New Venture Creation Entrepreneurship for the 21st Century
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ContentsChapter 1 The Global Entrepreneurial Revolution for a Flatter World (2)Chapter 2 The Entrepreneurial Mind: Crafting a Personal Entrepreneurial Strategy (2)Chapter 3 The Entrepreneurial Process (3)Chapter 4 Clean Commerce: Seeing Opportunity through a Sustainability Lens (3)Chapter 5 The Opportunity: Creating, Shaping, Recognizing, Seizing (4)Chapter 6 Screening Venture Opportunities (5)Chapter 7 Opportunities for Social Entrepreneurship (5)Chapter 8 The Business Plan (6)Chapter 9 The Entrepreneurial Leader and the Team (6)Chapter 10 Ethical Decision Making and the Entrepreneur (7)Chapter 11 Resource Requirements (7)Chapter 12 Franchising (8)Chapter 13 Entrepreneurial Finance (8)Chapter 14 Obtaining Venture and Growth Capital (9)Chapter 15 The Deal: Valuation, Structure, and Negotiation (9)Chapter 16 Obtaining Debt Capital (10)Chapter 17 Leading Rapid Growth, Crises, and Recovery (10)Chapter 18 The Family as Entrepreneur (11)Chapter 19 the Harvest and Beyond (12)Chapter 1The Global Entrepreneurial Revolution for a Flatter World▪Entrepreneurship is a truly global phenomenon, and coupled with the Internet, is flattening and democratizing the world.▪Entrepreneurs are the creators, the innovators, and the leaders who give back to society as philanthropists, directors, and trustees, and who, more than any others, change how people live, work, learn, play, and lead.▪Entrepreneurs create new technologies, products, processes, and services that become the next wave of new industries, and these in turn drive the economy.▪Entrepreneurs create value with high-potential, high-growth companies, which are the job creation engines of the U.S. economy.▪Venture capital provides the fuel for high-potential, high-growth companies.▪America and the world are at the dawn of a new age of equity creation as evidenced by a 10- to 30-fold increase in our capital markets in just 20 years.▪Entrepreneurs are realizing the value they have created; more than 95 precent of the wealth America has today has been created since 1980.▪North America's 3.1 million millionaires are mostly self-made entrepreneurs.▪In America, the poor get richer as a result of the entrepreneurial process.▪Building an entrepreneurial society for the 21st century and beyond is the highest priority for the new and global e-generation.Chapter 2The Entrepreneurial Mind: Crafting a Personal Entrepreneurial Strategy▪Entrepreneurs are men and women of all sizes, ages, shapes, religions, colours, and backgrounds. There is no single profile or psychological template.▪Successful entrepreneurs share seven common themes that describe their attitudes and ways of thinking and acting.▪Rather than being inborn, the behaviours inherent in these seven attributes can be nurtured, learned, and encouraged, which successful entrepreneurs model for themselves and those with whom they work.▪Entrepreneurs love competition and actually avoid risks when they can, preferring carefully calculated risks.▪Entrepreneurship can be learned; it requires an apprenticeship学徒.▪Most entrepreneurs gain the apprenticeship over 10 years or more after the age of 21 and acquire networks, skills, and the ability to recognize business patterns.▪The entrepreneurial mind-set can benefit large, established company’s today just as much as smaller firms.▪Many myths and realities about entrepreneurship provide insights for aspiring entrepreneurs.▪ A word of caution: IQ tests, SATs, GMATs, LSATs, and others do not measure some of the most important entrepreneurial abilities and aptitudes.▪Most successful entrepreneurs have had a personal strategy to help them achieve their dreams and goals, both implicitly and explicitly.▪The principal task for the entrepreneur is to determine what kind of entrepreneur he or she wants to become based on his or her attitudes, behaviours, management competencies, experience, and so forth.▪Self-assessment is the hardest thing for entrepreneurs to do; but if you don't do it, you will really get into trouble. If you don't do it, who will?Chapter 3The Entrepreneurial Process▪We began to demystify entrepreneurship by examining its classic start-up definition and a broader, holistic way of thinking, reasoning, and acting that is opportunity obsessed and leadership balanced.▪Entrepreneurship has many metaphors and poses many paradoxes.▪Getting the odds in your favour is the entrepreneur's perpetual永久challenge, and the smaller the business, the poorer are the odds of survival.▪Thinking big enough can improve the odds significantly. Higher-potential ventures are sought by successful entrepreneurs, venture capitalists, and private investors.▪The Timmons Model is at the heart of spotting and building the higher-potential venture and understanding its three driving forces: opportunity, the team, and resources. The concept of fit and balance is crucial.▪Recent research on CEOs of fast-growth ventures nationwide adds new validity to the model.Chapter 4Clean Commerce: Seeing Opportunity through a Sustainability Lens▪Some of the most fertile丰厚opportunities lie in the areas of greatest tension. If you can see them and act on them, you will differentiate your company and set the industry standard to best suit your venture's capabilities.▪The five strategic facets of looking through a sustainability lens are weak ties, systems thinking, thinking like a molecule, value-added networks, and radical incrementalism.▪Employing green chemistry techniques can not only reduce process costs and the risk of production and product liability, but can generate new products and open new markets.