BOOK
Entrepreneurship and Effective Small Business Management, Global Edition
(2015)
Additional Information
Book Details
Abstract
For undergraduate and graduate courses in entrepreneurship and/or small business management.
Discover how to successfully launch and manage a small business.
Open your students’ minds to the possibilities, challenges, and rewards of becoming a small business owner with Entrepreneurship and Effective Small Business Management. This text provides students with the tools they need in order to launch and manage a small business.
This Eleventh Edition continues to provide students with a practical, hands-on approach to launch a business that has the greatest chance for success. This edition features ten new cases and the most recent statistics, studies, surveys, and research about entrepreneurship and small business management.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Brief Contents | 3 | ||
| Contents | 5 | ||
| Dedication | 21 | ||
| Preface | 23 | ||
| Acknowledgments | 26 | ||
| Section I : The Rewards and Challenges of Entrepreneurship | 29 | ||
| Chapter 1 : Entrepreneurs: The Driving Force Behind Small Business | 29 | ||
| The Role of the Entrepreneur | 30 | ||
| What is an Entrepreneur? | 33 | ||
| Entrepreneurship in Action : Space: The Next Entrepreneurial Frontier? | 37 | ||
| How to Spot Entrepreneurial Opportunities | 38 | ||
| Monitor Trends and Exploit Them Early On | 38 | ||
| Travel—and Be Inspired | 39 | ||
| Take a Different Approach to an Existing Market | 39 | ||
| Put a New Twist on an Old Idea | 39 | ||
| Look for Creative Ways to Use Existing Resources | 40 | ||
| Realize That Others Have the Same Problem You Do | 40 | ||
| Take Time to Play | 40 | ||
| Notice What is Missing | 40 | ||
| The Benefits of Owning a Small Business | 41 | ||
| Opportunity to Gain Control over Your Own Destiny | 41 | ||
| Opportunity to Make a Difference | 41 | ||
| Opportunity to Reach Your Full Potential | 42 | ||
| Opportunity to Reap Impressive Profits | 42 | ||
| Opportunity to Contribute to Society and Be Recognized for Your Efforts | 42 | ||
| Opportunity to Do What You Enjoy Doing | 43 | ||
| The Potential Drawbacks of Entrepreneurship | 43 | ||
| Uncertainty of Income | 43 | ||
| Risk of Losing Your Entire Invested Capital | 43 | ||
| Long Hours and Hard Work | 44 | ||
| Lower Quality of Life Until the Business Gets Established | 44 | ||
| High Levels of Stress | 44 | ||
| Complete Responsibility | 45 | ||
| Discouragement | 45 | ||
| Why the Boom: The Fuel Feeding the Entrepreneurial Fire | 45 | ||
| Entrepreneurs as Heroes | 45 | ||
| Entrepreneurial Education | 45 | ||
| Shift to a Service Economy | 45 | ||
| Technology Advancements | 45 | ||
| Outsourcing | 46 | ||
| Independent Lifestyle | 46 | ||
| E-Commerce, the Internet, and Mobile Computing | 46 | ||
| International Opportunities | 47 | ||
| In the Entrepreneurial Spotlight : Collegiate Entrepreneurs | 47 | ||
| The Cultural Diversity of Entrepreneurship | 48 | ||
| Young Entrepreneurs | 48 | ||
| Women Entrepreneurs | 49 | ||
| Minority Enterprises | 50 | ||
| Immigrant Entrepreneurs | 51 | ||
| Part-Time Entrepreneurs | 52 | ||
| Home-Based Business Owners | 52 | ||
| Family Business Owners | 52 | ||
| Copreneurs | 54 | ||
| Corporate Castoffs | 55 | ||
| Corporate “Dropouts” | 55 | ||
| Retired Baby Boomers | 56 | ||
| The Contributions of Small Businesses | 56 | ||
| Lessons from the Street-Smart Entrepreneur : Bulletproofing Your Start-Up | 58 | ||
| Putting Failure into Perspective | 59 | ||
| How to Avoid the Pitfalls | 60 | ||
| Know Your Business in Depth | 60 | ||
| Prepare a Business Plan | 61 | ||
| Manage Financial Resources | 61 | ||
| Understand Financial Statements | 61 | ||
| Learn to Manage People Effectively | 62 | ||
| Set Your Business Apart from the Competition | 62 | ||
| Maintain a Positive Attitude | 62 | ||
| Conclusion—and a Look Ahead | 62 | ||
| Chapter Review | 63 | ||
| Discussion Questions | 64 | ||
| Chapter 2 : Ethics and Social Responsibility: Doing the Right Thing | 65 | ||
| An Ethical Perspective | 67 | ||
| Three Levels of Ethical Standards | 68 | ||
| Immoral, Amoral, and Moral Management | 69 | ||
| The Benefits of Moral Management | 70 | ||
| Establishing an Ethical Framework | 71 | ||
| Why Ethical Lapses Occur | 72 | ||
| An Unethical Employee | 73 | ||
| An Unethical Organizational Culture | 73 | ||
| Moral Blindness | 73 | ||
