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Chapter 1

The Entrepreneurial Perspective

Summary

On the opposite end of the spectrum, entrepreneurs can take on lifestyle ventures and become serial entrepreneurs. An entrepreneur is someone who takes on an entrepreneurial venture to create something new that solves a problem; small business ownership and franchising are also entrepreneurial options. Establishing an entrepreneurial vision helps you describe what you want your venture to become in the future. Entrepreneurs can remain in a full-time job while pursuing their ideas on the side, in order to mitigate risk.

Key terms

entrepreneur: someone who identifies an idea that no one else has acted on or identified; small business ownership and franchising are also entrepreneurial options
entrepreneurial vision: idea of what an entrepreneur wants a venture to become, what it will look like, what the driving forces are, and what values and culture should surround it
lifestyle venture: business whose founders’ primary focus is the lifestyle they will attain through becoming entrepreneurs, rather than a primary interest in financial rewards
entrepreneurial venture: any business, organization, project, or operation of interest that includes a level of risk in acting on an opportunity that has not previously been established
serial entrepreneur: entrepreneur who becomes involved in starting multiple entrepreneurial ventures
harvest: point at which the venture is sold, at which time the investors receive a return on their investment
SMART goals: well-structured and defined goals that are specific, measurable, achievable, relevant, and timely
career entrepreneur: someone who takes on the daily management as the owner of the venture, accepting, and perhaps enjoying, the daily risks and rewards of managing and building the venture

Chapter 2

The Entrepreneurial Journey and Pathways

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Summary

The seven steps outlined in this section will provide you with a perspective of what you might encounter on your entrepreneurial venture The entrepreneurial process provides a flexible guideline for launching a venture with an individualized approach. For now, gaining a perspective on the entire process provides you with a background understanding of what an entrepreneurial venture involves, from ideation through creating the venture to harvesting the venture with… The key is an honest and introspective assessment of how you can make a journey that brings your desired outcomes and results.

Key terms

entrepreneurial journey: your exploration to discover if entrepreneurship is right for you
venture: startup company or organization that conducts business or is created to satisfy a need
entrepreneurial venture: any business, organization, project, or operation of interest that includes a level of risk in acting on an opportunity that has not previously been established
key: an honest and introspective assessment of how you can make a journey that brings your desired outcomes and results
entrepreneurial process: set of decisions or actions that can be outlined and followed as a guide to developing or adjusting a venture
business model: plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end…
creative destruction: theory developed by Joseph Schumpeter stating that entrepreneurial innovation is the disruptive force that creates and sustains economic growth, though in the process, it…
entrepreneurial spirit: describes a quality of those individuals who are productive self-starters focused on making changes happen

Chapter 3

The Ethical and Social Responsibilities of Entrepreneurs

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Summary

The first section of this chapter explores the relationship between entrepreneurship, ethics, social responsibility, and the law. Sometimes, making a mistake is only an ethical lapse; other times, the mistake also constitutes a violation of the law (e.g., the Equifax case discussed) Causes such as sustainability/environmental awareness are often important to an entrepreneur and their workforce. At times, ethical conduct and legal conduct may seem intertwined; in other circumstances, they are quite different.

Key terms

sustainability: practice of preserving resources and operating in a way that is ecologically responsible in the long term
mistake: only an ethical lapse; other times, the mistake also constitutes a violation of the law (e.g., the Equifax case discussed)
ethics: standards of behavior to which we hold ourselves in our personal and professional lives
integrity: adherence to a code of moral values implying trustworthiness and incorruptibility because there is unity between what we say and what we do
fairness: impartial, unbiased compliance with rules and standards of what is right, just, and equitable
anchoring strategies: in the ethical context, the process of making ethics a foundation (anchor) of your business so that decision makers act keeping in mind key ethical considerations
antitrust laws: prevent companies from abusing position or power in the market through exclusion or limitation of competitor access to the market
business ethics: conduct by which companies and their agents abide by the law and respect the rights of their stakeholders, particularly their customers, clients, employees, and the surrounding…

Chapter 4

Creativity, Innovation, and Invention

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Summary

This reinforces the idea that creative thinking is a practice, that it can be guided, and that sometimes a combination of open thinking and rule following is ideal for collaborative creativity. There are many practical approaches to being creative and developing innovations. Human-centered design begins with empathizing with the people experiencing a problem or pain point. Returning to empathy is essential in the human-centric design protocol.