▪Green chemistry places human and ecological health at the heart of profitable product design and manufacturing. It uses the creativity of nature's biological processes to create molecules, materials, and processes that are safe and high-performing.▪Consistent with the Timmons Model emphasis on opportunity and the resources a visionary entrepreneurial team brings to bear; today many entrepreneurial leaders are looking through sustainability lens and creating new competitive market spaces.▪The entrepreneur who reads these trends and gets ahead of them can be ready when the market begins to shift—and indeed can help shift the market just by offering safe alternatives.▪Because it is becoming increasingly difficult to manufacture different qualities of goods for diverse regulatory regimes制度, it is best to meet the highest global standard—not only to simplify supply chains but to avoid being caught selling "substandard" or even contaminated products in one country and "clean" products in another.▪Although old-school business leaders may be inclined to fight against sustainability measures, entrepreneurs will instead spend their time coming up with new processes and products ahead of such regulations—and by doing so will ultimately lead the market.▪Entrepreneurial opportunities exist today and are growing worldwide as creative business leaders adapt and evolve in response to more complex social, economic, and environmental pressures.Chapter 5The Opportunity: Creating, Shaping, Recognizing, Seizing▪Ideas are a dime a dozen多如牛毛. Perhaps one out of a hundred becomes a truly great business; and one in 10 to 15 becomes a higher-potential business. The complex transformation of an idea into a true opportunity is akin to a caterpillar becoming a butterfly就像一只毛毛虫变成蝴蝶.▪High-potential opportunities invariably solve an important problem, want, or need that someone is willing to pay for now. In renowned venture capitalist Arthur Rock's words, "I look for ideas that will change the way people live and work."▪There are decided patterns in superior opportunities, and recognizing these patterns is an entrepreneurial skill aspiring entrepreneurs need to develop.▪Rapid changes and disruptions in technology, regulation, information flows, and the like cause opportunity creation. The journey from idea to high-potential opportunity requires navigating an undulating, constantly changing, three-dimensional relief map while inventing the vehicle and road map along the way.▪Some of the best opportunities actually require some of the least amounts of capital, especially via the Internet.▪The best opportunities often don't start out that way. They are crafted, shaped, molded, and reinvented in real time and market space. Fit with the entrepreneur and resources, the timing, and the balance of risk and reward govern the ultimate potential.▪The highest-potential ventures are found in high growth markets, with high gross margins, and robust free cash flow characteristics, because their underlying products or services add significantly greater value to the customer, compared with the next best alternatives.▪Trial and error, or learning by doing alone, is not enough for developing breakthrough ventures, which require experience, creativity, and conceptualizing.Chapter 6Screening Venture OpportunitiesChapter 7Opportunities for Social Entrepreneurship▪The primary difference between traditional entrepreneurship and social entrepreneurship is the intended mission.▪There are two types of enterprising non-profits. The first type utilizes earned-income activities, while the second has a focus on growth and economic sustainability.▪The primary mission of both social ventures and enterprising non-profits is social regardless of market impact. The hybrid model equally emphasizes social and economic goals.▪Social opportunities are driven not only by markets but also by mission and social need.▪With social entrepreneurship, the team in the Timmons Model is expanded to include stakeholders external to the venture.▪As more social ventures emerge, access to capital becomes a greater challenge.▪Social venture capitalists seek to invest in for-profit ventures for financial return as well as for social and environmental return.Chapter 8The Business Plan▪The business plan is more of a process and work in progress than an end in itself.▪Given today's pace of change in all areas affecting an enterprise, the plan is obsolete the moment it emerges from the printer.▪The business plan is a blueprint and flight plan for a journey that converts ideas into opportunities, articulates and manages risks and rewards, and articulates the likely flight and timing for a venture.▪The numbers in a business plan don't matter, but the economics of the business model and value proposition matter enormously.▪The plan is not the business; some of the most successful ventures were launched without a formal business plan or with one that would be considered weak or flawed.▪Preparing and presenting the plan to prospective investors is one of the best ways for the team to have a trial marriage, to learn about the venture strategy, and to determine who can add the greatest value.▪The dehydrated business plan can be a valuable shortcut in the process of creating, shaping, and molding an idea into a business.Chapter 9The Entrepreneurial Leader and the Team▪The growing enterprise requires that the founder and team develop competencies as entrepreneurial leaders.▪Founders who succeed in growing their firms beyond $10 million in sales learn to adapt and grow quickly themselves as leaders, or they do not survive.▪Founders of rapidly growing firms defy the conventional wisdom that entrepreneurs cannot manage growing beyond the start-up.