Entrepreneurship / Edition 2

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The Portable MBA in Entrepreneurship, Second Edition equips real-world entrepreneurs with the same state-of-the-art business knowledge and information taught to MBA candidates in top business schools. William Bygrave has reassembled his all-star team of professors, consultants, and entrepreneurs to expand and update this bestseller. Every chapter is brought into step with the times through a host of new case studies and examples, and the changing legal, tax, and regulatory climates for small businesses and entrepreneurs are examined and explained as well.

An authoritative guide for managers and owners in the fastest growing segment of the economy. Bygrave explores spotting and evaluating opportunities, entry strategies for start ups, marketing, financing, preparing business plans, managing a growing business, and strategies for growth.

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Editorial Reviews

Library Journal
Bygrave ( Venture Capital at the Crossroads , Harvard Business School Pr., 1992), has succeeded admirably in his goal of teaching the art and science of entrepreneurship. He covers all aspects of the entrepreneurial process, including planning a new enterprise, raising capital, marketing strategies, franchising, and dealing with legal and tax issues. This work is rich in detail, providing small business owners and would-be entrepreneurs the information they need to make sound business decisions. Individual chapters are written by academicians and business people. Though some of the charts and analysis may be a bit technical for the neophyte, this is a treasure trove of information for the motivated reader. Recommended for business collections.-- M. Uri Toch, P.L. of Cincinnati & Hamilton Cty., Ohio
From Barnes & Noble
While corporations lay off workers, small businesses create millions of new jobs each year. This book covers all angles of setting up your own business, from spotting market opportunities to protecting intellectual property
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Product Details

  • ISBN-13: 9780470450376
  • Publisher: Wiley
  • Publication date: 10/12/2010
  • Edition description: Older Edition
  • Edition number: 2
  • Pages: 632
  • Sales rank: 1,265,272
  • Product dimensions: 7.90 (w) x 9.90 (h) x 1.00 (d)

Meet the Author

Bill Bygrave is the Director of the Center for Entrepreneurial Studies at Babson College, where he also teaches Free Enterprise. He has also been a successful entrepreneur himself: he founded a high-tech company that was funded with venture capital; he managed a division of another high-tech company that was listed on the NYSE; he co-founded a pharmaceutical database company; and he was a member of the investment committee of a venture capital firm. He spent the 1992-1993 academic year at INSEAD where he introduced an MBA course in Entrepreneurial Finance and led a pan-European team from eight nations that studied entrepreneurs' attitudes toward realizing value and harvesting their companies. One of the outcomes of that research was the initiative that led to the founding of EASDAQ (the European equivalent of NASDAQ). In 1997, he and Michael Hay at the London Business School started the Global Entrepreneurship Monitor (GEM), which examines the entrepreneurial competitiveness of nations. Bygrave was the 1997 winner of the Ernst Young Entrepreneur of the Year award in the supporter category for New England, and one of the three finalists in this category nationwide.

Andrew Zacharakis
is the Paul T. Babson Term Chair in Entrepreneurship and Associate Professor of Entrepreneurship in the Arthur M. Blank Center for Entrepreneurship at Babson College. His writings and research focus on two major areas of entrepreneurship: the venture capital decision-making process, and the impact of entrepreneurship on the economy. His 1999 article on new venture failure received editor's award for best article in Journal of Small Business Management and his dissertation received the Heizer Award for outstanding thesis in entrepreneurship in 1995. Zacharakis has been interviewed in newspapers nationwide, including The Wall Street Journal, USA Today, The Boston Globe and The Los Angeles Times, and by several magazines, including Inc., Entrepreneur and Kiplinger's. He has also appeared on television in the Bloomberg Small Business Report and radio on NPR Morning Edition. Prior to his work at Babson, he held investment banking/venture capital positions with The Cambridge Companies. He also previously held positions at IBM and Leisure Technologies.