| Competitive Pressures | 73 | ||
| Opportunity Pressures | 73 | ||
| Globalization of Business | 73 | ||
| Establishing and Maintaining Ethical Standards | 74 | ||
| Establishing Ethical Standards | 74 | ||
| Maintaining Ethical Standards | 74 | ||
| Entrepreneurship in Action : Don’t Just Do It, Do It Right. | 77 | ||
| Social Entrepreneurship | 77 | ||
| In the Entrepreneurial Spotlight : Making a Profit and Making a Difference | 78 | ||
| Social Responsibility | 79 | ||
| Business’s Responsibility to the Environment | 80 | ||
| Business’s Responsibility to Employees | 81 | ||
| Cultural Diversity in the Workplace | 82 | ||
| Drug Testing | 85 | ||
| HIV/AIDS | 86 | ||
| Sexual Harassment | 87 | ||
| Lessons from the Street-Smart Entrepreneur : How to Avoid Sexual Harassment Charges | 90 | ||
| Privacy | 92 | ||
| Entrepreneurship in Action : Think Before You Hit “Post” on Facebook | 92 | ||
| Business’s Responsibility to Customers | 93 | ||
| Right to Safety | 93 | ||
| Right to Know | 94 | ||
| Right to Be Heard | 94 | ||
| Right to Education | 94 | ||
| Right to Choice | 95 | ||
| Business’s Responsibility to Investors | 95 | ||
| Business’s Responsibility to the Community | 95 | ||
| Conclusion | 96 | ||
| Chapter Review | 96 | ||
| Discussion Questions | 97 | ||
| Chapter 3 : Creativity and Innovation: Keys to Entrepreneurial Success | 99 | ||
| Creativity, Innovation, and Entrepreneurship | 100 | ||
| Creativity—Essential to Survival | 104 | ||
| Can Creativity Be Taught? | 106 | ||
| Creative Thinking | 106 | ||
| In the Entrepreneurial Spotlight : The Ingredients of Creativity | 107 | ||
| Barriers to Creativity | 109 | ||
| Lessons from the Street-Smart Entrepreneur : Questions to Spur the Imagination | 113 | ||
| How to Enhance Creativity | 114 | ||
| Enhancing Organizational Creativity | 114 | ||
| Enhancing Individual Creativity | 119 | ||
| In the Entrepreneurial Spotlight : How to Create a Culture of Creativity and Innovation | 124 | ||
| The Creative Process | 125 | ||
| Step 1. Preparation | 125 | ||
| Step 2. Investigation | 126 | ||
| Step 3. Transformation | 126 | ||
| Step 4. Incubation | 127 | ||
| Step 5. Illumination | 129 | ||
| Step 6. Verification | 129 | ||
| Step 7. Implementation | 130 | ||
| Conclusion | 130 | ||
| Chapter Review | 131 | ||
| Discussion Questions | 131 | ||
| Chapter 4 : Strategic Management and the Entrepreneur | 133 | ||
| Building a Competitive Advantage | 136 | ||
| The Strategic Management Process | 138 | ||
| Step 1. Develop a Clear Vision and Translate It into a Meaningful Mission Statement | 139 | ||
| Lessons from the Street-Smart Entrepreneur : Thriving on Change | 141 | ||
| Step 2. Assess the Company’s Strengths and Weaknesses | 142 | ||
| Step 3. Scan the Environment for Significant Opportunities and Threats Facing the Business | 143 | ||
| Step 4. Identify the Key Factors for Success in the Business | 144 | ||
| Step 5. Analyze the Competition | 146 | ||
| Step 6. Create Company Goals and Objectives | 150 | ||
| Entrepreneurship in Action : Vizio: Disrupting Another Market | 152 | ||
| Step 7. Formulate Strategic Options and Select the Appropriate Strategies | 153 | ||
| In the Entrepreneurial Spotlight : Strategies for Success | 158 | ||
| Step 8. Translate Strategic Plans into Action Plans | 159 | ||
| Step 9. Establish Accurate Controls | 160 | ||
| Conclusion | 162 | ||
| Chapter Review | 163 | ||
| Discussion Questions | 164 | ||
| Section II : Launching a Venture: Entry Strategies | 165 | ||
| Chapter 5 : Choosing a Form of Ownership | 165 | ||
| The Sole Proprietorship | 167 | ||
| Advantages of a Sole Proprietorship | 168 | ||
| Lessons from the Street-Smart Entrepreneur : Get That Name Right! | 169 | ||
| Disadvantages of the Sole Proprietorship | 170 | ||
| Entrepreneurship in Action : The Pain of Partnership | 171 | ||
| The Partnership | 172 | ||
| The Uniform Partnership Act | 174 | ||
| Advantages of the Partnership | 174 | ||
| Lessons from the Street-Smart Entrepreneur : How to Avoid a Business Divorce | 176 | ||
| Disadvantages of the Partnership | 177 | ||
| Limited Partnerships | 178 | ||
| Limited Liability Partnerships | 179 | ||
| The Corporation | 179 | ||
| Requirements for Incorporation | 179 | ||
| Advantages of the Corporation | 180 | ||
| Disadvantages of the Corporation | 182 | ||
| Professional Corporations | 183 | ||
| The S Corporation | 183 | ||
