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Entrepreneurship and Small Business
Entrepreneurial Strategy
Pursuing New Venture Opportunities
The New Venture Business Plan
Small Business Marketing
Small Business Management
Financial Management in the Entrepreneurial Firm

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Entrepreneurship and Small Business

Rationale

A Small Business may be defined as a business with a small number of employees. The legal definition of "small" often varies by country and industry, but is generally under 100 employees in the United States while under 50 employees in the European Union (In comparison, the American definition of mid-sized business by the number of employees is generally under 500 while 250 is for that of European Union). These businesses are normally privately owned corporations, partnerships, or sole proprietorships.

However, other methods are also used to classify small companies, such us annual sales (turnover), assets value or net profit (balance sheet), alone or in a mixed definition. This criteria is followed by the European Union, for instance (head count, turnover and balance sheet totals).

Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, solicitors, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing etc. Small businesses are usually independent.

The smallest businesses, often located in private homes, are called microbusinesses (term used by international organizations such as the World Bank and the International Finance Corporation) or SoHos. The term "mom and pop business" is a common colloquial expression for a single-family operated business with few (or no) employees other than the owners. When judged by the number of employees, the American and the European definitions are the same: under 10 employees.

See also

The European Model for Small and Medium Sized Enterprises

External links

Who are Mom and Pop?

Entrepreneurial Economics. If entrepreneurship remains as important to the economy as ever, then the continuing failure of mainstream economics to adequately account for entrepreneurship indicates that fundamental principles require re-evaluation. Entrepreneurial Economics is the study of the entrepreneur and entrepreneurship within the economy. The characteristics of entrepreneurial economy (regional or national level) are high level of innovation combined with high level of entrepreneurship which result in the creation of new ventures as well as new sectors and industries.

Mainstream economics does not include entrepreneurship not because there is no theory or analytical framework for entrepreneurship. Entrepreneurship does not belong in mainstream theory; in fact mainstream theory makes the entrepreneur an invisible man. The reason for that is that the construct of equilibrium models, which is central to mainstream economics, is exactly what by definition excludes entrepreneurship. Joseph Schumpeter and Israel Kirzner have argued in their writings, that entrepreneur does not tolerate equilibrium. According to Baumol, mainstream theory is not ‘wrong’ by excluding entrepreneurship it is irrelevant there.

Entrepreneurship has been perceived as a chaotic, unpredictable economic process, which cannot be modelled using the equilibrium based analytical methods used in mainstream economic theory.

It seems no longer possible to expect that only theoretical refinements and extending known principles can provide for a theory of entrepreneurship. Challenging 'fundamental principles' like equilibrium models, rational agent, maximization paradigm, the traditional production function, by applying insight from other disciplines like theoretical physics (thermodynamics, entropy) might be the way forward in the study of entrepreneurial economics. Coase surveys the field of economics and believes it has become a "theory-driven" subject that has moved into a paradigm in which conclusions take precedence over problems. "If you look at a page of a scientific journal like Nature," he said, "every few weeks you have statements such as, 'We’ll have to think it out again. These results aren’t going the way we thought they would.' Well, in economics, the results always go the way we thought they would because we approach the problems in the same way, only asking certain questions. Entrepreneurial Economics challenges fundamental principles, using insights from models and theories in the natural sciences.

Learning Objectives and Outcomes

This is a non-taught unit designed for self-directed study by those planning to start or grow their own business.

Knowledge

After completing this module, entrepreneurs will be able to:

1. Develop awareness of the importance of small businesses in global economy

2. Identify new venture opportunities

3. Understand the role economic, social and marketing environments in raising finances for new ventures

4. Learn skills required for small business strategic, financial, managerial, and marketing related decision making

5. Understand why different products and services require different levels of management and investment

6. Develop knowledge and skills in employing effective marketing techniques

7. Identify sources of funds and develop on operating budget

8. Evaluate the target markets and determine a "fair market" price

9. Understand the personal characteristics of an effective entrepreneur.

Skills

After completing this module, students will be able to:

1. Write and present an actionable new venture business plan

2. Develop an operating plan to run a small business

3. Formulate and implement entrepreneurial strategic, finance, marketing and management plans for an entrepreneurial new ventures and small businesses

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Entrepreneurship and Small Business

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Entrepreneurship is the practice of starting new organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs.

See also

Business incubators, Business opportunity, Junior enterprise
- List of management topics, List of social entrepreneurs
- Bootstrap funding

References and external articles

Entrepreneurial Strategy

Tutorials

Readings

Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of ﬁrms in their external environments.^[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs. A balanced scorecard is often used to evaluate the overall performance of the business and its progress towards objectives. Recent studies and leading management theorists have advocated that strategy needs to start with stakeholders expectations and use a modified balanced scorecard which includes all stakeholders.

