Introduction to Entrepreneurship
Chapter 1
1-26: In the case that a friend needs more information on the skills required to operate a business, I would advise her on the importance to have a solid idea about the business so that it can be easy to operate it. Having the ability to convert a business idea to real business is the major thing that she requires not necessarily entrepreneurial education. The fact that the friend has been making jewelry before and now she plans to start business regarding the same, I believe she got the necessary skills to start and operate the business. This is because she already can convert the business idea into real action where she makes the jewelry.
Despite the fact that she has the idea of the product she wants to sell in the business, she requires execution intelligence which will make her operate the business effectively. I would advise her to come up with a business model with which she wants to run. Then put together a team that will help in the development of the new business (Barringer, 13). In her case, a partnership can assist where she will have to include potential partners who have been in the business industry as they will help in the operation of the business to keep it open. The money will be required for starting and maintain the business so I will advise her to be well equipped with finances.
Managing finances is another thing that will lead to a successful business even after execution. This is because the business requires money for operation and which will keep the business open. The friend should also use different ways to motivate employees as they contribute more to the business success or failure (Barringer, 13). All these constitute execution intelligence which enables a business idea to be viable and which she should use to successfully operate a firm.
Chapter 2
2-29: AJ Forsythe and Anthony who are the co-founders of iCracked could have used library and internet research in various ways. This is where they could discuss their idea of phone repair with a librarian who has more knowledge on useful magazines and books that can help them to make their business idea flesh. From the chapter, it is clear that a business idea and an opportunity are different where a business idea is made effective if all opportunities available are utilized (Barringer, 43). Library and online researches are opportunities that the co-founders of iCracked could use to freshen their idea.
In libraries, one is likely to get business magazines and books that have information regarding all business ideas one may have. The information that will be obtained from these books assist one in the development of a business idea as well as making the idea fresh for any started business. In libraries, we have efficient search engines and databases that are cheap to access and contain relevant information that can be required to develop a business idea (Barringer, 61). Internet searches are also necessary as they contain any information that one may require regarding business. Aj Forsythe and Anthony require to look for internet and search how to make their business more successful and fresh. With the right description of the business, they are assured of particular information relevant to their phone business. They can search on the internet on views of others regarding the business and how they can refresh it, and they can be lucky to get other peoples tweets regarding the business which will be of great importance to them.
Chapter 3
3-20: in the case presented where the father of Jackson went through entrepreneurship book and narrated of the businesses he sold after launching, the author of the text could comment regarding the issue is that the father did not conduct the feasibility analysis when expected. The author may conclude that the father of Jackson did not perform a financial feasibility analysis of the businesses. This could be done by researching financial performance of other similar business in the market which can guide on the prospected financial performance of the businesses (Barringer, 92). The business could also be sold because of change in customer taste. This can happen where the business owner have not conducted a feasibility analysis and the attractiveness of the products to the consumer that can make them shift their taste to other businesses. This can also be another reason that made Jackson’s father sell the businesses.
Before deciding on any business, it is important to conduct a feasibility analysis so that one can determine the suitability of the business in that location. Different demographics require different products which mean a business can thrive better in one location more than the other. According to Jackson, the reason that the author could suggest regarding the selling of the businesses is a financial performance of similar businesses. Despite successful launching of the businesses, maybe the financial performance of the father’s businesses was lower compared to similar businesses which made him sell the businesses. Another reason can be lack of proper organizational feasibility analysis which is done to determine whether a business has enough management expertise and organization competence (Barringer, 89). Proper organizational feasibility analysis allows one to know the ability of the management team to make the business successful.
Chapter 4
4-25: Debra wants to have an example o a company that has a successful business model, and from the readings, I came across Quirky Company that have a successful business model. The Quirky business model allows the company to create value for its stakeholders because it allows an ordinary person to submit a product idea. When the ideas are presented, the company assists these people to develop their ideas to real businesses. Most people have business ideas that can be developed to form companies if given a chance.
Quirky business model also delivers value of any product idea presented by the ordinary people where an easy-to-navigate process is used for all ideas submitted to the company (Barringer, 114). This gives equal opportunity to all ideas of all stakeholders to be vetted, and the best idea is fashioned into products that are later sold. Quirky business has enabled its stakeholders to realize the worth of any ideas as they see them come to reality. The business has all it takes to evaluate good ideas and make them a reality by creating businesses for the qualifying ideas. This enables all stakeholders to see the value of their product ideas which is a good business model
The third way that Quirky has shown value to stakeholders where it captures the value of the products that are successfully sold. For any product sold by the Quirky business, 60 percent belongs to the business itself while the 40percent is given back to the initial inventor and maybe the community that aided the success of the product idea (Barringer, 114). Quirky also ensures that the products developed have a certain level of pre-sale so that the risk of not selling the products is minimized. This ensures that value is created to the ideas that are generated by the stakeholders which is a good business model for Quirky.
Chapter 5
5-34: the power of buyers affects producers as they try to sell it in the market. In the case presented where a friend has come up with a novel floor cleaning product, WalMart may not be willing to buy the cleaning products as she thinks. This is because the bargaining power of WalMart being a big firm may be high which can make the product less attractive to the market and with this, it can be hard for her to sell the products as she intends. Conducting industry analysis should be done first to assess the attractiveness of the product to the consumers which will guide on the quality of products needed on the market.