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Table of Contents

Preface     xiii
The Power of Entrepreneurship     1
Entrepreneurship and Small Business in the U.S.     2
Entrepreneurial Revolution     4
Web: Three Revolutions Converge     9
Development of the Web     9
Entrepreneurship Revolution Strikes Gold     10
Causes of the Entrepreneurial Revolution     12
Changes in the Entrepreneurial Framework Conditions     14
Churning and Economic Growth     18
Global Entrepreneurship Monitor     20
Principal Findings from GEM     21
Age     23
Gender     24
Education     25
Financing     25
Job Creation     26
Twenty-First Century Economies: Anglo-Saxon or Social Models?     27
Conclusion     28
Your Opportunity Journal     29
Web Exercise     30
Notes     30
Case: Malincho     36
The Entrepreneurial Process     49
Critical Factors for Starting a New Enterprise     50
Personal Attributes     52
Environmental Factors     52
Other Sociological Factors     54
Evaluating Opportunities forNew Businesses     56
The Opportunity     57
The Customer     58
The Timing     58
The Entrepreneur and the Management Team     59
Resources     60
Determining Resource Needs and Acquiring Resources     61
Startup Capital     63
Profit Potential     65
Ingredients for a Successful New Business     66
Conclusion     68
Your Opportunity Journal     69
Notes     69
Case: Alison Barnard     71
Opportunity Recognition, Shaping, and Reshaping     83
From Glimmer to Action: How Do I Come Up with a Good Idea?     84
Finding Your Passion     84
Idea Multiplication     85
Is Your Idea an Opportunity?     89
The Customer     89
The Competition     100
Suppliers and Vendors     103
The Government     104
The Global Environment     104
The Opportunity Checklist     104
"I Don't Have an Opportunity"     104
Conclusion     106
Your Opportunity Journal     107
Web Exercise     108
Notes      108
Case: Jim Poss     110
Understanding Your Business Model and Developing Your Strategy     125
The Business Model     126
The Revenue Model     126
The Cost Model     127
The First-Mover Myth     129
Formulating a Winning Strategy     132
The People Are What Matters     132
Entry Strategy     134
Growth Strategy     137
Conclusion     144
Your Opportunity Journal     145
Web Exercise     145
Notes     145
Case: Adam Aircraft     148
Enterpreneurial Marketing     165
Why Marketing Is Critical for Entrepreneurs     166
Entrepreneurs Face Unique Marketing Challenges     166
Acquiring Market Information     167
Marketing Strategy for Entrepreneurs     168
Segmentation, Targeting, and Positioning     169
The Marketing Mix     170
Guerrilla Marketing     182
Marketing Skills for Managing Growth     183
Understanding and Listening to the Customer     183
Building the Brand     184
Conclusion     185
Your Opportunity Journal      185
Web Exercise     186
Customer Interview     186
General Outline: It Needs to be Tailored to Meet your Research Needs     186
Notes     188
Case: ClearVue     189
Building the Founding Team     184
Power of the Team     202
Where Do You Fit?     203
How to Build a Powerful Team     207
Bootstrapping: Building the Team Based on Stage-of-Venture Life     209
Compensation     210
Equity     210
Salary     215
Other Compensation Considerations     216
External Team Members     216
Outside Investors     216
Lawyers     217
Accountants     218
Board of Advisors     218
Board of Directors     219
Keeping the Team Together     219
Burnout     221
Family Pressure     221
Interpersonal Conflicts     222
Conclusion     222
Your Opportunity Journal     223
Web Exercise     223
Notes     223
Case: Ajay Bam     225
The Business Planning Process     239
The Planning Process      241
The Story Model     243
The Business Plan     244
The Cover     244
Table of Contents     244
Executive Summary     245
Industry, Customer, and Competitor Analysis     246
Company and Product Description     249
Marketing Plan     250
Operations Plan     254
Development Plan     255
Team     256
Critical Risks     259
Offering     260
Financial Plan     260
Appendices     260
Types of Plans     261
Style Pointers for the Written Plan and Oral Presentation     262
Conclusion     263
Your Opportunity Journal     263
Web Exercise     264
Notes     264
Case: P'kolino     265
Building Your Pro-Forma Financial Statements     309