Strategic management is a level of managerial activity under setting goals and over Tactics. Strategic management provides overall direction to the enterprise and is closely related to the field of Organization Studies. In the field of business administration it is useful to talk about "strategic alignment" between the organization and its environment or "strategic consistency." According to Arieu (2007), "there is strategic consistency when the actions of an organization are consistent with the expectations of management, and these in turn are with the market and the context." Strategic management includes not only the management team but can also include the Board of Directors and other stakeholders of the organization. It depends on the organisational structure.

“Strategic management is an ongoing process that evaluates and controls the business and the industries in which the company is involved; assesses its competitors and sets goals and strategies to meet all existing and potential competitors; and then reassesses each strategy annually or quarterly [I regularly] to determine how it has been implemented and whether it has succeeded or needs replacement by a new strategy to meet changed circumstances, new technology, new competitors, a new economic environment., or a new social, financial, or political environment.” (Lamb, 1984:ix)^[2]

See also

References

External links

The Journal of Business Strategies
Strategic Planning Society
The Association of Internal Management Consultants-The nationwide network of Strategic Management and Planning professionals

Pursuing New Venture Opportunities

Tutorials

Readings

A startup company or startup is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. The term became popular internationally during the dot-com bubble when a great number of dot-com companies were founded.

See also

References

^ "Cash-strapped entrepreneurs get creative", BBC News

^ See generally A Market for Ideas, ECONOMIST, Oct. 22, 2005, at 3, 3 (special insert)

^ For a discussion of such issues, see, e.g., Strategic management issues for starting an IP company, Szirom, S.Z., RAPID, HTF Res. Inc., USA (ISBN 0-7695-0465-5); What Business Owners Should Know About Patenting, Wall Street Journal, available at http://www.wsj.com/article/SB121820956214224545.html (Interview with James McDonough, Intellectual property attorney),

^ "High Tech Start Up, Revised and Updated: The Complete Handbook For Creating Successful New High Tech Companies", John L. Nesheim

^ A Legal Bridge Spanning 100 Years: From the Gold Mines of El Dorado to the 'Golden' Startups of Silicon Valley by Gregory Gromov 2010.

^ JAMES F. MCDONOUGH III (2007). "The Myth of the Patent Troll: An Alternative View of the Function of Patent Dealers in an Idea Economy". Emory Law Journal. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=959945. Retrieved 2007-07-27.

^ "Hong Kong in Honduras", The Economist, December 10th 2011.

External links

Evaluating New Venture Opportunities Conversations with Venture Capitalists

In finance, a buyout is an investment transaction by which the ownership equity of a company, or a majority share of the stock of the company is acquired. The acquirer thereby "buys out" control of the target company.

A buyout can take the form of a leveraged buyout, a venture capital buyout, or a management buyout. Where the company being bought out is a public company, a buyout is often called a "going private" transaction.

Franchising is the practice of using another firm's successful business model. The word 'franchise' is of Anglo-French derivation - from franc - meaning free, and is used both as a noun and as a (transitive) verb.^[1] For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid the need for investments and liability for a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business.

Thirty three countries, including the United States, China, and Australia, have laws that explicitly regulate franchising, with the majority of all other countries having laws which have a direct or indirect impact on franchising ^[2].

Overview
Obligations of the parties
Regulations
- Australia
- New Zealand
- Brazil
- China
- India
- Kazakhstan
- Europe
  - France
  - Italy
  - Norway
  - Russia
  - Spain
  - United Kingdom
- United States
Social franchises
Event franchising

See also

External links

International Franchise Association

A family business is a business in which one or more members of one or more families have a significant ownership interest and significant commitments toward the business’ overall well-being.

In some countries, many of the largest publicly listed firms are family-owned. A firm is said to be family-owned if a person is the controlling shareholder; that is, a person (rather than a state, corporation, management trust, or mutual fund) can garner enough shares to assure at least 20% of the voting rights and the highest percentage of voting rights in comparison to other shareholders.^[1]

See also

External links

UMass Family Business Centre: Treat Your Family Like a Family and Your Business Like a Business

Northeastern University Centre for Family Business

Family Business Advice Column

The New Venture Business Plan

Tutorials

Readings

A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

Business plans may also target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to assume a major change or when planning a new venture, a 3 to 5 year business plan is required, since investors will look for their annual return in that timeframe.^[1]

See also

Small Business Marketing

Tutorials

Readings

Business Marketing is the practice of individuals, or organizations, including commercial businesses, governments and institutions, facilitating the sale of their products or services to other companies or organizations that in turn resell them, use them as components in products or services they offer, or use them to support their operations. Also known as industrial marketing, business marketing is also called business-to-business marketing, or B2B marketing, for short. (Note that while marketing to government entities shares some of the same dynamics of organisational marketing, B2G Marketing is meaningfully different.)