| Advantages of an S Corporation | 184 | ||
| Disadvantages of an S Corporation | 185 | ||
| When is an S Corporation a Wise Choice? | 185 | ||
| The Limited Liability Company | 185 | ||
| Social Enterprises | 188 | ||
| In the Entrepreneurial Spotlight : From the Life on the Street to Running a Business | 188 | ||
| Nonprofit Organizations | 189 | ||
| Chapter Review | 191 | ||
| Discussion Questions | 192 | ||
| Chapter 6 : Franchising and the Entrepreneur | 193 | ||
| What is a Franchise? | 195 | ||
| Types of Franchising | 196 | ||
| The Benefits of Buying a Franchise | 196 | ||
| A Business System | 197 | ||
| Management Training and Support | 198 | ||
| Brand-Name Appeal | 199 | ||
| Standardized Quality of Goods and Services | 199 | ||
| National Advertising Programs | 199 | ||
| Financial Assistance | 200 | ||
| Proven Products and Business Formats | 201 | ||
| Centralized Buying Power | 201 | ||
| Site Selection and Territorial Protection | 201 | ||
| Increased Chance for Success | 202 | ||
| Drawbacks of Buying a Franchise | 203 | ||
| Franchise Fees and Ongoing Royalties | 203 | ||
| Strict Adherence to Standardized Operations | 204 | ||
| Restrictions on Purchasing | 204 | ||
| Limited Product Line | 205 | ||
| Market Saturation | 205 | ||
| Limited Freedom | 206 | ||
| No Guarantee of Success | 206 | ||
| Franchising and the Law | 206 | ||
| Entrepreneurship in Action : After the Cheering Stops | 209 | ||
| The Right Way to Buy a Franchise | 210 | ||
| Evaluate Yourself | 211 | ||
| Research the Market | 211 | ||
| Consider Your Franchise Options | 212 | ||
| Get a Copy of the FDD and Study It | 212 | ||
| Talk to Existing Franchisees | 213 | ||
| Ask the Franchisor Some Tough Questions | 213 | ||
| Make Your Choice | 215 | ||
| Lessons from the Street-Smart Entrepreneur : Make Sure You Select the Right Franchise | 215 | ||
| Franchise Contracts | 216 | ||
| Termination | 218 | ||
| Renewal | 218 | ||
| Transfer and Buybacks | 218 | ||
| In the Entrepreneurial Spotlight : The Allure of Franchising | 218 | ||
| Trends in Franchising | 219 | ||
| Changing Face of Franchisees | 219 | ||
| Multiple-Unit Franchising | 220 | ||
| International Opportunities | 220 | ||
| In the Entrepreneurial Spotlight : The Middle East: A Hot Spot for Franchising | 221 | ||
| Smaller, Nontraditional Locations | 223 | ||
| Conversion Franchising | 223 | ||
| Refranchising | 223 | ||
| Area Development and Master Franchising | 223 | ||
| Cobranding | 224 | ||
| Serving Dual-Career Couples and Aging Baby Boomers | 225 | ||
| Franchising as a Growth Strategy | 225 | ||
| Unique Concept | 225 | ||
| Replicable | 225 | ||
| Expansion Plan | 226 | ||
| Due Diligence | 226 | ||
| Legal Guidance | 226 | ||
| Support for Franchisees | 226 | ||
| Conclusion | 226 | ||
| Chapter Review | 226 | ||
| Discussion Questions | 227 | ||
| Chapter 7 : Buying an Existing Business | 229 | ||
| Buying an Existing Business | 231 | ||
| Advantages of Buying an Existing Business | 231 | ||
| Disadvantages of Buying an Existing Business | 233 | ||
| The Search Stage | 236 | ||
| Self-Inventory | 236 | ||
| Develop a List of Criteria | 237 | ||
| Potential Candidates | 237 | ||
| Investigation | 238 | ||
| Lessons from the Street-Smart Entrepreneur : Don’t Get Burned When You Buy a Business | 240 | ||
| The Deal Stage | 240 | ||
| Methods for Determining the Value of a Business | 241 | ||
| In the Entrepreneurial Spotlight : Bond Coffee | 250 | ||
| Negotiating the Deal | 251 | ||
| Letter of Intent | 254 | ||
| The Due Diligence Process | 255 | ||
| Entrepreneurship in Action : What’s the Deal? | 259 | ||
| The Transition Stage | 260 | ||
| Chapter Review | 261 | ||
| Discussion Questions | 262 | ||
| Chapter 8 : New Business Planning Process: Feasibility Analysis, Business Modeling, and Crafting a Winning Business Plan | 263 | ||
| Conducting a Feasibility Analysis | 265 | ||
| Industry and Market Feasibility Analysis | 265 | ||
| Product or Service Feasibility Analysis: Is There a Market? | 270 | ||
| Financial Feasibility Analysis: Is There Enough Margin? | 271 | ||
| Entrepreneur Feasibility: Is This Idea Right for Me? | 273 | ||
| Developing and Testing a Business Model | 275 | ||
| Value Proposition | 275 | ||
| Customer Segments | 276 | ||
| Customer Relationships | 276 | ||
| Channels | 276 | ||
| Key Activities | 276 | ||
| Key Resources | 276 | ||
| Key Partners | 276 | ||
| Revenue Streams | 277 | ||