Common Mistakes     310
Financial Statement Overview     311
Building Your Pro-Forma Financial Statements     312
Build-Up Method     312
Revenue Projections     314
Cost of Goods Sold     315
Operating Expenses     315
The Preliminary Income Statement     316
Comparable Method     318
Building Integrated Financial Statements     321
Income Statement     322
Balance Sheet     324
Cash Flow Statement     325
Putting It All Together     326
Conclusion     327
Your Opportunity Journal     328
Web Exercise     328
Notes     328
Case: P'kolino Financials     329
Financing Entrepreneurial Ventures Worlwide     341
Entrepreneurial Financing for the World's Poorest     342
Microfinancing     342
Microcredit for the Poorest of the Poor     343
Entrepreneurs and Informal Investors     344
Amount of Capital Needed to Start a Business     346
Characteristics of Informal Investors     347
Financial Returns on Informal Investment     348
Supply and Demand for Startup Financing     348
Venture Capital     350
Classic Venture Capital     350
Importance of Venture Capital in the U.S. Economy     353
Mechanism of Venture Capital Investing     355
Financial Returns on Venture Capital     357
Venture Capital in Europe      359
Factors Affecting Availability of Financing     359
Total Entrepreneurial Activity and Informal Investing     360
Factors Affecting Informal Investing     360
Factors Affecting Classic Venture Capital     360
Conclusion     361
Your Opportunity Journal     361
Web Exercise     361
Notes     362
Case: DayOne     364
Raising Money for Starting and Growing Businesess     383
Jim Poss, Seahorse Power Company     383
Bootstrapping New Ventures     384
Valuation     385
Earnings Capitalization Valuation     385
Present Value of Future Cash Flows     386
Market-Comparable Valuation (Multiple of Earnings)     386
Asset-Based Valuation     387
Example of Market-Comparable Valuation     387
Asset-Based Valuation Example     389
Financing a New Venture     390
Informal Investors     391
Business Angels     392
Searching for Business Angels     394
Types of Business Angels     395
Putting Together a Round of Angel Investment     396
Venture Capital      397
Candidates for Venture Capital     397
Ideal Candidates for Venture Capital     398
Actual Venture-Capital-Backed Companies     399
Dealing with Venture Capitalists     400
Negotiating the Deal     402
Follow-On Rounds of Venture Capital     403
Harvesting Investments     403
Initial Public Offering     404
Pros and Cons of an IPO     405
The Process of Going Public     406
BFWS Goes Public     408
Selling the Company     409
A Strategic Acquisition: LowerMyBills.com     409
Why Be Acquired?     411
Conclusion     412
Your Opportunity Journal     413
Web Exercise     413
Notes     413
Case: Jon Hirschtick's New Venture     416
Debt and Other Forms of Financing     427
Getting Access to Funds-Start with Internal Sources     428
Start with Credit Cards and Home Equity Lines     429
Cash Conversion Cycle     430
Working Capital: Getting Cash from Receivables and Inventories     431
Using Accounts Receivable as Working Capital     432
The Sales Pattern     432
Cash Versus Credit Sales     433
Credit Policies     434
Setting Credit Terms     434
Collection Policies     435
Setting Credit Limits for Individual Accounts     436
Inventory     438
Sources of Short-Term Cash: More Payables, Less Receivables     439
Cash from Short-Term Bank Loans     439
Cash from Trade Credit     439
Cash Obtained by Negotiating with Suppliers     441
Cash Available Because of Seasonal Business Credit Terms     441
Advantages of Trade Credit     442
Cash Obtained by Tightening Up Accounts Receivable Collections     442
Obtaining Bank Loans Through Accounts Receivable Financing     443
Pledging     443
Pledging with Notification     443
Factoring     443
Recourse     444
Obtaining Loans Against Inventory     445
Chattel Mortgage     445
Floating Lien     446
Field Warehousing     446
Public Warehousing     446
Obtaining "Financing" from Customer Prepayments     447
Choosing the Right Mix of Short-Term Financing     447
Traditional Bank Lending: Short-Term Bank Loans      447
Maturity of Loans     448
Interest Rates     448
Collateral     450
Applying for a Bank Loan     450
Restrictive Covenants     450
General Provisions     451
