Done with blood, swears and tears.
Chapter 1 : Introduction to
Entrepreneurship
What is Entrepeneurship
Academic
Definition
(Stevenson &
Jarillo)
Alternative
View
Explanation of
What
Entrepreneurs
Do
Process by which individuals pursue
opportunities without regard to
resources they currently control
Art of turning an idea into a business.
Assemble and then integrate all the
resources needed – the money, the
people, the business model, the
strategy – to transform an invention or
an idea into a viable business
Corporate Entrepreneurship
- conceptualization of entrepreneurship at the
firm level.
- All firms fall along a conceptual continuum
that ranges from highly conservative to highly
entrepreneurial.
- Position of firm = entrepreneurial intensity
Entrepreneurial Firms Conservative Firms
 Proactive
 Take wait and
see posture
 Innovative
 Less innovative
 Risk tasking
 Risk averse
Why Become and Entrepeneur
 To be their own boss
 To pursue their own ideas
 Financial rewards
Money
If successful, earn a lot
Flexibility
No one can tell you what to do. Can
start and stop working whenever. Can
choose what to work and where to do.
Control
Things under company need you to
approve. Make all decisions.
Pick your
Can hire people who we want for
own team
better atmosphere and productivity.
Legacy
Change the world and leave footprints.
Characteristics of Successful Entreprneurs
Passion for
Stems from the entrepreneur’s belief
Business
that the business will positively
influence people’s lives
Product &
Stems from the fact that most
Customer
entrepreneurs are craftspeople
Focus
Tenacity
Doing something new comes
Despite
naturally with high risk of failure.
Failure
One has ability to persevere through
setbacks and failures.
Execution
Ability to fashion a solid business
Intelligence
idea into a viable business
Common Myths About Entrepreneurs
- Consensus agrees no one is born to be
entrepreneur, it comes from potential.
- Based on environment, life experiences,
personal choices.
They Are
Born, Not
Made
they
are
made
They Are
Gamblers
- Moderate risk takers (more accurate)
- Cause of the myths :
1) They typically have jobs that are less
structured, and so they face a more
uncertain set of possibilities
2) They have a strong need to achieve and
set challenging goals
They are - It is naïve to think that entrepreneurs don’t
Motivated seek financial rewards, but money is rarely
Primarily the reason entrepreneurs start new firms.
by Money - Money can be distracting from your actual
goals.
They
- It is fairly spread out over age ranges.
Should Be - Experience, maturity, solid reputation,
Young & track record of success : strong in investor
Energetic eyes
- More favour for older entrepreneurs.
They Love - vast majority of them do not attract public
Spotlight attention
- Not many entrepreneurs we can list except
Jeff Bezos of Amazon.com, Mark Zuckerberg
of Facebook, Larry Page and Sergey Brin of
Google or maybe Elon Musk of Tesla and
SpaceX.
Types of Start Up Firms
Provide owner(s) similar level
income to what they would be
able to earn in conventional job.
Lifestyle
Provide owner(s) opportunity to
pursue particular lifestyle and
make a living off it.
Entrepreneurial Bring new products or services to
market by creating and seizing
opportunities regardless of
resources they currently control.
Salary
Substitute
Changing Demographics of Entrepreneurs
Women
Entrepreneurs
Minority
Entrepreneurs
Senior
Entrepreneurs
Millennial
Entrepreneurs
- Men are most likely to start a
business, but women entrepreneurs is
increasing.
- By American Express OPEN, as of 2016,
there were 11.3 million women-owned
businesses in the United States.
- Number of women-owned businesses
has grown at a rate five times faster
- There are eight million minorityowned firms in the United States (38%
increase since 2007)
- Factor : organizations that promotes
and provides assistance.
- Examples include the Latin Business
Association, the Black Business
Association, and The National Center
for American Indian Enterprise
Development.
- Many people in the 60 and older age
range have substantial business
experience, financial resources, and
excellent vigor and health
- Only 3.6% of business in USA owned
by 30 years old below.
- Obstacles : lack of finances, lack of
desire, fear of failure, and lack of
knowledge.
- To encourage : Universities offering
courses on entrepreneurship.
- Organizations : 3-Day Startup, Dorm
Room Fund, CEO (Collegiate
Entrepreneurs’ Organization), Startup
Weekend, and VentureWell.
Economic Impact of Entrepreneurial Firms
- Small innovative firms are 16 times
Innovation
more productive than larger innovative
firms in terms of patents per employee
- Create a substantial number of net new
jobs in the United States
Job Creation
- Firms with 500 or fewer employees
created two million of the roughly three
million private sector jobs in 2014
Entrepreneurial Firms Impact on Society and Larger Firms
- New products and services make our
On Society
lives easier, enhance our productivity at
work, improve our health, and entertain
us.
On Larger
- help larger firms become more efficient
Firms
and effective
Steps in Entrepreneurial Process
Step 1 :
Deciding to
become an
entrepreneur
Step 2 :
Developing
successful
business ideas

Introduction to
Entrepreneurship.

Recognizing opportunities and
generating ideas
Feasibility analysis
Developing an effective business
model
Industry and competitor analysis
Writing a business plan
Preparing proper ethical and
legal foundation
Assessing new venture, its
financial strength and viability
Building new venture team
Getting financing or funding
Unique marketing issues
Importance of intellectual
property
Preparing for and evaluating
challenges of growth
Strategies for firm growth
Franchising





Step 3 :
Moving from
idea to

entrepreneurial
firm


Step 4 :

Managing and 
growing the
firm



Chapter 2 : Recognizing
Opportunities & Generating Ideas
Opportunity : favourable set of circumstances
that creates a need for a new product,
service, or business
Essential Qualities of Opportunity
1. Attractive
2. Timely
3. Durable
4. Anchored in product, service, business that
creates or adds value for its buyer or end user
First Approach : Observing Trends
- trends create opportunities
- be aware of changes of trends
Economic
- help determine areas that are ripe for new
Forces
start-ups and areas that start-ups should
avoid
- A weak economy favours start-ups that
help consumers save money
Social Forces - alter how people and businesses behave
and set their priorities
- Examples :
1) Aging of the population
2) The increasing diversity of the population
3) Millennials entering the workforce
4) Growth in the use of mobile devices
5) An increasing focus on health and
wellness
Technological Example :
Advances
1) Computer industry
2) Internet
3) Biotechnology
4) Digital photography
Rokit Boost, a high-end mobile accessories
company that makes smartphone cases,
headphones, portable USB device chargers,
and Bluetooth speakers. (thanks to
smartphones)
Political and - Provide basis for opportunities.