WalMart being a big firm may interfere with the profitability of the novel floor cleaning product where the company can demand improved quality of the cleaning product (Barringer, 159). This can be expensive for the friend to improve because she is assured that the product is already of high quality and a small amount will be used as compared to the normal cleaning products. WalMart being the buyers may also demand price concessions which will interfere with the profit my friend expects from selling the novel cleaning product. As a supplier of the products, one is at risk of experiencing competition from the substitute products in the market. WalMart is a big firm that sells products from different suppliers. This can be a threat to the novel floor cleaning product since the supplier can be forced to sell it to the buyer at a reduced cost especially if there are limited buyers in the market. The degree of standardization of the products my friend intends to sell may differ from the products already in the market which will increase the bargaining power of buyer (Barringer, 160).
Chapter 6
6-24: in the case where my friend has written a business plan of more than a hundred pages, I would advise her to summarize the business plan to around 25 to 25b pages. This is because the investors may not be willing to read the whole business plan due to the many pages yet a full business plan is usually 25 to 35 pages (Barringer, 188). The business plan my friend have written may include repetitions and some irrelevant information that may discourage the investors to support her business idea. The business plan can only be 100 pages if it is meant for the operational business plan and which should be read by the internal audience.
For early development of a business or a company, the best business plan should be a summary business plan with 10 to 15 pages (Barringer, 188). This can be best for the case of my friend because she doesn’t have the information that is needed for the whole business plan. This business plan aims to assess the interest of investors on her idea which will later be developed into a full business plan if they show interest to fund the idea. The fact that my friend has not sold the idea to investors makes it irrelevant to have a business plan of more than a hundred pages like the one to be presented to the investors.
I would advise my friend to present to investors a summary business plan first so that they can buy her idea. After they plan to support the idea, she can now present a full business plan that will be approximately 30 pages which will include a more detailed plan of what the business plans to achieve and how it will achieve it.
Chapter 7
7-30: Friends of my parents are having dinner in our home, and they start discussing their interest in launching an entrepreneurial venture. The other founders of the entrepreneurial venture plan to establish a founder’s agreement but the friends don’t see the need to have such an agreement as the business will be comprised of friends. My position about founder’s agreement is that it is important because it deals with issues of a business such as split of equity among the founder members. It also includes information on how the founder members will be compensated for the amount of money they contributed to the business (Barringer, 228). This ensures fairness to all founder members as they are paid depending on the contribution each made to facilitate the success of the business.
I would advise them that where two or more people are involved in starting a business, founders’ agreement is important despite the fact that they know each other. This is because it helps in solving issues that are likely to occur in a partnered job. The issues include compensation, how equity is split among the co-founders, and the duration one has to stay with the firm to ensure the shares have matured. The agreement includes information on what should happen in case one of the founders die or plans to leave the firm (Barringer, 228). Since each of the founders contributes towards the success of the firm, it is important to ensure equity when one is no longer interested in pursuing the business.
The agreement contains the formula that should be used in dividing the cash which is based on the amount each founder contributed towards the firm. Vesting ownership information is also included in the agreement where the founders may decide to decide who should lead the business.
Chapter 8
8-22: Kate Snow plans to start another career where she plans to buy three different businesses. She goes through the historical financial statements for each of the business so that she can gain insight of how each has been performing for the years they have been in operational. The statement given on balance sheets that they can be revealing or deceiving is an indication that balance sheets are not to be trusted. Balance sheets contain a snapshot of the company liabilities, assets and the owner equity at a given time. The balance sheet must be in the balance at all time so that it can be considered useful for a farm (Barringer, 267). The statement given is an indication that the balance sheet can contain the true information regarding the firm assets and liabilities and to some extent, it can include wrong information to ensure it is in the balance.
In a balance sheet, the firm’s assets should equate to the liabilities and owner equity of the firm. It should reflect the assets in the order of their liquidity where the assets that can easily be converted to cash are listed at the top of the balance sheet. The liabilities are indicated on the right-hand side of the sheet and should be in the order of how they will be paid (Barringer, 267). Most businesses fail to indicate the risks that are likely to affect the business on the balance sheet, and some of the liabilities may be omitted where the business owner plans to sell the business. This can be a way to attract the buyer which can be deceiving if the buyer concentrates more on balance sheet as the document to assess the success of a business. Kate should consider using other financial statements of the businesses rather than using the balance sheet.
Chapter 9
9-26: Kim Simpson has a successful fitness center, and she plans to open some more fitness centers using the funds she has received. This will require that she hire more employees and general manager who will run the new fitness centers. The recruiting techniques I would advise her to use include using social media to learn more about the employees she desires to hire in her new businesses. This is because, in the social media, she is likely to get not only the resumes of the candidates but also their traits by checking on their social media profiles. This will offer the best platform for selecting best candidates as she will select candidates based on their profiles available on social media.
Another technique that Kim Simpson can use is skills profile which indicates the most important skills that are needed for the new businesses. This assists in the identification of the best-skilled people who are required by the business owner. For her to have smart employees, she should consider enquiring from a personal network who can include the investors and co-founders as they have in information on what your business deal with and the right pool of employees who can make it a success. Consultants can also be used to guide Kim Simpson on the best site to get the desired pool of employees (Barringer, 313). This is because consultants are more connected and they have information on what is required by the organization hence the right pool of staff and manager can be obtained from them. Smart hiring decision can be obtained if she discusses the issue with the board of director and board of advisors so that that can all brainstorm on the best sources of staff and the skills that will be required for the new businesses.