| Cost Structure | 277 | ||
| Entrepreneurship in Action : The Evolution of CoolPeopleCare’s Business Model | 278 | ||
| The Benefits of Creating a Business Plan | 279 | ||
| Three Tests That Every Business Plan Must Pass | 280 | ||
| Reality Test | 280 | ||
| Competitive Test | 280 | ||
| Value Test | 280 | ||
| In the Entrepreneurial Spotlight : The Battle of the Plans | 281 | ||
| The Elements of a Business Plan | 282 | ||
| Title Page and Table of Contents | 283 | ||
| The Executive Summary | 283 | ||
| Mission and Vision Statement | 283 | ||
| Company History | 284 | ||
| In the Entrepreneurial Spotlight : A Business Plan: Don’t Launch Without It | 284 | ||
| Description of Firm’s Product or Service | 285 | ||
| Business and Industry Profile | 286 | ||
| Goals and Objectives | 286 | ||
| Business Strategy | 286 | ||
| Competitor Analysis | 287 | ||
| Marketing Strategy | 287 | ||
| Visualizing a Venture’s Risks and Rewards | 291 | ||
| What Lenders and Investors Look for in a Business Plan | 293 | ||
| Capital | 293 | ||
| Capacity | 293 | ||
| Collateral | 293 | ||
| Character | 293 | ||
| Conditions | 293 | ||
| The Pitch: Making the Business Plan Presentation | 294 | ||
| Conclusion | 296 | ||
| Suggested Business Plan Elements | 296 | ||
| Chapter Review | 299 | ||
| Discussion Questions | 300 | ||
| Section III : Building a Marketing Plan | 301 | ||
| Chapter 9 : Building a Bootstrap Marketing Plan | 301 | ||
| Creating a Bootstrap Marketing Plan | 302 | ||
| In the Entrepreneurial Spotlight : Bootstrap Marketing in the New Music Industry | 304 | ||
| Market Diversity: Pinpointing the Target Market | 305 | ||
| Determining Customer Needs and Wants Through Market Research | 306 | ||
| How to Conduct Market Research | 308 | ||
| In the Entrepreneurial Spotlight : Bootstrap Marketing Using Databases | 310 | ||
| Plotting a Bootstrap Marketing Strategy: Building a Competitive Edge | 311 | ||
| Find a Niche and Fill It | 312 | ||
| Retain Existing Customers | 313 | ||
| Concentration on Innovation | 313 | ||
| The Marketing Mix | 316 | ||
| Product | 316 | ||
| Promotion | 324 | ||
| Lessons from the Street-Smart Entrepreneur : Marketing to Millennials | 326 | ||
| Price | 330 | ||
| Place | 331 | ||
| Chapter Review | 332 | ||
| Discussion Questions | 332 | ||
| Chapter 10 : Creative Use of Advertising and Promotion | 333 | ||
| Define Your Company’s Unique Selling Proposition | 334 | ||
| Creating a Promotional Strategy | 335 | ||
| Publicity | 335 | ||
| Personal Selling | 337 | ||
| Entrepreneurship in Action : Should an Ambulance Service Hire Its First Sales Representative? | 339 | ||
| Advertising | 340 | ||
| Selecting Advertising Media | 342 | ||
| Media Options | 344 | ||
| Lessons from the Street-Smart Entrepreneur : E-Mail Ads That Produce Results | 350 | ||
| How to Prepare an Advertising Budget | 367 | ||
| How to Advertise Big on a Small Budget | 368 | ||
| Cooperative Advertising | 368 | ||
| Shared Advertising | 369 | ||
| Stealth Advertising | 369 | ||
| Other Ways to Save | 369 | ||
| Chapter Review | 369 | ||
| Discussion Questions | 370 | ||
| Chapter 11 : Pricing and Credit Strategies | 371 | ||
| Pricing: A Creative Blend of Art and Science | 372 | ||
| Three Powerful Pricing Forces: Image, Competition, and Value | 376 | ||
| Price Conveys Image | 376 | ||
| Competition and Prices | 377 | ||
| Focus on Value | 378 | ||
| Pricing Strategies and Tactics | 379 | ||
| New Product Pricing: Penetration, Skimming, or Sliding | 380 | ||
| Pricing Techniques for Established Products and Services | 382 | ||
| In the Entrepreneurial Spotlight : How to Compete with Cheap Knockoffs of Your Successful Product | 383 | ||
| Entrepreneurship in Action : Social Coupons: Beneficial—or Just Plain Bad—for Business? | 387 | ||
| Lessons from the Street-Smart Entrepreneur : Enhancing Your Company’s Pricing Power | 389 | ||
| Pricing Techniques for Retailers | 390 | ||
| Markup | 390 | ||
| Pricing Techniques for Manufacturers | 392 | ||
| Direct Costing and Pricing | 393 | ||
| Computing a Break-Even Selling Price | 393 | ||
| Pricing Techniques for Service Businesses | 395 | ||
| The Impact of Credit on Pricing | 397 | ||
| Entrepreneurship in Action : To Accept Credit Cards or Not: That is the Question | 397 | ||
| Credit Cards | 398 | ||
| Chapter Review | 400 | ||
| Discussion Questions | 401 | ||
| Chapter 12 : Global Marketing Strategies | 403 | ||