Regulatory
- Engenders new business and product
Changes
opportunities. For example, global political
instability and the threat of terrorism have
resulted in many firms becoming more
security-conscious
Second Approach : Solving a Problem
- involves noticing a problem and finding a
way to solve it
- can be pinpointed through observing trends
and through simple means (intuition,
serendipity, or chance)
Third Approach : Finding Gaps in The
Marketplace
- A gap in the marketplace is often created
when a product or service is needed by a
specific group of people but doesn’t represent
a large enough market to be of interest to
mainstream retailers or manufacturers.
Personal Characteristics of Entrepreneur That
Makes Them Better At Recognizing
Opportunities
1) Prior Industry Experience
- an individual may spot a market niche that is
underserved.
- individual builds a network of social contacts
who provide insights that lead to recognizing
new opportunities
- people outside an industry can sometimes
enter it with a new set of eyes, and as a result
innovate in ways that people with prior
experience might find difficult
2) Cognitive Factors
- Entrepreneurial alertness : the ability to
notice things without engaging in deliberate
search
3) Social Networks
- People who build a substantial network of
social and professional contacts will be
exposed to more opportunities and ideas than
people with sparse networks
4) Creativity
- process of generating a novel or useful idea
Techniques for Generating Ideas
1) Brainstorming
- process of generating several ideas about a
specific topic
- brainstorming “session” typically involves a
group of people, and should be targeted to a
specific topic
- Rules : no criticism, encouraged freewheeling
and leap-frogging, session should move quickly
2) Focus Group
- involve a group of people who are familiar
with a topic, are brought together to respond
to questions, and who are able to shed light on
an issue through the give-and-take nature of
group discussions
- further refinement of the idea
3) Library and Internet Research
- talk to a reference librarian, who can point
out useful resources, such as industry-specific
magazines, trade journals, and industry reports
- browsing through several issues of a trade
journal or an industry report on a topic can
spark new ideas
- Examples of Reports : BizMiner, ProQuest,
IBISWorld, Mintel, LexisNexis Academic
- Internet Research : simply typing “new
business ideas” into a search engine will
produce links to newspaper and magazine
articles about the “hottest” and “latest” new
business ideas. Targeted searches are useful
too.
4) Other techniques
- Customary Advisory Boards
- Day-In-The-Life Research
improve on the idea based on the
feedback
2) Online tools
- Surveys : Survey Monkey, Google
forms
- Q&A sites : Quora, Bright Journey
- Google trends
- Google AdWords : direct users to
landing pages to see how many
people request additional
information
3) Library, internet, gumshoe
research
- Library : provides archival data
- Internet : to find useful reports
and articles
- Gumshoe : detective or an
investigator that scrounges around
for information or clues wherever
they can be found
Chapter 3 : Industry & Competitor
Analysis
Feasibility Analysis (FA)
- process of determining whether a business
idea is viable
- preliminary evaluation of a business idea,
conducted for the purpose of determining
whether the idea is worth pursuing
When to Conduct Feasibility Analysis
1) Timing
- early in thinking through the prospects for a
new business, before resources are spent.
2) Components of Proper Conduct
Forms of Feasibility Analysis
Product or Service FA
- assessment of the overall appeal of the product
or service being proposed
- be sure that the product or service is what
prospective customers want
 Questions :
1) Does it make sense? Is it
reasonable? Is it something
consumers will get excited about?
2) Does it take advantage of an
environmental trend, solve a
problem, or take advantage of a
gap in the marketplace?
3) Is this a good time to introduce
the product or service to the
Desirability market?
4) Are there any fatal flaws in the
product or service’s basic design or
concept?
 Concept statement to develop
- one-page description of a product
or service idea that is distributed to
people who are asked to provide
feedback on the potential of the
idea
- provide sense of viability and how
to tweak and strengthen the idea
Demand
1) Talking face-to-face with
potential customers
- to gauge customer reaction to the
general concept of what you want
to sell, and then tweak, revise, and
Industry or Target Market FA
- assessment of the overall appeal of the
industry and the target market for the
proposed business
Industry
Characteristics :
Attractiveness  young rather than old
 early than late in life
cycle
 fragmented
 growing
 selling must have
products or services
 not crowded
 high operating margins
 not highly dependent on
low price raw materials
Target Market - to find a market that’s large
Attractiveness enough for the proposed
business but is yet small
enough to avoid attracting
larger competitors
f- A
-
f
product /
(
service
industry / target
market
organizational
financial
Financial FA
Organizational FA
- to determine whether a proposed business has
sufficient management expertise, organizational
competence, and resources to successfully launch
a business
- focus on non-financial resources
Management - ability, of its management team
Prowess
to satisfy itself that management
has the requisite passion and
expertise to launch the venture
- factors : passion of
entrepreneur, understanding of
founding team on markets
Resource
- to an assessment of whether an
Sufficiency
entrepreneur has sufficient
resources to launch the proposed
venture
- to test resource sufficiency, a
firm should list the 6 to 12 most
critical nonfinancial resources
that will be needed
- Examples :
 Affordable office space
 Lab, manufacturing
spaces
 Availability of
manufacturers and
service providers
 Key management
employees
 Support personnel
 Ability to obtain
intellectual property
protection
 Ability to for favourable
business partnerships
- final component of FA
- preliminary financial assessment is sufficient
Total Start-Up Cash - total cash needed to prepare
Needed
the business to make its first
sale
- lists all the anticipated capital
purchases and operating
expenses needed to generate
the first $1 in revenues
- to determine if the proposed
venture is realistic given the
total start-up cash
Financial
- comparing to similar, already
Performance of
established businesses
Similar Businesses - reports available, for free or
require a fee, offering detailed
industry trend analysis and
reports on thousands of
individual firms
- simple observational research
Overall Financial
 Steady and rapid growth in
Attractiveness of
sales during the first 5 to 7
Proposed Venture
years in a clearly defined
market niche.