Routine Provisions     452
Specific Provisions     452
Equipment Financing     452
Obtaining Early Financing from External Sources     453
SBA-Guaranteed Loans     453
Applying for an SBA Loan     454
Planning Cash Flow and Planning Profits     455
Conclusion     456
Your Opportunity Journal     457
Web Exercise     457
Notes     457
Case: BetterLiving Patio Rooms     458
Legal and Tax Issues     477
Leaving Your Present Position     478
Corporate Opportunity     478
Recruitment of Fellow Employees     479
Proprietary Information     479
Noncompetition     481
Choosing an Attorney and an Accountant     482
Choice of Legal Form     483
Control     484
Personal Liability     486
Taxation     487
Initial Investment of the Founders      489
Administrative Obligations     491
Choosing a Name     492
Stockholder and Operating Agreements     492
Negotiating Employment Terms     492
Disposition of Equity Interests     493
Distributions of Company Profits     495
Redemption Provisions     495
Legal and Tax Issues in Hiring Employees     496
Employees as Agents of the Company     496
Employment Discrimination     497
Other Employment Statutes     498
Employment Agreements     498
Equity Sharing     499
Insurance     500
Property Insurance     500
Liability Insurance     501
Key Person Life Insurance     501
Business Interruption Insurance     501
Group Life, Disability, and Health Insurance for Employees     501
Raising Money     501
Legal Issues in the Sale of Securities to Investors     502
Conclusion     503
Your Opportunity Journal     504
Web Exercise     504
Notes     505
Case: Cadence Design Systems and Avant! (A)     506
Intellectual Property     519
The Basics: What is Protectable and How Should It Be Protected?     520
Patents     521
Obtaining a Utility Patent     522
Criteria for Obtaining a Utility Patent     523
Drafting the Patent Claims     524
Provisional Patent Applications     526
Design Patents     526
Managing Patent Costs     527
Trade Secrets     527
Trademarks     530
Registering a Mark     532
Ownership of a Mark     532
Copyright     533
Summing Up     533
International Protection for Intellectual Property     534
Patent Filing Deadlines     534
How to Extend Patent Filing Deadlines     535
Licensing and Technology Transfer     536
Common Concerns and Clauses     536
Defining the Property Being Licensed     537
Limitations on Licenses     537
Assigning Value to a License     537
Royalty Rates     538
Negotiating License Agreements     538
Foreign Licenses     539
Software Protection     539
Patents for Software     539
Software Copyrights     540
Software Trade Secret Protection     540
The Internet     541
IP Agreements     541
Preparing Employment Contracts     542
Transfer of Employee Rights to Company Innovations     542
How Employee Moonlighting Might Compromise Confidentiality     543
Noncompetition Clauses     544
Preventing Employee Raiding     545
Employee Ownership of Copyright     545
Rights of Prior Employees     545
Consultant Contracts     546
Confidential Disclosure Agreements     546
Conclusion     548
Your Opportunity Journal     549
Web Exercise     549
Notes     549
Case: Cadence Design Systems and Avant! (B)     550
Entrepreneurial Growth     555
Making the Transition from Startup to Growth     556
Looking Forward: The Choice to Grow, or Not,...or Sell     556
A Model of Driving Forces of Growth     558
The Growth Process     559
Execution     559
Instituting Controls     559
Tracking Performance     561
Managing the Cash Cycle     562
Leveraging the Value Chain     564
Maintaining the Entrepreneurial Organization     564
Opportunity Domain     565
Organizational Resources and Capabilities     568
Obtaining Financial Resources for the Growing Company     568
Intangible Resources and Capabilities     569
Leadership     570
Starting the Delegation Process     571
First-Level Management     572
From Delegation to Decentralization     573
Professional Management and Boards     573
Coordinating the Driving Forces     574
Leading People; Developing Entrepreneurs     574
Conclusion     575
Your Opportunity Journal     576
Web Exercise     577
Notes     577
Case: Nancy's Coffee     578
Glossary     593
Company Index     603
Name Index     605
Subject Index     607
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