Key terms

invention: truly novel product, service, or process that, though based on ideas and products that have come before, represents a leap, a creation truly novel and different
innovation: new idea, process, or product, or a change to an existing product or process
creativity: development of original ideas
empathy: human ability to feel what other humans are feeling, which in the context of creativity, innovation, and invention is essential to beginning a process of human-centric design
ideation: purposeful process of opening up one’s mind to new trains of thought that branch out in many directions from a stated purpose or problem
pain point: problem that people have with a product or service that might be addressed by creating a modified version that solves the problem
lateral thinking: free and open thinking in which established patterns of logical thought are purposefully ignored or even challenged

Chapter 5

Identifying Entrepreneurial Opportunity

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Summary

Entrepreneurial opportunity exists when consumer demand meets the feasibility of bringing the product or service to market. Schumpeter’s focus on economics led him to categorize potential opportunities based on supply, demand, or changes in how technology is used Use primary and secondary research to determine whether there is adequate demand, market structure and size, and the needed margins and resources to launch and sustain the enterprise. Joseph Schumpeter, an early scholar of entrepreneurship, identified creative destruction—when innovation is disruptive and creates potential entrepreneurial opportunities.

Key terms

entrepreneurial opportunity: point at which identifiable consumer demand meets the feasibility of satisfying the requested product or service and meets the following conditions: significant market demand…
creative destruction: theory developed by Joseph Schumpeter stating that entrepreneurial innovation is the disruptive force that creates and sustains economic growth, though in the process, it…
demand: need or desire for the outputs, the product or services
supply: amount of a product or service produced
secondary research: research that uses existing data
venture: currently worth pursuing
business model: plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end…
unique selling proposition: marketer’s rationale as to why a product or service is different/better than the competitor’s products

Chapter 6

Problem Solving and Need Recognition Techniques

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Summary

Problem-solving skills include critical thinking, communication, decisiveness, resourcefulness, business and industry awareness, and an ability to analyze data. There are various types of problem solvers, including self-regulating, theorist, and petitioner problem solvers The creative problem-solving process is a logical process. Problem solving involves more than making decisions.

Key terms

critical thinking: complex analysis of a problem or issue with the goal of solving the problem or making a decision
decisiveness: ability to make a quick, effective decision, not letting too much time go by in the process
petitioner problem solvers: problem solvers who see a problem and ask others for solution ideas
resourcefulness: ability to discover clever solutions to obstacles
self-regulating problem solvers: problem solvers who are autonomous and work on their own, without external influence; they have the ability to see a problem, immediately visualize a possible solution to the…
adaptive model: method of entrepreneurial problem solving that seeks solutions in ways that are tested and known to be effective
evaluation: lean problem-solving process phase in which behaviors are analyzed to assess success

Chapter 7

Telling Your Entrepreneurial Story and Pitching the Idea

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Summary

The most basic formula for telling the story of your innovation is the problem-solution narrative. Vision and mission statements are crucial to planning a venture. Vision statements are broader than mission statements. Entrepreneurs are problem solvers, but they need to strategize to battle competitors and to weather the risks inherent in starting a new venture.

Key terms

pitch: formal presentation in which you ask for something and that is delivered (usually) to potential investors in a startup
problem-solution narrative: brief story of a sentence or two that states a problem affecting many people and offering a solution that is innovative, unique, insightful, or all of these
mission statement: statement of an organization’s reason for being that defines its primary long-term goal, explains what the venture will do, what value it will provide to the end customer, and…
story of your innovation: the problem-solution narrative
noncompete agreement: formal agreement that the person signing the document will not work for another organization that is a direct competitor of their current employer during employment and usually…
pitch competition: competition that may have cash prizes or mentorship opportunities for winners; you are expected to present your business idea in the form of a presentation, usually with a pitch…
user interface (UI): what a customer sees when they use your product; having a variant of a UI is not necessarily grounds for establishing a patent, but having unique design in the broader sense may…
corporate narrative: story about how a successful company grew from something small into something broad and powerful, serving thousands or even millions of people; it may have marketing purposes…

Chapter 8

Entrepreneurial Marketing and Sales

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Summary

One way to think of the marketing mix is to break it into the 7Ps: product, promotion, price, place, people, physical environment, and process. Entrepreneurial marketing is a set of unconventional practices that can help start-ups and younger firms survive in competitive markets. Marketing refers to those activities companies use to identify consumers and convert them into buyers. Entrepreneurs often don’t have deep enough resources to use all of these marketing tools, so they need to be strategic in which ones they choose and how they execute them