 High percentage of
recurring revenue—
meaning that once a firm
wins a client, the client will
provide recurring sources
of revenue.
 Ability to forecast income
and expenses with a
reasonable degree of
certainty.
 Internally generated funds
to finance and sustain
growth.
 Availability of an exit
opportunity for investors
to convert equity to cash
Feasibility Analysis Template
Industry Analysis
- business research that focuses on the
potential of an industry
- helps a firm determine if the target market it
identified during feasibility analysis is
favorable for a new firm.
Three Key Questions
1) Is the industry accessible
2) Does the industry contain markets that are
ripe for innovation or are underserved?
3) Are there positions in the industry that will
avoid some of the negative attributes of the
industry as a whole?



Rivalry Among Existing Firms

Bargaining Power of Suppliers

Bargaining Power of Buyers
Techniques to Assess Industry Attractiveness
Study Environmental & Business Trends
Environmental trends
- shift in favor or against the industry
Business trends
- part of the core nature of an industry
Five Competitive Forces Model
- a framework for understanding the structure of
an industry
- determine industry profitability
- determine the average rate of return for the
firms in an industry
 Threat of Substitutes
- price that consumers are willing to pay for a
product depends in part on the availability of
substitute products
- firms offering amenities to reduce likelihood
of customers switch to substitute product due
to increasing price
 Threat of New Entrants
- Erecting barriers to enter : condition that
creates a disincentive for a new firm to enter
an industry
Industry Types & Opportunities They Offer
Emerging
- standard operating procedures
have yet to be developed.
O : first-mover advantage
Fragmented - a large number of firms of
approximately equal size
O : Consolidation
Mature
- experiencing slow or no increase
in demand
O : Process innovation and aftersale service innovation
Declining
- experiencing a reduction in
demand
O : Leadership, establishing a niche
market, and pursuing a cost
reduction strategy
Global
- experiencing significant
international sales
O : Multidomestic and global
strategies
Type of Competitors
Direct
Offer identical or similar products
or services.
Indirect
Offer close substitute products or
services.
Future
Not yet direct or indirect
competitors, could be any time.
Chapter 4 : Developing an Effective
Business Model
Business Model : firm’s plan or recipe on how
it creates, delivers, and captures value for its
stakeholders.
- proper time to develop BM :
 following the feasibility analysis stage
 prior to fleshing out the operational
details
General Categories of BM
Standard
Disruptive
- existing plans or recipes
- rare, do not fit the profile
firms can use to determine
of a standard business
how they will create, deliver,
model
and capture value
- impactful enough that
they disrupt or change the
way business is conducted
in an industry
Barringer/Ireland Business Model Template
- successful business model has a common set
of attributes
- laid out in a visual framework or template,
easy to see the individual parts and their
interrelationships
1) Core Strategy
- how the firm plans to compete relative to its
competitors
>> Business Mission
- why it exists and what its business model is
supposed to accomplish
- can continually refer back to as it makes
important decisions in other elements of its
business model
>> Basis of Differentiation
- articulate the points that differentiate its
product or service from competitors.
- refer to benefits rather than features
>> Target Market
- a place within a larger market segment that
represents a narrow group of customers with
similar interests. Should be explicit.
>> Product or Market Scope
- products and markets on which it will
concentrate
- Start : narrow scope
- Grows and secure financial : pursue more
opportunities
2) Resources
- inputs a firm uses to produce, sell, distribute,
and service a product or service
>> Core Competencies
- specific factor or capability that supports a
firm’s business model and sets it apart from
rivals.
- technical know-how, an efficient process, a
trusting relationship with customers,
expertise in product design
>> Key Assets
- assets that a firm owns that enable its
business model to work
Physical
physical space, equipment, vehicles,
distribution networks
Intellectual patents, trademarks, copyrights, and
trade secrets, along with a
company’s brand and its reputation
Financial cash, lines of credit, and
commitments from investors
Human
company’s founder or founders, its
key employees, and its advisors
3) Financials
- how it earns money (very important)
>> Revenue Streams : ways in which it makes
money
>> Cost Structure : most important costs
incurred to support its business model
>> Financing or Funding : Capital costs, onetime expenses (website, training), provisions
of ramp-up expenses
4) Operations
- integral to a firm’s overall business model
and represent the day-to-day heartbeat of a
firm
>> Product or Service Production
- how a firm’s products and/or services are
produced.
>> Channels
- how it delivers its product or service to its
customers
- direct, through intermediaries (such as
distributors and wholesalers), or via a
combination of both
>> Key Partners
- rely on key partners to perform important
roles (for start-ups) due to insufficient
resources
1) Business Model Canvas (BMC)
Customer
Segments
Value
Proposition
Identify a segment of customers who have a
clearly defined need.
Collection of products and/or services the
business will offer to meet the needs of the
customers.
Customer
How customers want to interact with the
Relationship business, if customers want intensive
personal service or prefer limited
engagement or even an automated
interaction.
Channels
Communication channels (promotion) and
distribution channels (product placement).
Key
Build a basic checklist of what needs to be
Activities
done to open the business and what
activities are necessary to ensure its longterm success
Key
Identify the human, capital, and intellectual
Resources resources
Key
Key suppliers, key outsourcing partners,
Partners
investors, industry partners, advisers
Revenue
One-time sale, ongoing fees, advertising, or
Streams
some other sources of cash into the
business
Cost
Identify fixed and variable costs
Structure
2) Test the Value Proposition
Ask customers :
– Do we really understand the customer
problem the business model is trying to
address?