External links

Internet marketing, also known as web marketing, online marketing, webadvertising, or e-marketing, is referred to as the marketing (generally promotion) of products or services over the Internet. marketing is used as an abbreviated form for Internet Marketing.

Internet marketing is considered to be broad in scope because it not only refers to marketing on the Internet, but also includes marketing done via e-mail and wireless media. Digital customer data and electronic customer relationship management (ECRM) systems are also often grouped together under internet marketing.^[1]

Internet marketing ties together the creative and technical aspects of the Internet, including design, development, advertising and sales.^[2] Internet marketing also refers to the placement of media along many different stages of the customer engagement cycle through search engine marketing (SEM), search engine optimization (SEO), banner ads on specific websites, email marketing, mobile advertising, and Web 2.0 strategies.

In 2008, The New York Times, working with comScore, published an initial estimate to quantify the user data collected by large Internet-based companies. Counting four types of interactions with company websites in addition to the hits from advertisements served from advertising networks, the authors found that the potential for collecting data was up to 2,500 times per user per month.^[3]

See also

References

Small Business Management

Tutorials

Readings

A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers.^[1] Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning.

The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage to mean a particular organization; the generalized usage to refer to a particular market sector, "the music business" and compound forms such as agribusiness; and the broadest meaning, which encompasses all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.

See also

Financial Management in the Entrepreneurial Firm

Tutorials

Readings

Managerial finance is the branch of finance that concerns itself with the managerial significance of finance techniques. It is focused on assessment rather than technique.

The difference between a managerial and a technical approach can be seen in the questions one might ask of annual reports. One concerned with technique would be primarily interested in measurement. They would ask: are moneys being assigned to the right categories? Were generally accepted accounting principles GAAP followed?

One concerned with management though would want to know what the figures mean.

1. They might compare the returns to other businesses in their industry and ask: are we performing better or worse than our peers? If so, what is the source of the problem? Do we have the same profit margins? If not why? Do we have the same expenses? Are we paying more for something than our peers?

2. They may look at changes in asset balances looking for red flags that indicate problems with bill collection or bad debt.

3. They will analyse working capital to anticipate future cash flow problems.

Managerial finance is an interdisciplinary approach that borrows from both managerial accounting and corporate finance.

Sound financial management creates value and organisational agility through the allocation of scarce resources amongst competing business opportunities. It is an aid to the implementation and monitoring of business strategies and helps achieve business objectives.

See also

External links

Mastering Financial Management, Clive Marsh, Financial Times Prentice Hall, ISBN 978-0-273-72454-4
MIT Open Courseware - 15.414 Financial Management, Summer 2003.

Gitman, Lawrence (2003), Principles of Managerial Finance, 10th edition, Addison-Wesley Publishing, 2003, ISBN 0-201-78479-3. [1]

Cash flow is the movement of money into or out of a business, project, or financial product. It is usually measured during a specified, finite period of time. Measurement of cash flow can be used for calculating other parameters that give information on a company's value and situation.

Cash flow can e.g. be used for calculating parameters:

1. to determine a project's rate of return or value. The time of cash flows into and out of projects are used as inputs in financial models such as internal rate of return and net present value.

2. to determine problems with a business's liquidity. Being profitable does not necessarily mean being liquid. A company can fail because of a shortage of cash even while profitable.

3. as an alternative measure of a business's profits when it is believed that accrual accounting concepts do not represent economic realities. For example, a company may be notionally profitable but generating little operational cash (as may be the case for a company that barters its products rather than selling for cash). In such a case, the company may be deriving additional operating cash by issuing shares or raising additional debt finance.

4. cash flow can be used to evaluate the 'quality' of income generated by accrual accounting. When net income is composed of large non-cash items it is considered low quality.

5. to evaluate the risks within a financial product, e.g. matching cash requirements, evaluating default risk, re-investment requirements, etc.

Cash flow is a generic term used differently depending on the context. It may be defined by users for their own purposes. It can refer to actual past flows or projected future flows. It can refer to the total of all flows involved or a subset of those flows. Subset terms include net cash flow, operating cash flow and free cash flow.