO Control Your Company's Accounts The Income Statement 409 Receivable 467 The Statement of Cash Flows Inventory 469 Creating Projected Financial Avoiding the Cash Crunch 472 Statements 412
10 CONTENTS Overhead Costs 472 Nonbank Sources of Debt Capital 512 Fixed Loan Payments to Coincide with Your Company's Cash Flow 475 Establish an Internal Security and Control System 475 Small Business Lending Federally Sponsored Programs 516 Economic Development Administration Department of Housing and Urban to Fraud 475 Development 516 Change Your Shipping Terms 475 Department of Agriculture's Start Selling Gift Cards 475 Business-Cooperative Service 517 Switch to Zero-Based Budgeting 476 Small Business Innovation Research Be on the Lookout for Shoplifting and Program Theft 476 Small Business Technology Transfer a Cash Cushion 476 Program 518 Invest Surplus Cash 476 The Small Business Administration (SBA) 518 YOU BE THE CONSULTANT YOU BE THE CONSULTANT Foul Play 477 Never-Ending Hunt for Business Plan Current 478 519 YOU BE THE CONSULTANT 520 The Challenges of Cash Flow 478 State and Local Loan Development Conclusion 479 Programs 524 Other Methods of Financing 526 Objective 479 Discussion Factoring Accounts Receivable 526 Questions 480 Beyond the Leasing 526 481 Endnotes 481 Credit Cards 527 SECTION IV the Business objective 527 Discussion Plan to Work: Questions 528 Beyond the 484 530 Endnotes 530 Chapter 13 Sources of Financing: Equity Chapter 14 Choosing the Right Location Debt 484 and Layout 535 Planning for Capital Needs 487 Location: A Source of Competitive Equity Capital versus Debt Capital 487 Advantage 536 Sources of Equity Financing 488 Choosing the Region 537 Savings 488 Choosing the State 540 489 Choosing the City 543 Funding 490 Choosing Site 549 490 Location Criteria for Retail and Service Businesses 550 TO Structure Family and Friendship Financing YOU BE THE CONSULTANT "Pop- Deals 491 the Store 551 Partners 494 Trade Area Size 552 Venture Capital Companies 495 Retail 552 Corporate Venture Capital 499 Degree of Competition 552 Public Stock ("Going Public") 499 The of Retail Saturation 552 YOU BE THE CONSULTANT Gravitation 553 Search of Growth Capital 506 Transportation Network 554 The Nature of Debt Financing 506 Physical and Psychological Barriers 554 Sources of Debt Capital 507 Traffic 554 Banks 507 Adequate Parking 554 Loans 508 Reputation 555 Loans 509 Visibility 555 HANDS ON... HOW TO Get a Location Options for Retail and Service Bank to Say "Yes" to Your Loan Businesses 555 Application 510 Central Business District 555
Neighborhood Locations 556 Political Barriers Shopping Centers and 556 Business Barriers 613 Near 560 Cultural Barriers 614 CONTENTS 11 Inside Large Retail Stores 560 International Trade Agreements 616 Locations 561 Conclusion 617 Businesses 561 561 Objective 618 Discussion The Location Decision for the Manufacturers 562 Classroom... 620 Endnotes 620 Foreign Trade 562 Chapter 16 Building a New Venture Business 563 Team and Planning for the Layout and Design Considerations 563 Next Generation 623 YOU BE THE CONSULTANT Business Leadership in the New Economy 624 Incubators: A Nurturing Environment Building an Entrepreneurial Team: Hiring for Small Companies 564 the Right 630 631 Construction and External Appearance 566 create Practical Job Descriptions and Job Entrances 567 Specifications 635 The with Disabilities Act 567 Plan an Effective Interview 636 Signs 568 AND ENTREPRENEURSHIP Building Interiors 568 Honesty in Job Descriptions 637 Sight, Sound, Scent, and Lighting 569 the Interview 639 Sustainability and Friendly Contact References and Conduct Design 570 Background Check 641 Layout: Revenues, Increasing Creating an Organizational Culture Efficiency, or Reducing Costs 571 That Encourages Motivation Layout Retailers 571 and Retention 642 HANDS ON... HOW TO Create the Layout 572 Job Design 646 YOU BE THE CONSULTANT A Fresh YOU BE THE CONSULTANT New Look 575 Fired over Facebook 647 Layout for Manufacturers 576 Factors in Manufacturing Layout 576 Motivating Employees to Higher Levels of Performance: Rewards and 649 Types of Manufacturing Layouts 576 Management Succession: Passing Objective 578 Discussion the of Leadership 652 Questions 579 Beyond the Classroom.. HANDS ON... HOW TO Your 580 Endnotes 581 Business a Great Place 653 Chapter 15 Global Aspects of Strategies 660 Entrepreneurship 585 Selling to Outsiders 660 Global? 586 Selling to Insiders 660 Strategies for Going Global 588 YOU BE THE CONSULTANT Objective 661 Discussion Going Global from the Outset 590 Questions 662 Beyond the YOU BE THE CONSULTANT Classroom... 663 Endnotes 664 A Really Bright Future 599,..,. YOU BE THE CONSULTANT Appendix: The Daily Perc Business Plan 667 A Small Company Goes Global 607 Cases 689 Barriers to International Trade 609 Domestic Barriers 609 HANDS ON... HOW TO a Subject Successful Global Company 610 International Barriers Warne 704