– Do these customers care enough about this
problem to spend their hard-earned money
on our product?
– Do these customers care enough about our
product to help us by telling others through
word-ofmouth?
3) Business Prototyping
- on a small scale before committing serious
resources to launch a business that might not
work
- Lean start-up : a process of rapidly
developing simple prototypes to test key
assumptions by engaging real customers,
simplest version of product.
4) Pivots
- process of making changes and adjustments
in the business model on the basis of the
feedback a company receives from customers
– Product pivot : changes to the product to
enable it to better meet the needs and wants
of the customer.
– Customer pivot : changes in the target
customer description.
– Revenue model pivot : changes in the way
the firm generates revenue
Chapter 5 : Writing A Business Plan
Business Plan : a written narrative, typically
25 to 35 pages long, that describes what a
new business intends to accomplish and how
it intends to accomplish it
Guideline for Writing a Business Plan
- a business plan should follow a conventional
Structure
structure
of Business - investors are busy people and want a plan
Plan
where they can easily find critical information
Software
- avoid a boilerplate plan that looks as though
Packages
it came from a “canned” source
- along with facts and figures, a business plan
Sense of
needs to project a sense of anticipation and
Excitement excitement about the possibilities that
surround a new venture
Content of - clear and concise information on all the
Business
important aspects of the proposed venture
Plan
- long enough to provide sufficient
information yet short enough to maintain
reader interest.
- 25-35 pages
Type of
Business
Plan
Recognizing
Elements of
Plan May
Change
- New insights invariably emerge when an
entrepreneur or a team of entrepreneurs
immerse themselves in writing the plan and
start getting feedback from others
Outline of Business Plan
Section 1 : Executive Summary
- short overview of entire business plan
- shouldn’t exceed two single-spaced pages
- even though the executive summary appears
at the beginning of the business plan, it
should be written last
- Key Insights : if executive summary is
convincing, investors will ask copy of full
business plan
Section 2 : Industry Analysis
- describing the industry the business will
enter in terms of its size, growth rate, and
sales projections
 Industry size, growth rate, and sales
projections.
 Industry structure.
 Nature of participants.
 Key success factors.
 Industry trends.
 Long-term prospects.
- Key insights : good grasp of the industry,
determine promising areas and points of
vulnerability
Section 3: Company Description
- general description of the company
 Company description.
 Company history.
 Mission statement.
 Products and services.
 Current status.
 Legal status and ownership.
 Key partnerships (if any).
- Key insights : demonstrates that we know
how to translate idea into business
Section 4 : Market Analysis
- it breaks the industry into segments and
zeroes in on the specific segment (or target
market) to which the firm will try to appeal
 Market segmentation and target market
selection.
 Buyer behavior.
 Competitor analysis.
 Estimate of the firm’s annual sales and
market share
- Key insights : The more a start-up knows
about the consumers in its target market, the
more it can tailor its products or services
appropriately
Section 5 : Economics of Business
- addresses the basic logic of how profits are
earned in the business and how many units of
a business’s profits must be sold for the
business to “break even” and then start
earning a profit.
 Revenue drivers and profit margins.
 Fixed and variable costs.
 Operating leverage and its implications.
 Start-up costs.
 Break-even chart and calculations.
- Key insights : Two companies in the same
industry may make profits in different ways.
One may be a high-margin, low-volume
business, while the other may be a lowmargin, high-volume business.
Section 6 : Marketing Plan
- how the business will market and sell its
product or service
 Overall marketing strategy.
 Product, price, promotions, and
distribution.
 Sales process (or cycle).
 Sales tactics.
- Key insights : articulating its marketing
strategy, positioning, and points of
differentiation, and then talk about how these
overall aspects of the plan will be supported
by price, promotional mix, and distribution
strategy
Section 7 : Product (or Service) Design and
Development Plan
- focuses on the status of your development
efforts
 Development status and tasks.
 Challenges and risks.
 Projected development costs.
 Proprietary issues (patents, trademarks,
copyrights, licenses, brand names)
- Key insights : a very important section for
businesses developing a completely new
product or service
Section 8 : Operations Plan
- Outlines how your business will be run and
how your product or service will be produced
- describe it in terms of “back stage” (unseen
to the customer) and “front stage” (seen by
the customer) activities
 General approach to operations.
 Business location.
 Facilities and equipment
- Key insights : careful balance between
adequately describing this topic and providing
too much detail. Keep it short and crisp.
Section 9 : Management Team & Company
Stricture
- consists of the founder or founders and a
handful of key management personnel.
 Management team.
 Board of directors (if you have one).
 Board of advisors (if you have one).
 Company structure.
- Key insights : Many investors (after executive
summary) go directly to the management
team section to assess the strength of the
people starting the firm.
Section 10 : Overall Schedule
- shows the major events required to launch
the business
 Incorporating the venture.  Completion of
prototypes.  Rental of facilities.  Obtaining
critical financing.  Starting production. 
Obtaining the first sale
- Key insights : helpful in convincing investors
Section 11 : Financial Projections
- presents a firm’s pro forma (or projected)
financial projections
 Sources and uses of funds statement.
 Assumptions sheet.
 Pro forma income statements.
 Pro forma balance sheets.
 Pro forma cash flows.
 Ratio analysis.
Presenting Business Plan to Investors
1) Oral Presentation
- follow directions (follow time allocated)
- smooth, well-rehearsed
- slides sharp and not cluttered
2) Questions and Feedback to Expect from
Investors
- be prepared for any kind of queries
Chapter 6 : Preparing for Proper
Ethical and Legal Foundation
Initial Ethical & Legal Issues facing a New
Firm
1) Establishing a strong ethical organizational
culture
 Lead by example
 Establish code of conducts or ethics
- a formal statement of an
organization’s values on certain
ethical and social issues
 Implement Ethics Training Programme
- teach business ethics to help
employees deal with ethical dilemmas
and improve their overall ethical
conduct.