▪ A strong team is usually the difference between a great success and a marginal or failed company.▪Ventures go through stages of growth from start-up, through rapid growth, to maturity, to decline and renewal.▪Core philosophies, values, and attitudes—particularly sharing the wealth and ownership with those who create it—are key to team building.▪The fit concept is central to anticipating management gaps and building the team.▪The faster the rate of growth, the more difficult and challenging are the issues, and the more flexible, adaptive, and quick-learning the organization must be.▪Numerous pitfalls await the entrepreneur in team building and need to be avoided.▪Entrepreneurs create and invent new and unique approaches to organizing and leading teams.▪As ventures grow, the core competencies need to be covered by the team. Chapter 10 Ethical Decision Making and the Entrepreneur▪The vast majority of CEOs, investors, and entrepreneurs believe that a high ethical standard is the single most important factor in long-term success.▪Historically, ethical stereotypes of businesspeople ranged widely, and today the old perceptions have given way to a more aware and accepting notion of the messy work of ethical decisions.▪Ethical issues and discussion are now a part of curricula at many of the top business school programs in the United States and abroad.▪Entrepreneurs can rarely, if ever, finish a day without facing at least one or two ethical issues.▪To make effective and ethical decisions you must understand yourself and be able to identify the scope and effects of your self-interest.▪Numerous ethical dilemmas challenge entrepreneur’s at the most crucial moments of survival, like a precarious walk on a tightrope.Chapter 11 Resource Requirements▪Successful entrepreneurs use ingenious bootstrapping approaches to marshal and minimize resources.▪Control of resources rather than ownership of resources is the key to a "less is more"resource strategy.▪Entrepreneurs are also creative in identifying other people's money and resources, thereby spreading and sharing the risks.▪Selecting outside advisors, directors, and other professionals boils down to one key criterion: Do they add value through their know-how and networks?▪Today access to financial and nonfinancial resources is greater than ever before and is increasing because of the Internet.▪Building a brain trust of the right mentors, advisors, and coaches is one of the entrepreneur's most valuable "secret weapons."Chapter 12 FranchisingFranchising is an inherently entrepreneurial endeavour. In this chapter we argue that opportunity, scale, and growth are at the heart of the franchise experience. The success of franchising is demonstrated by the fact that it accounts for more than one-third of all U.S. retailing. Equally important is the demonstrated performance of the top franchise companies, which consistently outperform the Standard & Poor's 500. Franchising shares profits, risk, and strategic implementation between the franchisor and the franchisee. Unique aspects of franchising as entrepreneurship are the wide spectrum of opportunity that exists and the matching of scale to appetite for a broad spectrum of entrepreneurs. Two tools have been provided in this chapter to help the entrepreneur. For those interested in creating a franchise, the franchise relationship model articulates the dynamic construction of the franchisor franchisee alliance. For the prospective franchisee, the franchise risk profile helps the budding entrepreneur assess the risk–return scenario for any given franchise opportunity.Chapter 13Entrepreneurial Finance▪Cash is king and queen. Happiness is a positive cash flow. More cash is preferred to less cash. Cash sooner is preferred to cash later. Less risky cash is preferred to more risky cash.▪Financial know-how, issues, and analysis are often the entrepreneurs' Achilles' heels.▪Entrepreneurial finance is the art and science of quantifying value creation, slicing the value pie, and managing and covering financial risk.▪Determining capital requirements, crafting financial and fund-raising strategies, and managing and orchestrating the financial process are critical to new venture success.▪Harvest strategies are as important to the entrepreneurial process as value creation itself. Value that is unrealized may have no value.Chapter 14 Obtaining Venture and Growth Capital▪Appreciating the capital markets as a food chain looking for companies to invest in is key to understanding motivations and requirements.▪Entrepreneurs have to determine the need for outside investors, whether they want outside investors, and if so whom.▪America's unique capital markets include a wide array of private investors, from "angels" to venture capitalists.▪The search for capital can be very time-consuming, and whom you obtain money from is more important than how much.▪It is said that the only thing that is harder to get from a venture capitalist than a "yes"is a "no."▪Fortunately for entrepreneurs, the modest revival of the venture capital industry has raised the valuations and the sources available. Entrepreneurs who know what and whom to look for—and look out for—increase their odds for success.Chapter 15 The Deal: Valuation, Structure, and Negotiation▪There is rarely a "fair fight" between users (entrepreneurs) and suppliers of capital (investors). Entrepreneurs need to be prepared by learning how the capital markets determine valuation risk.▪Several valuation methods are used to arrive at value for a company, the venture capital method being the most common.▪Investors prefer to stage their capital commitments, thereby managing and containing the risk and preserving their options to invest further or cease.