| Why Go Global? | 406 | ||
| Going Global: Strategies for Small Businesses | 409 | ||
| Creating a Presence on the Web | 409 | ||
| In the Entrepreneurial Spotlight : Going Global One Step at a Time | 411 | ||
| Relying on Trade Intermediaries | 412 | ||
| The Value of Using Trade Intermediaries | 413 | ||
| Joint Ventures | 415 | ||
| Foreign Licensing | 416 | ||
| International Franchising | 416 | ||
| Entrepreneurship In Action : Growing Beyond the Borders | 419 | ||
| Countertrading and Bartering | 420 | ||
| Exporting | 420 | ||
| Lessons from the Street-Smart Entrepreneur : Finding Your Place in the World | 428 | ||
| Establishing International Locations | 430 | ||
| Importing and Outsourcing | 430 | ||
| Barriers to International Trade | 432 | ||
| Domestic Barriers | 432 | ||
| International Barriers | 433 | ||
| Political Barriers | 434 | ||
| Business Barriers | 434 | ||
| Cultural Barriers | 435 | ||
| International Trade Agreements | 436 | ||
| World Trade Organization | 436 | ||
| North American Free Trade Agreement | 437 | ||
| The Dominican Republic-Central America Free Trade Agreement | 437 | ||
| Conclusion | 437 | ||
| Chapter Review | 439 | ||
| Discussion Questions | 439 | ||
| Chapter 13 : E-Commerce and Entrepreneurship | 441 | ||
| Factors to Consider Before Launching into E-Commerce | 444 | ||
| Ten Myths of E-Commerce | 446 | ||
| Myth 1. If I Launch a Site, Customers Will Flock to It | 446 | ||
| Myth 2. Online Customers Are Easy to Please | 448 | ||
| Myth 3. Making Money on the Web is Easy | 448 | ||
| Myth 4. Privacy is Not an Important Issue on the Web | 448 | ||
| Myth 5. “Strategy? I Don’t Need a Strategy to Sell on the Web! Just Give Me a Web Site, and the Rest Will Take Care of Itself” | 449 | ||
| Myth 6. The Most Important Part of Any E-Commerce Effort is Technology | 450 | ||
| Myth 7. On the Web, Customer Service is Not as Important as It is in a Traditional Retail Store | 450 | ||
| Myth 8. Flashy Web Sites Are Better Than Simple Ones | 451 | ||
| Myth 9. It’s What’s Up Front That Counts | 452 | ||
| Myth 10. My Business Doesn’t Need a Web Site | 452 | ||
| Strategies for E-Success | 453 | ||
| Focus on a Niche in the Market | 454 | ||
| Develop a Community | 454 | ||
| Attract Visitors by Giving Away “Freebies” | 455 | ||
| Make Creative Use of E-Mail, but Avoid Becoming a “Spammer” | 455 | ||
| Sell the “Experience” | 456 | ||
| Make Sure Your Web Site Says “Credibility” | 457 | ||
| Make the Most of the Internet’s Global Reach | 457 | ||
| Lessons from the Street-Smart Entrepreneur : How to Make Your Business Ready for Global E-Commerce | 459 | ||
| Go Mobile | 460 | ||
| Promote Your Web Site Online and Offline | 461 | ||
| Use Social Media Tools to Attract and Retain Customers | 461 | ||
| Entrepreneurship in Action : Enhancing E-Commerce with Social Media | 462 | ||
| Capture Local Traffic | 463 | ||
| Develop an Effective Search Engine Optimization Strategy | 463 | ||
| Designing a Killer Web Site | 466 | ||
| Decide How to Bring Your Site to Life | 467 | ||
| Start with Your Target Customer | 467 | ||
| Give Customers What They Want | 467 | ||
| Select an Intuitive Domain Name | 467 | ||
| Make Your Web Site Easy to Navigate | 469 | ||
| Provide Customer Ratings and Reviews | 470 | ||
| Offer Suggestions for Related Products | 470 | ||
| Add Wish List Capability | 470 | ||
| Create a Gift Idea Center | 470 | ||
| Establish the Appropriate Call to Action on Each Page | 470 | ||
| Build Loyalty by Giving Online Customers a Reason to Return to Your Web Site | 470 | ||
| Establish Hyperlinks with Other Businesses, Preferably Those Selling Products or Services That Complement Yours | 470 | ||
| Include an E-Mail Option, an Address, and a Telephone Number on Your Site | 471 | ||
| Give Shoppers the Ability to Track Their Orders Online | 471 | ||
| Offer Web-Only Specials | 471 | ||
| Use the Power of Social Media | 471 | ||
| Use Customer Testimonials | 471 | ||
| Follow a Simple Design | 471 | ||
| Assure Customers That Online Transactions are Secure | 473 | ||
| Post Shipping and Handling Charges Up Front | 473 | ||
| Create a Fast, Simple Checkout Process | 473 | ||
| Provide Customers Multiple Payment Options | 473 | ||
| Confirm Transactions | 473 | ||
| Keep Your Site Fresh | 473 | ||
| Rely on Analytics to Improve Your Site | 473 | ||
| Test Your Site Often | 473 | ||
| Consider Hiring a Professional Designer | 474 | ||