2) Choosing an attorney
 Select an attorney early
- attorney should be familiar with
start-up issues
 Intellectual property
3) Drafting founders agreement
 Founders agreement
- a written document that deals with
issues such as the relative split of the
equity among the founders of the
firm, how individual founders will be
compensated for the cash or the
“sweat equity” they put into the firm,
and how long the founders will have
to remain with the firm for their
shares to fully vest
4) Avoiding legal disputes
 Avoid all contractual obligations
 Avoid undercapitalization
 Get everything in writing
 Set standards
5) Obtaining business licenses and permits
 Business Licenses and Permits
- may need local, state, and/or federal
licenses and permits to operate
 Federal Licenses and Permits
- business that sells or provide
(alcohol, firearms, etc)
6) Choosing a form of business organization
Ameen Khwaja : When starting a business,
one of the most important is the type of legal
structure you select. It impacts how much
payment for taxes, affect amount of
paperwork required, personal liability faced
and ability to raise money.
Factors in Pre-Business Formation Analysis
- choose proper attorney and accountant that
aligns with the goals to accomplish business
(and choosing best form of organization)
1) Ownership and Control
- level and degree of control over organization
- if don’t want assistance and value own
leaderiship : Sole Proprietorship
- if seek passive role and solely want to
invest, others do the job : Incorporate
Business
2) Liability and Financial Risk
- willingness to expose to liabilities
- if high risk to failure (due to costs, accidents
and regulations) to prevent personal asserts
from being seized : C Corporation, S
Corporation, Limited Liability Companies
3) Business Formation Costs
- costs for legal fees and costs for complex
recordkeeping
- an inexpensive and easy-to-set-up entity
with minimal annual filing and formation
requirements
- Best : Sole proprietorship, Partnership
4) Taxation
- pay Social Security and Medicare taxes
- cant claim life or health insurance income
deductions (owner problem)
5) Capitalization
- expectations, how to get money for her
business to operate and grow
- Corporation : easier time to raise capital due
to shares
- ask accountant and banker on : how much
capital necessary, how to raise it, and how to
budget capital for business operations
6) Transferability & Liquidity
Security : an investment interest in the
business entity that can be exchanged for
value (stocks, bonds, mutual funds)
Truth in securities law = Securities Act of
1993 : requires investors receive financial and
other information concerning securities prior
to public sale, prohibits deceit,
misrepresentations, frauds in securities sales
Company that sell securities must :
1) Register them and provide a description of
companys business
2) A description of security to be offered for
sale
3) Provide info about companys management
4) Offer financial statements certified by
independent accountants
>> To cut costs to apply to law above,
entrepreneurs choose sole proprietorship and
partnership to avoid spending resources
necessary to comply with it.
Sole
Proprietorship
(Enterprise)
Partnership
Limited
Liability
Company (Sdn
Bhd)
Public Limited
Company
(Berhad)
- Owned by a single individual owner
under the Business Registration Act 1956,
company and business registered under
private name (the owner of business)
- Registered at Suruhanjaya Syarikat
Malaysia (SSM)
- 1 hour to register
- Capital is small, and can be raised by the
owner’s assets, borrowed from friends,
family, and banks that offer microfinance
- Grocery store, shoe shop
- Similar to a sole proprietorship, except
it has more than one (1) owners but no
more than 20 owners
- According to Partnership Act 1961
- Capital is small, and can be raised by
the owner’s assets, borrowed from
friends, family, and banks that offer
microfinance
- profit(or losses) of the company can be
distributed (shared) according to the
amount of capital, labour and under
agreement from the members of the
partnership
- Accounting firms, law firms
- registered under the Company Act
1965 but recently, this act has been
superseded by a new act, Company Act
2016
- ownership of a limited liability
company is between 2-50 people
- does not involve personal assets
(limited liabilities)
- if company bankrupts, company assets
lost
- listed in Bursa Malaysia
- Shares can be bought (TM, Padini,
Aeon, Petron, Nestle, etc)
- owned by a minimum of two owners,
up to an unlimited number of owners
- does not involve personal assets
- capital from the sales of shares to the
public, and the minimum amount is 100
units and its price depends on the price
of the units on that particular time
- formed to increase members
- must have at least 50 active members,
and if either one of the 50 active members
become inactive, the cooperation cannot
run
Cooperation - established according to Cooperation Act
1993 where members can profit through
dividends if the cooperation profits
- vote for a Board Member in an Annual
Grand Meeting
- register under Suruhanjaya Koperasi
Malaysia (KPM)
Directory of Business to Find Out Information
On Business
1. Direktori Perniagaan Malaysia, a search
engine of businesses by the name of the
company/services as well as location.
2. GiatMARA’s Entrepreneur Directory, a list
of entrepreneurs under GiatMARA
3. PUNB’s Entrepreneur’s Directory, a list of
entrepreneurs under Perbadanan Usahawan
National Berhad (PUNB)
4. Malaysian Entrepreneurship Directory
(MED)
Intellectual Property : Is any product of
human intellect that is intangible but has
value in the marketplace (called “intellectual”
property because it is the product of human
imagination, creativity, and inventiveness)
Importance : Traditionally, businesses have
thought of their physical assets, such as land,
buildings, and equipment as the most
important, however, a company’s intellectual
assets are the most important
Common Mistakes Firms Make In Protecting
Their Intellectual Property
1) Not properly identifying all of their
intellectual property
2) Not fully recognizing the value of their
intellectual property
3) Not using their intellectual property as part
of their overall plan for success.
4) Not taking sufficient steps to protect it
4 Key Forms on Intellectual Property
Copyrights
- a grant from the federal government conferring
the rights to exclude others from making, selling,
or using an invention for the term of the patent
 Articles of manufacture
 Machines
 Processes
 Compositions
 Improvements on or new uses for
existing inventions
- the exclusive right to perform, display,
copy, or distribute an artistic work
- extends to derivatives, or works based
on one or more existing works
- © : informs or reminds others that the
work can be used only with permission
and possibly payment
- exists for 70 years after the creator’s
death
Patents
Exclusion from Copyright Protections
- laws cannot protect ideas
- any word, name, symbol, or device used
to identify the source or origin of products
or services and to distinguish those
product or services from others.