Key terms

marketing: umbrella term given to those activities that companies use to identify consumers and convert them into buyers
entrepreneurial marketing: set of unconventional practices that can help start-ups and younger firms survive in competitive markets
physical environment: where a service takes place or a product is manufactured
marketing mix: basic set of possible strategies and approaches that marketers use to reach their target market
process: chain of procedures and/or activities required to provide the product to the customer
price: value that must be exchanged in order for a customer to receive a product or service
place: channels or locations—physical or digital—where products can be found by customers
target market: specific group of consumers for which a company seeks to provide a good or service

Chapter 9

Entrepreneurial Finance and Accounting

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Summary

Equity financing provides the entrepreneur with maximum flexibility: Dividends are not required and can be made when cash flow is strong enough to meet all obligations of the firm. Entrepreneurial financing is concerned with understanding the funding requirements for a new business and what sources of funds are available. Debt financing restricts financial flexibility but can be cheaper under some circumstances. Financing is not a one-size-fits-all procedure

Key terms

accounting: system of recording and classifying a company’s financial transactions and summarizing and communicating those transactions in the form of financial statements
equity financing: funds provided in exchange for a share of ownership in a business
financing: raising money to fund the startup and operation of a business
debt financing: borrowing funds that must be repaid, usually with interest
equity: owner’s interest in the assets of the business
funds: financial resources for acquiring assets
angel investor: wealthy, private individual seeking investment options with a greater potential return than is generally available with traditional publicly traded stocks
financing activities: section of the statement of cash flows that shows where new infusions of cash are coming from

Chapter 10

Launch for Growth to Success

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Summary

The lean startup method provides an opportunity for companies to approach management in a measurable and provable way. The lean startup method is a tested way for new and old companies to stay in business and operate, even when there is a lot of uncertainty A startup requires time to clarify its identity, market, product, and business model through the build-measure-learn loop, which requires businesses to describe or build a prototype of a product, ask for feedback from… Customer feedback allows the companies to make iterations and pivots that are necessary to get back on the right track.

Key terms

lean startup method: a tested way for new and old companies to stay in business and operate, even when there is a lot of uncertainty
build-measure-learn loop: step-by-step approach on how to maneuver a startup, how to change course if necessary, how to persevere, and how to accelerate the expansion of a business
lean startup: methodology entrepreneurs use this method to help them innovate by continuously testing their products and getting feedback from customers in real time
iterations: small changes to the current version of a product to make it better fit consumer needs
lean plan: brief business plan shown to potential investors and employees that is a fast and effective way to set, manage, and evaluate goals and strategies in a business
pivoting: crucial change done to test a hypothesis regarding the basic product, its growth potential, and business model; if something is not working, then a change or a “pivot” needs to…
innovation accounting: assesses whether the changes made to the product are creating the desired results
business failure: ending a business due to the lack of goal attainment, which can include low levels of revenue and profit, or not meeting investors’ expectations

Chapter 11

Business Model and Plan

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Summary

The lean model canvas and social business model canvas are derivations of the original business model canvas. More recent theories suggest that disruptive innovations are disruptive because they disturb the underlying business model of the companies being disrupted The business model canvas addresses customer segments, customer relationships, channels (of distribution), revenue streams, value propositions, key partners, key activities, key resources, and cost structure. Business models and business plans are tools involved in the strategic process of charting a path for your entrepreneurial venture.

Key terms

business model: plan for how venture will be funded; how the venture creates value for its stakeholders, including customers; how the venture’s offerings are made and distributed to the end…
business model canvas: developed by Osterwalder and Pigneur, used to develop a business model for a venture, including nine blocks that are mapped out to address customer segments, customer…
business plan: formal document that typically describes the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and…
disruptive innovation: process that significantly impacts the market by making a product or service more affordable and/or accessible often by smaller companies in an industry
lean model canvas: developed by Ash Maurya as a derivation of the original business model canvas; this canvas differs by addressing unfair advantages, problems, solutions, and key metrics rather…
social business model canvas: modification of the business model canvas, designed for social entrepreneurship venues; new areas address impact measures around social impacts and its measurement, surplus…
value proposition: summary describing the benefits (value) customers can expect from a particular product or service
innovation: new idea, process, or product, or a change to an existing product or process