| In the Entrepreneurial Spotlight : Web Site Makeovers | 474 | ||
| Tracking Web Results | 475 | ||
| Software Solutions | 475 | ||
| Ensuring Web Privacy and Security | 476 | ||
| Privacy | 476 | ||
| Security | 476 | ||
| Chapter Review | 479 | ||
| Discussion Questions | 480 | ||
| Section IV : Building a Financial Plan | 481 | ||
| Chapter 14 : Creating a Solid Financial Plan | 481 | ||
| Basic Financial Reports | 482 | ||
| The Balance Sheet | 483 | ||
| The Income Statement | 484 | ||
| The Statement of Cash Flows | 486 | ||
| Creating Projected Financial Statements | 487 | ||
| Projected Statements for the Small Business | 487 | ||
| Ratio Analysis | 493 | ||
| 12 Key Ratios | 494 | ||
| In the Entrepreneurial Spotlight : Pitcher Strikes Out While Trying to Hit a Home Run | 503 | ||
| Interpreting Business Ratios | 504 | ||
| What Do All These Numbers Mean? | 507 | ||
| Lessons from the Street-Smart Entrepreneur : Gaining a Competitive Edge | 509 | ||
| Break-Even Analysis | 510 | ||
| Calculating the Break-Even Point | 511 | ||
| Adding a Profit | 512 | ||
| Break-Even Point in Units | 512 | ||
| Constructing a Break-Even Chart | 513 | ||
| Using Break-Even Analysis | 514 | ||
| In the Entrepreneurial Spotlight : Open Book Management | 515 | ||
| Chapter Review | 516 | ||
| Discussion Questions | 516 | ||
| Chapter 15 : Managing Cash Flow | 517 | ||
| Cash Management | 518 | ||
| Cash and Profits are Not the Same | 521 | ||
| In the Entrepreneurial Spotlight : Cash Flow and Pass-Through Entities | 522 | ||
| Preparing a Cash Budget | 523 | ||
| Lessons from the Street-Smart Entrepreneur : A Short Season | 524 | ||
| Step 1: Determining an Adequate Minimum Cash Balance | 526 | ||
| Step 2: Forecasting Sales | 526 | ||
| Step 3: Forecasting Cash Receipts | 530 | ||
| Step 4: Forecasting Cash Disbursements | 530 | ||
| Step 5: Estimating the End-of-Month Cash Balance | 532 | ||
| Entrepreneurship in Action : Rowena’s Cash Budget | 533 | ||
| The “Big Three” of Cash Management | 534 | ||
| Accounts Receivable | 534 | ||
| Accounts Payable | 538 | ||
| Inventory | 540 | ||
| In the Entrepreneurial Spotlight : Be Ready for Inflation! | 542 | ||
| Bootstrapping to Avoid the Cash Crunch | 543 | ||
| Bootstrapping Overhead | 544 | ||
| Bootstrapping Employee Costs | 546 | ||
| Bootstrapping Operating Costs | 546 | ||
| Other Tools for Bootstrapping and Preserving Cash | 546 | ||
| Conclusion | 549 | ||
| Chapter Review | 549 | ||
| Discussion Questions | 550 | ||
| Chapter 16 : Sources of Equity Financing | 551 | ||
| Planning for Capital Needs | 554 | ||
| Fixed Capital | 554 | ||
| Working Capital | 555 | ||
| Sources of Equity Financing | 555 | ||
| Funding from Founders | 556 | ||
| In the Entrepreneurial Spotlight : Bootstrapping a Technology Start-Up | 558 | ||
| Friends and Family Members | 559 | ||
| Crowdfunding | 560 | ||
| Accelerators | 562 | ||
| Entrepreneurship in Action : Launching a Business in a University Accelerator | 563 | ||
| Angels | 564 | ||
| Strategic Investments Through Corporate Venture Capital | 567 | ||
| In the Entrepreneurial Spotlight : Funding Does Not Ensure Success | 568 | ||
| Venture Capital Companies | 569 | ||
| Policies and Investment Strategies | 570 | ||
| Public Stock Sale (“Going Public”) | 575 | ||
| Chapter Review | 577 | ||
| Discussion Questions | 578 | ||
| Chapter 17 : Sources of Debt Financing | 579 | ||
| In the Entrepreneurial Spotlight : A Tale of Two Borrowers | 582 | ||
| Sources of Debt Capital | 583 | ||
| Commercial Banks | 583 | ||
| Short-Term Loans | 584 | ||
| Intermediate- and Long-Term Loans | 586 | ||
| Lessons from the Street-Smart Entrepreneur : How to Maintain a Positive Relationship with Your Banker | 586 | ||
| Nonbank Sources of Debt Capital | 587 | ||
| Asset-Based Lenders | 587 | ||
| Trade Credit | 589 | ||
| Equipment Suppliers | 590 | ||
| Commercial Finance Companies | 590 | ||
| Stock Brokerage Houses | 591 | ||
| Insurance Companies | 591 | ||
| Credit Unions | 591 | ||
| Bonds | 592 | ||
| Private Placements | 592 | ||
| Small Business Investment Companies | 593 | ||
| Federally Sponsored Programs | 594 | ||
| Economic Development Administration | 594 | ||
| Department of Housing and Urban Development | 594 | ||
| U.S. Department of Agriculture’s Rural Business and Cooperative Program and Business Program | 595 | ||
| Small Business Innovation Research Program | 595 | ||