- Words, Numbers and letters, Designs and
logos, Sounds, Fragrances, Shapes, Colors,
Trade dress (protected under Trademark
Law)
Trademarks
Copyrights
- any formula, pattern, physical device, idea,
process, or other information that provides
the owner of the information with a
competitive advantage in the marketplace.
- marketing plans, product formulas, financial
forecasts, employee rosters, logs of sales calls,
and similar types of proprietary information
- The federal Economic Espionage Act, passed
in 1996, criminalizes the theft of trade secrets
What Qualifies for Trade Secret Protection
• Is not known outside the company.
• Is known only inside the company on a
“need-to-know” basis.
• Is safeguarded by stringent efforts to keep
the information confidential.
• Is valuable and provides the company a
competitive advantage.
• Was developed at great cost, time, and
effort.
• Cannot be easily duplicated, reverse
engineered, or discovered
Chapter 7 : Financial Management
Financial Management : raising money and
managing a company’s finances in a way that
achieves the highest rate of return
Alternatives for Raising Money For a New
Venture
1) Personal Funds
- Sweat equity : value of the time and effort
that a founder puts into a new venture
- Friends and Family : second source of funds
for many new ventures
- Bootstrapping : finding ways to avoid need
for external financing or funding through
creativity, ingenuity, thriftiness, cost cutting,
etc.
2) Debt Financing
Preparing an Elevator Speech
- a brief, carefully constructed statement that
outlines the merits of a business opportunity
3) Equity Capital
 Business Angels
- Individuals who invest their personal
capital directly in start-up
- prototypical business angel : about
50 years old, high income, wealth,
well educated, succeeded as an
entrepreneur, invests in companies
that are in the region where he or she
lives
- motivated by the process of
mentoring new start-up
 Venture Capital
- Money that is invested by venture
capital firms in start-ups and small
businesses with exceptional growth
potential
- comes in later than angels
 Initial Public Offerings
- company’s first sale of stock to the
public
- An IPO : important milestone for a
firm. Typically, a firm is not able to go
public until it has demonstrated that
it is viable and has a bright future
4) Creative Sources
• Crowdfunding : practice of funding a project,
new venture by raising monetary contributions
from a large number of people typically via the
Internet.
• Leasing : a written agreement in which the
owner of a piece of property allows an
individual or business to use the property for a
specified period of time in exchange for
payments.
• Grant Programs : MATRADE, TEKUN
Financing Products etc
• Strategic Partners : partnerships are formed
to share the costs of product or service
development, to gain access to particular
resources, or to facilitate speed to market.
Process of Financial Management
1) Importance of Financial Statements
- To assess whether its financial objectives are
being met, firms rely heavily on analysis of
financial statements
- a written report that quantitatively describes
a firm’s financial health
 Historical
- Reflect past performance and
usually prepared on a quarterly and
annual basis
- Available publicly for publicly traded
firms
Ratio Analysis : to interpret or make sense of
a firm’s historical financial statements
- Comparing a firm’s financial results to
industry norms help determine how it stacks
up against its competitors and if there are any
financial “red flags” requiring attention
2) Forecasts
- an estimate of a firm’s future income and
expenses, based on past performance, its
current circumstances, and its future plans
- predictions of a firm’s future sales, expenses,
income, and capital expenditures.
- provide the basis for its pro forma financial
statements
- helps a firm create accurate budgets, build
financial plans, and manage its finances in a
proactive rather than a reactive manner
 Pro Forma
- Are projections for future periods
based on forecasts and are typically
completed for two to three years in
the future
- planning tools
- Pro forma : similar to its historical financial
statements except that they look forward
rather than track the past, helps a firm rethink
its strategies and make adjustments if
necessary, necessary if a firm is seeking
funding or financing
3) Budgets
- itemized forecasts of a company’s income,
expenses, and capital needs and are also an
important tool for financial planning and
control
Chapter 8 : Building a New-Venture
Team
New-Venture Team : group of founders, key
employees, and advisors that move a new
venture from an idea to a fully functioning
firm (more involved than paid employees)
# High propensity to fail due to liability of
newness (people involved can’t adjust fast
enough to their new roles and because the
firm lacks a track record of success)
Element of New-Venture Team
1. Key employees
2. Board of directors
3. Other professionals
4. Leaders & investors
5. Board of advisors
6. Management team
Common Mistakes in New-Venture Team
1. Unqualified friends or family members in
management positions
2. Assume previous success in other industries
automatically translates to venture’s industry
3. “One person team” philosoph = one person
(small group of people) is wearing all hats
with no plans to bolster the team
4. Top managers without sharing ownership
5. Not disclosing, talking dismissively of
management team skill or competency gaps
6. Vague, unclear plans for filling the skill or
competency gaps
Advantages
1. More talent, resources,
and ideas to a new
venture.
2. Broader, deeper
network of social and
professional contacts.
3. Psychological support
of cofounders can offer
one another.
Disadvantages
1. May not get along.
2. Conflicts arise when
needs to establish a formal
structure and designate a
CEO.
3. May duplicate rather
than complement one
another.
4. Disagreements (work
habits, tolerance of risks,
level of passion, ideas how
to run business, etc)
Key Elements to Successful Founding Team
1. Teams that have worked together before
2. Heterogeneous – diverse in abilities,
experiences, area of expertise
3. Not too big – prevent miscommunications,
conflicts (set 2-3 founders)




Preferred Attributes of Entrepreneurs
Higher education
Prior entrepreneurial experience
- likely to avoid costly mistakes
Relevant industry experience
- likely have better professional networks
- applicable marketing & management
skills
Broad social and professional network
- access to additional know-how, capital,
customer referrals
Source of Labor
Someone who works for & at business’s
location, utilizing the business’s tools and
equipment, according to the business’s
policies and procedures
Intern
An apprentice or trainee for the purpose
of obtaining practical experience
Freelancer In business for themselves, works on
(contractor) their own time & tools and equipment,
and performs services for a number of
different clients
Virtual
Provides administrative, technical,
assistant
creative assistance to clients remotely
from a home office
Full or Parttime
employee
Board of Directors (BOD)
- A panel of individuals who are elected by a
corporation’s shareholders to oversee the
management of the firm
- Inside director : person who is also an officer
of the firm.