▪Numerous potential conflicts exist between users and suppliers of capital, and these require appreciation and managing. The economic consequences can be worth millions to founders.▪Successful deals are characterized by careful thought and sensitive balance among a range of important issues.▪Deal structure can make or break an otherwise sound venture, and the devil is always in the details.▪Negotiating the deal is both art and science, and also can make or break the relationship.▪The entrepreneur encounters numerous strategic, legal, and other "sand traps" during the fund-raising cycle and needs awareness and skill in coping with them.Chapter 16 Obtaining Debt Capital▪Business cycles impact lending cycles, with more or less restrictive behaviour.▪Start-ups are generally not candidates for bank credit, but numerous sources of debt capital are available once profitability and a decent balance sheet are established.▪Managing and orchestrating the banking relationship before and after the loan decision is key task is for entrepreneurs.▪Knowing the key steps in obtaining a loan and selecting a banker—not a bank—who can add value can improve your odds.▪Loan covenants can have a profound impact on how you can and cannot run the business. The devil is in the details of the loan agreement.▪For the vast majority of small companies, leverage works only during the most favourable economic booms of credit availability. Leverage is a disaster if business turns sour.▪The IRS also places a time bomb for personal disaster with every entrepreneur who borrows money: If your bank debt is forgiven in a restructuring, it becomes taxable income to the borrower!▪When the bank says no to a loan request, several key questions need to be addressed in an effort to reverse the decision; or you need to seek sources of credit other than banks.Chapter 17 Leading Rapid Growth, Crises, and Recovery▪The demands of rapid growth have led to the invention of new organizational and leadership paradigms by entrepreneurs.▪The entrepreneurial organization today is flatter, faster, and more flexible and responsive, and copes readily with ambiguity and change. It is the opposite of the hierarchy, layers of management, and more-is-better syndrome prevalent in brontosaurus capitalism.▪Entrepreneurs in high-growth firms distinguish themselves with leading entrepreneurial practices in marketing, finance, management, and planning.▪As high-potential firms "grow up big" they experience stages (Wonder, Blunder, Thunder, Plunder, and Asunder), each with its own special challenges and crises, which are compounded the faster the growth.▪Numerous signals of impending trouble—strategic issues, poor planning and financial controls, and running out of cash—invariably point to a core cause: top management.▪Crises don't develop overnight. Both quantitative and qualitative signals can predict patterns and actions that could lead to trouble. Often it takes 18 months to five years before a company is sick enough to trigger a turnaround intervention.▪Turnaround specialists begin with a diagnosis of the numbers—cash, strategic market issues, and management—and develop a turnaround plan.▪Establishing a culture and climate conducive to entrepreneurship is a core task for the venture.▪ A chain of greatness characterizes some breakthrough approaches to entrepreneurial leadership.Chapter 18 The Family as Entrepreneur▪We began by demonstrating the significant contributions families make to the economy and entrepreneurial process. It is often overlooked that the majority of the businesses worldwide are controlled and managed by families, including many of the very largest businesses that we normally do not associate with family.▪Families play a diverse number of formal and informal roles in the entrepreneurial process. We described them as (a) the family-influenced start-up, (b) family corporate venturing, (c) family corporate renewal, (d) family private cash, and (e) family investment funds.▪Family enterprising was defined as the proactive and continuous search for opportunistic growth when expansion is neither pressing nor particularly obvious. The outcome of family enterprising is transgenerational entrepreneurship and wealth creation through balance in the Timmons Model.▪The mind-set continuum assesses the family's risk profile, and those interested in enterprising move from an operational to a financial investor strategy. The methodscontinuum assesses the organizational behaviour of leaders and organizations and requires a move from managerial to entrepreneurial strategies for enterprising.▪There are six dimensions for family enterprising that were described as antecedents from the entrepreneurship literature: leadership, relationship, vision, strategy, governance, and performance. The chapter presented key questions for each dimension to assist families in becoming more enterprising▪We defined the familiness of an organization as the unique bundle of resources and capabilities that result from the interaction of the family and individual family members with the business entities. Families can have positive and negative family influence, which we described as an f+ or f−.Chapter 19 the Harvest and Beyond▪Entrepreneurs thrive on the challenges and satisfactions of the game: It is a journey, not a destination.▪First and foremost, successful entrepreneurs strive to build a great company: wealth follows that process.▪Harvest options mean more than simply selling the company, and these options are an important part of the entrepreneur's know-how.▪Entrepreneurs know that to perpetuate the system for future generations, they must give back to their communities and invest time and capital in the next entrepreneurial generation.。