Chapter 12

Building Networks and Foundations

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Summary

Entrepreneurial networking is interacting with other people who have a common interest that eventually leads to the exchange of goods and services for payment. You must be comfortable approaching, talking to, and working with other individuals in order to build the circle of associates, colleagues, and professionals that you will need to start and operate your business. Likewise, you must be willing to offer your expert knowledge and professional skills to others. A good networker supports others in the community through sharing information and passing along personal introductions to expand everyone’s networks

Key terms

networking: process of establishing and maintaining bilateral relationship with other people to exchange information, ideas, products or services, and money
capital expense: major purchase of a functional asset that is expected to last longer than three years or that still has financial value after being fully depreciated
hybrid group: group of individuals who have a loose and flexible set of criteria for membership and function within a very broad set of guidelines; certain criteria may be required of regular…
line of credit (LOC): agreement between a bank and a depositor in which the bank makes available a maximum amount of money the depositor can borrow at any time during the term of the loan; the…
production time: amount of time that a machine is actually producing products that are to be sold; also called up time
down time: time when production is not occurring due to repair, restocking inventory, or unscheduled work
creditworthiness: lender’s assessment of how reliable a company is in repaying a debt
ergonomics: study of how work is performed

Chapter 13

Business Structure Options: Legal, Tax, and Risk Issues

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Summary

This is primarily a tax decision, with C corporations being taxed as corporations, and S corporations being taxed as partnerships. The second important decision to make is whether you are going to be a for-profit or not-for-profit business. Choices include corporation, LLC, partnership, and sole proprietorship This decision is closely related to the business’s purpose and is not necessarily controlled by how much revenue you think you might have but rather by who is going to “own” the entity and what it does with the profit…

Key terms

business structure: legal organization of a business; also called entity selection
C corporation: corporation taxed the corporate level, and then again on the owners’ personal income tax returns if corporate income is distributed to the shareholders as dividends
sole proprietorship: business entity that is owned and managed by one individual that has very little formal structure and no mandatory filing/registration with the state
for-profit business: business structure designed to create profits that are distributed to the owners
second important decision to make: whether you are going to be a for-profit or not-for-profit business
partnership: business entity formed by two or more individuals, or partners, each of whom contributes something such as capital, equipment, or skills
S corporation: “pass-through” entity, also known as a small corporation, where shareholders report and claim the business’s profits as their own and pay personal income taxes on it

Chapter 14

Fundamentals of Resource Planning

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Summary

Intangible resources cannot be seen, touched, or felt. They include intellectual property such as designs, formulas, art, written work, brands, and inventions that can be protected by patents, trademarks, and copyrights Determining which resources a venture needs is essential to its success. Tangible resources can be seen, touched, and felt.

Key terms

trademark: registration that provides the owner the ability to use a name, symbol, jingle, or character in conjunction with a specific product or service, and prevents others from using…
copyright: grants the creator of a work the exclusive right to reproduce the work, typically for a specified period of time
intangible resources: assets that cannot be seen, touched, or felt, such as intellectual property, patents, designs, and processes
tangible resources: assets that have a physical form as they can be seen, touched, and felt
venture needs: essential to its success
quota: specific number of units allowed into a country; sometimes quotas are limited to one source, such as one country, and sometimes the limit is placed on aggregate quantity…
sociocultural factors: changes in how society is moving and the direction of that movement as it relates to a customer base and potential new markets
tariffs: taxes or duties that are added to imported goods from another nation

Chapter 15

Next Steps

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Summary

The company culture should be defined, and a code of conduct developed. Early agreement that the success of the venture is the primary focus can help to work through these difficult decisions Before launching a venture, the entrepreneurial team should ensure its members agree on the vision and then develop a founder’s agreement. The team should identify all operational tasks needed to launch the venture and their associated time requirements and dependencies.

Key terms

code of conduct: formal statement that provides guidance on how ethical conduct is demonstrated
company culture: shared beliefs, values and assumptions held by people regarding how to behave or conduct themselves within the context of fitting into an organization
success of the venture: the primary focus can help to work through these difficult decisions
Delphi method: group decision-making process that includes a diverse group of people who are located at different locations and willing to respond to a series of questionnaires to assist in…
escalation of commitment: tendency to continue with a predetermined action based on the past efforts and contributions to the project rather than an analysis of the current realities that disclose a new…
fail-safe point: identified point that triggers the entrepreneur to consider what actions are needed to bring the venture back to a healthy position and whether this action is reasonable and…
noncompete agreement: formal agreement that the person signing the document will not work for another organization that is a direct competitor of their current employer during employment and usually…
planning fallacy: creation of a plan that is too optimistic and not aligned with conservative assumptions