- Outside director : person who is not
employed by the firm.
- Formal responsibilities : appoint officers,
declare dividends, oversee affairs
- Meet 3-4 times a year
- Paid in company stock or on a voluntary
basis
Growth Strategies
Board of Advisors (BOA)
- a panel of experts who are asked by a firm’s
managers to provide counsel and advice on an
ongoing basis
- no legal responsibility for the firm and gives
nonbinding advice
- established for general purposes or can be
set up to address a specific issue or need
- people more willing to serve them because
requires less time and there is no potential
legal liability involved
- provide guidance and lend credibility to the
firm
Leaders & Investors
- Help new firms by providing guidance and
lending advice
- Natural role of providing financial oversight
- Help identify and recruit key management
personnel.
- Provide insight into the industry and markets
in which the venture intends to participate.
- Help the venture fine-tune its business
model.
- Serve as a sounding board for new ideas.
- Provide introductions to additional sources
of capital.
- Recruit customers
Other Professionals
- attorneys, accountants, and business
consultants
- business consultants : individual who gives
professional or expert advice, 2 types (paid
consultants and consultants who are available
for free or at a reduced rate through a
nonprofit or governmental agency)
Internal
Efforts taken within the
firm itself (new product
development, other
product-related
strategies, international
expansion)
External
Rely on establishing
relationships with third
parties (mergers,
acquisitions, strategic
alliances, joint ventures,
licensing, and franchising)
Internal Growth Strategies
1. New Product Development
- creation and sale of new products (or
services) as a means of increasing firm
revenues
- a competitive necessity
- Key to effective new product development
1. Find a need and fill it
2. Develop to add value
3. Get quality and pricing right
4. Focus on specific target market
5. Conduct ongoing feasibility analysis
- 5 reasons new products fail
1. Overestimate potential market
2. Product too expensive
3. Poorly designed
4. No different from competition’s
5. Cost to develop is too high
2. Additional Internal Product-Related
Strategies
3. International Expansion
- International new ventures are businesses
tha seek to derive significant competitive
advantage by using their resources to sell
products or services in multiple countries
- complex form of growth
Foreign-Market Entry Strategies
Exporting
Producing a product at home and
shipping it to a foreign market
Joint ventures Involves the establishment of a firm
that is jointly owned by two or more
otherwise independent firms
Licensing
An arrangement whereby a firm with
the proprietary rights to a product
grants permission to another firm to
manufacture that product for specified
royalties or other payments
Franchising
An agreement between a franchisor (a
company like McDonald’s Inc., an
established business and brand) and a
franchisee (the owner of one or more
McDonald’s restaurants)
Turnkey
A contractor from one country builds a
project
facility in another country, trains the
personnel that will operate the facility,
and turns over the keys to the project
when it is completed and ready to
operate
Wholly owned A company that has made the decision
subsidiary
to manufacture a product in a foreign
country and establish a permanent
presence
External Growth Strategies
1. Merges & Acquisitions
- A merger : pooling of interests to combine
two or more firms into one
- An acquisition : outright purchase of one
firm by another
- Purpose of acquisitions :
1. Expanding product line
2. Gain access to distribution channels
3. Achieve competitive economies of
scale
2.Licensing
- granting of permission by one company to
another company to use a specific form of its
intellectual property (patent, trademark,
copyright) under clearly defined conditions
3. Strategic Alliances and Joint Ventures
- driven largely by a growing awareness that
firms can’t “go it alone” and succeed
- Strategic alliances
 partnership between two or more
firms developed to achieve a specific
goal
 boost a firm’s rate of patenting,
product innovation and foreign sales
 informal and do not involve the
creation of a new entity
 can be tricky
- Join ventures
 entity created when two or more
firms pool a portion of their resources
to create a separate, jointly owned
organization
 to gain access to a foreign market
Chapter 9 : Unique Marketing
Issues
Selecting a Target market & Positioning
Strategy
1. Market Segmentation
- studying a firm’s industry and determining
the different target markets in that industry
– Geography (city, state, country).
– Demographic variables (age, gender, family
size).
– Psychographic variables (personality,
lifestyle, values).
– Behavioral variables (benefits sought, brand
loyalty).
– Product type (varies by product)
- Ex :
2. Selecting a Target Market
- sufficiently attractive and the firm must have
the capability to serve it.
3. Establishing a Unique Position
- “Position” : part of a market that the firm is
claiming as its own
- by drawing attention to two or three of the
product’s attributes
- develop a product attribute map (illustrates
a firm’s positioning strategy relative to its
rivals)
- where additional resources could have the
greatest impact and give you objective
information about the likely consequences of
a move
- Tagline : to reinforce the position they have
staked out in their market, or a phrase that is
used consistently in a company’s literature
and thus becomes associated with the
company
Branding
1. Establishing a Brand
- Brand : set of attributes (positive, negative)
that people associate with a company
- positive : trustworthy, innovative,
dependable, or easy to deal with
- negative : cheap, unreliable, arrogant, or
difficult to deal with
- must create value where customers willing
to pay
- name, logo, website deisgn, page, accounts,
letterhead (parts of brand)
2. Brand Management
- monitor the integrity of their brands through
a program
3. Power of Strong Brand
– Over 50% of consumers say that a known
and trusted brand is a reason to buy a
product.