| Entrepreneurship in Action : Where Do We Turn Now? | 596 | ||
| The Small Business Technology Transfer Program | 596 | ||
| Small Business Administration | 596 | ||
| SBA Express Loan Programs | 597 | ||
| SBA Loan Programs | 597 | ||
| State and Local Loan Development Programs | 603 | ||
| In the Entrepreneurial Spotlight : Alternative Sources of Financing | 603 | ||
| Other Methods of Financing | 604 | ||
| Factoring Accounts Receivable | 604 | ||
| Leasing | 605 | ||
| Cash Advances | 605 | ||
| Peer-to-Peer Loans | 606 | ||
| Credit Cards | 606 | ||
| Where Not to Seek Funds | 606 | ||
| Chapter Review | 607 | ||
| Discussion Questions | 608 | ||
| Section V : Building an Operating Plan | 609 | ||
| Chapter 18 : Location, Layout, and Physical Facilities | 609 | ||
| Stages in the Location Decision | 610 | ||
| Selecting the Region | 611 | ||
| Selecting the State | 614 | ||
| Selecting the City | 617 | ||
| The Final Site Selection | 624 | ||
| Entrepreneurship in Action : The Ideal Spot | 624 | ||
| Location Criteria for Retail and Service Businesses | 626 | ||
| Trade Area Size | 626 | ||
| Customer Traffic | 627 | ||
| Adequate Parking | 627 | ||
| Reputation | 628 | ||
| Visibility | 628 | ||
| The Index of Retail Saturation | 628 | ||
| Reilly’s Law of Retail Gravitation | 629 | ||
| In the Entrepreneurial Spotlight : Transformed Locations | 629 | ||
| Location Options for Retail and Service Businesses | 630 | ||
| Central Business District | 631 | ||
| Neighborhood Locations | 631 | ||
| Shopping Centers and Malls | 631 | ||
| Near Competitors | 634 | ||
| Shared Spaces | 635 | ||
| Inside Large Retail Stores | 635 | ||
| Nontraditional Locations | 635 | ||
| Home-Based Businesses | 635 | ||
| On the Road | 636 | ||
| Lessons from the Street-Smart Entrepreneur : How to Launch a Successful Pop-Up Shop | 636 | ||
| The Location Decision for Manufacturers | 638 | ||
| Foreign Trade Zones | 638 | ||
| Business Incubators | 639 | ||
| Layout and Design Considerations | 640 | ||
| Size and Adaptability | 641 | ||
| External Appearance | 641 | ||
| Entrances | 642 | ||
| The Americans with Disabilities Act | 642 | ||
| Signs | 643 | ||
| Interiors | 643 | ||
| Drive-Through Windows | 644 | ||
| Sight, Sound, Scent, and Lighting | 645 | ||
| Sustainability and Environmentally Friendly Design | 647 | ||
| Layout: Maximizing Revenues, Increasing Efficiency, and Reducing Costs | 647 | ||
| Layout for Retailers | 647 | ||
| In the Entrepreneurial Spotlight : The Secrets of Successful Retail Layouts | 649 | ||
| Layout for Manufacturers | 650 | ||
| Chapter Review | 653 | ||
| Discussion Questions | 654 | ||
| Chapter 19 : Supply Chain Management | 655 | ||
| Lessons from the Street-Smart Entrepreneur : How to Manage Supply Chain Risk | 659 | ||
| Creating a Purchasing Plan | 660 | ||
| Quality | 662 | ||
| Quantity: The Economic Order Quantity | 667 | ||
| Cost of Units | 669 | ||
| Holding (Carrying) Costs | 669 | ||
| Setup (Ordering) Costs | 670 | ||
| Solving for EOQ | 670 | ||
| EOQ with Usage | 673 | ||
| Price | 674 | ||
| Trade Discounts | 674 | ||
| Quantity Discounts | 674 | ||
| Cash Discounts | 675 | ||
| Timing—When to Order | 677 | ||
| Managing the Supply Chain: Vendor Analysis and Selection | 682 | ||
| In the Entrepreneurial Spotlight : Integrating Local Suppliers into a Complex Supply Chain | 683 | ||
| Vendor Certification | 685 | ||
| The Final Decision | 687 | ||
| In the Entrepreneurial Spotlight : Back in the USA | 688 | ||
| Legal Issues Affecting Purchasing | 690 | ||
| Title | 690 | ||
| Risk of Loss | 690 | ||
| Insurable Interest | 691 | ||
| Entrepreneurship in Action : Supply Chain Innovation at Mother Dairy | 691 | ||
| Receiving Merchandise | 692 | ||
| Selling on Consignment | 692 | ||
| Chapter Review | 693 | ||
| Discussion Questions | 693 | ||
| Chapter 20 : Managing Inventory | 695 | ||
| Inventory Control Systems | 700 | ||
| Perpetual Inventory Systems | 700 | ||
| In the Entrepreneurial Spotlight : An Ideal Inventory Solution | 702 | ||
| Partial Inventory Control Systems | 702 | ||
| Physical Inventory Count | 706 | ||
| Radio Frequency Identification Tags | 706 | ||
| Lessons from the Street-Smart Entrepreneur : Best Practices in Inventory Management | 708 | ||
| Just-in-Time Inventory Control Techniques | 709 | ||
| Just-in-Time Techniques | 709 | ||
| Turning Slow-Moving Inventory into Cash | 711 | ||