– A successful brand can increase the market
value of a company by 50% to 75%
Product
Marketing Mix
- good or service a firm offers to its target
market
- it adds value in the mind of its target
customers
- amount of money consumers pay to buy
a product
Price
- Cost-based : adding a markup
percentage to a product’s cost
- Value-based : estimating what
consumers are willing to pay for a product
- Promotion : activities the firm takes to
communicate the merits of its product to
its target market
- Advertising : making people aware of a
product or service in hopes of persuading
them to buy it
Promotion
- AdWords : Allows advertisers to buy
keywords on the Google home page
- AdSense : Allows advertisers to buy ads
that will be shown on other Web sites
instead of Google’s home page
- Public Relations : Efforts to establish and
maintain a company’s image with the
public (not paid directly)
- Social media
- Blogging : amiliarize people with a
business and help build an emotional bond
between a business and its customers
- Facebook, Twitter, IG, Pinterest : build a
community around their products and
services.
- to sell its products directly to consumers
or through intermediaries (such as
wholesalers and retailers)
Place
(Distribution) - Sales Process : steps to identify
prospects and close sales, formal sales
process involves a number of identifiable
steps
- Importance of Process : to have a well
thought-out approach to prospecting
customers and closing sales
Tripwire : practice of offering leads a low-cost
product with the intention of selling them
more expensive products later (Ex : free
delivery)
Lead magnet : free item or service that is
given away for the purpose of gathering
contact details (Ex : free samples)
Return path : anything that brings the
customer or prospect back more frequently
(e-mail, offers, social media, loyalty programs)
Keywords that triggers emotions
Background
Prop
Lighting
Basics of Photography
- minimal
- white or plain colour to get better
contrast of subject and easier cropping
- use light background for dark
coloured subject and vice versa
- to alleviate subject to prevent
drowning it
- if background has pattern, make it
repetitive but not dense
- can be blurred to enhance subject
- choose props that helps contrast
- to create dramatic effect
- shadow : creates contrast, premium
look
- the hardest
- taken around 2pm
- soft light : safe to use on all type of
pictures, it focuses on overall picture,
colour, omits elements (glare, shadow)
to make it easy for the eyes
- to make picture more compelling to
viewer
- subject placed off-center, uses onethird or two-third of whole picture
space
- place subject on any grid lines or
point of meeting between grid lines
Composition –
Rule of Thirds
Always Be Closing (ABC)
First Call Resolution (FCR)
SEO (validation process) : method to optimize
website to ensure high ranking positioning &
listing on search engine (Google, Yahoo, etc),
objective is to be ranked the highest on the
search engine listing
Chapter 11 : Franchising
Franchising : a firm that already has a
successful product or service (franchisor)
licenses its trademark and method of doing
business to another business or individual
(franchisee) in exchange for a franchise fee
and an ongoing royalty payment
1. Product & Trademark Franchise
- An arrangement under which the franchisor
grants to the franchisee the right to buy its
products and use its trade name
- connects a single manufacturer with a
network of dealers or distributors
- Ex : General Motors has established a
network of dealers that sell GM cars and use
the GM trademark in their advertising and
promotions
2. Business Format Franchise
- An arrangement under which the franchisor
provides a formula for doing business to the
franchisee along with training, advertising,
and other forms of assistance
- Ex : Fast-food restaurants, convenience
stores, and motels
1. Automotive
2. Business Services
3. Commercial and Residential Services
4. Food Retailing
5. Lodging
6. Personal Services
7. Quick Serve Restaurants
8. Real Estate
9. Retail Products & Services
10. Table/Full-Service Restaurants
When to franchise
- most appropriate when a firm has a strong
or potentially strong trademark, a welldesigned business method, and a desire to
grow
Qualities in Prospective Franchisees
• Good work ethic
• Ability to follow instructions
• Ability to operate with minimal supervision
• Team oriented
• Experience in the industry
• Adequate financial resources and good
credit history
• Ability to make suggestions without
becoming confrontational or upset if the
suggestions are not adopted
• Ability to represent the franchisor in a
positive manner
Ways Franchisors Develop Franchisees
Potential
• Provide mentoring that supersedes routine
training
• Keep operating manuals, product, services,
and business systems up-to-date
• Solicit input from franchisees to reinforce
their importance in the larger system
• Encourage franchisees to develop a
franchise association
• Maintain the franchise system’s integrity
Franchising as Business Expansion Method
Advantages
Disadvantages
• Rapid, low-cost market • Profit sharing.
expansion.
• Loss of control.
• Income from franchise
• Friction with franchisees.
fees and royalties.
• Managing growth.
• Franchisee motivation.
• Differences in required
• Access to ideas and
business skills.
suggestions.
• Legal expenses
• Cost savings.
• Increased buying power
Cost of a Franchise
Initial
varies depending on the franchisor
Franchise Fee
Capital
vary but may include the cost of
Requirements buying real estate, the cost of putting
up a building, the purchase of
inventory, and the cost of obtaining a
business license
Continuing
around 5% of monthly gross income
Royalty
Payment
Advertising
national or regional advertising fund
Fees
Other Fees
 Training additional staff.
 Providing management expertise
when needed.
 Providing computer assistance.
 Providing a host of other items or
support services
Seven Steps in Purchasing a Franchise
Buying a Franchise
- often legally and financially difficult to exit a
franchise relationship
- good choice for someone who wants to start
a business but has no prior business
experience
Misconceptions about Franchising
• A safe investment.
• A strong industry ensures franchise success.
• A franchise is a “proven” business system.
• There is no need to hire a franchise attorney
or an accountant.
• The best systems grow rapidly, and it is best
to be part of a rapid-growth system.
• I can operate my franchise outlet for less
than the franchisor predicts.
• The franchisor is a nice person.
Franchise Ethics (Ethical abuse)
 The get-rich-quick mentality.
 The false assumption that buying a
franchise is a guarantee of business success.
 Conflicts of interest between franchisors
and franchisees
International Franchising
 The markets for certain franchised products
in the U.S. have become saturated (i.e., fast
food).
 The trend toward globalization continues