| Protecting Inventory from Theft | 713 | ||
| Employee Theft | 713 | ||
| Entrepreneurship in Action : A Thief Within | 719 | ||
| Shoplifting | 720 | ||
| Entrepreneurship in Action : A Tale of Two Shoplifters | 724 | ||
| Conclusion | 728 | ||
| Chapter Review | 728 | ||
| Discussion Questions | 729 | ||
| Chapter 21 : Staffing and Leading a Growing Company | 731 | ||
| The Entrepreneur’s Role as Leader | 732 | ||
| Hiring the Right Employees: The Company’s Future Depends on It | 735 | ||
| How to Hire Winners | 736 | ||
| Entrepreneurship in Action : Facebook Interview Process | 742 | ||
| Conducting the Interview | 743 | ||
| Entrepreneurship in Action : Building an Intentional Culture at Zappos | 747 | ||
| Building the Right Culture and Organizational Structure | 748 | ||
| Managing Growth and a Changing Culture | 750 | ||
| In the Entrepreneurial Spotlight : What a Great Place to Work! | 751 | ||
| Team-Based Management | 752 | ||
| Communicating Effectively | 753 | ||
| Improving Communication | 754 | ||
| Listening | 755 | ||
| The Informal Communication Network: The “Grapevine” | 756 | ||
| The Challenge of Motivating Workers | 756 | ||
| Empowerment | 756 | ||
| Job Design | 758 | ||
| Rewards and Compensation | 760 | ||
| Lessons from the Street-Smart Entrepreneur : Sabbaticals | 763 | ||
| Performance Feedback | 764 | ||
| Performance Appraisal | 765 | ||
| Chapter Review | 767 | ||
| Discussion Questions | 768 | ||
| Section VI : Legal Aspects of Small Business: Succession, Ethics, and Government Regulation | 769 | ||
| Chapter 22 : Management Succession and Risk Management Strategies in the Family Business | 769 | ||
| Family Businesses | 770 | ||
| Benefits of Family Businesses | 770 | ||
| The Dark Side of Family Businesses | 771 | ||
| Characteristics of Successful Family Businesses | 773 | ||
| Exit Strategies | 776 | ||
| Selling to Outsiders | 777 | ||
| Selling to Insiders | 777 | ||
| Lessons from the Street-Smart Entrepreneur : How to Set Up an ESOP | 779 | ||
| Management Succession | 780 | ||
| In the Entrepreneurial Spotlight : Can Your Family Business Survive for Centuries? | 783 | ||
| Developing a Management Succession Plan | 784 | ||
| Buy-Sell Agreement | 788 | ||
| Lifetime Gifting | 789 | ||
| Setting Up a Trust | 789 | ||
| Risk Management Strategies | 791 | ||
| The Basics of Insurance | 793 | ||
| Types of Insurance | 794 | ||
| In the Entrepreneurial Spotlight : The Aftermath of a Storm | 798 | ||
| Controlling Insurance Costs | 805 | ||
| Chapter Review | 807 | ||
| Discussion Questions | 808 | ||
| Chapter 23 : The Legal Environment: Business Lawand Government Regulation | 809 | ||
| The Law of Contracts | 811 | ||
| Agreement | 811 | ||
| Contractual Capacity | 814 | ||
| Legality | 815 | ||
| Breach of Contract | 816 | ||
| The Uniform Commercial Code | 816 | ||
| Sales and Sales Contracts | 817 | ||
| Breach of Sales Contracts | 819 | ||
| Sales Warranties and Product Liability | 819 | ||
| Protection of Intellectual Property Rights | 822 | ||
| Patents | 823 | ||
| Trademarks | 826 | ||
| Entrepreneurship in Action : Protecting Your Brand | 827 | ||
| Copyrights | 828 | ||
| Protecting Intellectual Property | 828 | ||
| The Law of Agency | 829 | ||
| Bankruptcy | 830 | ||
| Forms of Bankruptcy | 831 | ||
| In the Entrepreneurial Spotlight : A Second Chance at Success | 833 | ||
| Government Regulation | 834 | ||
| Trade Practices | 835 | ||
| Consumer Protection | 837 | ||
| Lessons from the Street-Smart Entrepreneur : Are Your Ads Setting You Up for Trouble? | 838 | ||
| Consumer Credit | 839 | ||
| Environmental Law | 840 | ||
| Entrepreneurship in Action : Small Businesses and Eminent Domain | 841 | ||
| The Affordable Care Act | 842 | ||
| Chapter Review | 843 | ||
| Discussion Questions | 844 | ||
| Appendix : The picturebooth co. | 845 | ||
| Executive Summary | 846 | ||
| Our Mission is to Provide High-Quality Photo Booths at an Affordable Price | 846 | ||
| What Makes Us Stand Out? | 846 | ||
| Cases | 859 | ||
| Case 1 : Big Bottom Market | 859 | ||
| Case 2 : MyBizHomepage | 860 | ||
| Case 3 : Jacquii LLC | 862 | ||
| Case 4 : Red Iguana | 863 | ||
| Case 5 : Baked in the Sun | 865 | ||
| Case 6 : Bluffton Pharmacy—Part 1 | 867 | ||
| Case 7 : Bluffton Pharmacy—Part 2 | 869 | ||
| Case 8 : United By Blue | 870 | ||
| Case 9 : Socedo | 872 | ||
| Case 10 : EasyLunchboxes | 873 | ||
| Endnotes | 874 | ||
| Index | 912 |