New Venture Management » (1st Edition)

This book is about effectiveness; and what a new manger needs to know to run a new venture successfully.

New venture opportunities, planning, marketing, financing, and growth management.

For entrepreneurs looking to develop a new venture or small business.

Preface     xvii
About the Authors     xix
Introduction     1
New Ventures: The Quiet Giant     1
Introduction     1
New Ventures: Energizing Economies     1
The Global Impact of New Ventures     3
Entrepreneurs and New Ventures     4
Entrepreneurial Motivation     7
Advantages to Starting a New Venture     9
Independence     9
Financial Opportunities     9
Community Service     9
Job Security     9
Family Employment     9
Challenge     10
Disadvantages of Starting a New Venture     10
Sales Fluctuations     10
Competition     11
Increased Responsibilities     11
Financial Losses     11
Employee Relations     11
Laws and Regulations     12
Risk of Failure     12
New Venture Failure     13
Specific Causes of Failure     13
Failure: A Look at the Record     13
The New Venture Survival Rate     14
Avoiding New Venture Management Traps     14
Summary     16
Review andDiscussion Questions     16
Endnotes     18
New Venture Opportunities     19
New or Acquired Ventures: The Pathways     19
Introduction     19
Approaches to New Venture Creation     19
New-New Approach     19
New-Old Approach     22
Market Analysis     23
Gathering of the Facts     23
Organization of the Facts     25
Analysis of the Facts     25
Implementation of an Action Plan     26
The Entrepreneur     26
The Financial Picture     28
Other Key Factors     30
Buying an Ongoing Venture     31
Advantages of Buying an Ongoing Venture     31
Less Fear about Successful Future Operation     31
Time and Effort Can Be Reduced     32
Buy at a Good Price     32
Key Questions to Ask     33
Why Is the Business Being Sold?     33
What Is the Current Physical Condition of the Business?     33
What Is the Condition of the Inventory?     34
What Is the State of the Company's Other Assets?     34
How Many of the Employees Will Remain?     35
What Type of Competition Does the Business Face?     35
What Is the Status of the Firm's Financial Picture?     37
Determining the Price     39
Assessing the Price     39
Book Value     39
Replacement Value     39
Liquidation Value     39
Past Earnings     40
Cash Flow     40
Asset Pricing     40
One Acceptable Formula?     41
Negotiating the Deal     44
Summary     46
Review and Discussion Questions     47
Endnotes     49
Franchising: The Hybrid     51
Introduction     51
The Nature of Franchising     51
Product or Service Franchise     51
Business Franchise     52
Conversion Franchising     53
How a Franchise Works     53
The Growth of Franchising     54
Advantages of Franchising     58
Training and Guidance     58
Brand-Name Appeal     58
A Proven Track Record     59
Financial Assistance     59
Disadvantages of Franchising     59
Franchise Fees     60
Franchisor Control      61
Unfulfilled Promises     61
Evaluating the Opportunities     62
Learn of Opportunities     64
Investigate the Franchisor     64
Seek Professional Help     64
The Decision: It's Up to the Entrepreneur     66
Trends in Franchising     66
Franchising Your Business     67
Summary     69
Review and Discussion Questions     69
Endnotes     71
New Venture Planning     73
Successful Business Plans: The Roadmap     73
Introduction     73
The Nature of a Business Plan     73
Importance of a Business Plan     75
What Is a Business Plan?     76
The Components of a Business Plan     77
Preparing the Business Plan     79
Helpful Hints     89
Updating Your Business Plan     91
Practical Example     91
Summary     92
Review and Discussion Questions     92
Endnotes     94
Legal Forms of Ventures: The Structure     95
Introduction     95
Forms of Business Organization     95
Sole Proprietorship     96
Advantages of Proprietorships     96
Disadvantages of Proprietorships     97
The Partnership     99
Types of Partnerships     99
Advantages of Partnerships     103
Disadvantages of Partnerships     105
The Corporation     107
Organizing the Corporation     108
The Corporate Structure     109
Advantages of Corporations     109
Disadvantages of Corporations     111
The S Corporation     114
The Limited Liability Company     114
Summary     115
Review and Discussion Questions     118
Endnotes     119
New Venture Marketing     121
Market Research: The Niche     121
Introduction     121
Determining Market Niches     121
Relevant Price Range     122
Competition     124
Examining the Current Market Niche     126
Market Niche Analysis: An Example     126
Market Niche Danger Signals     128
Marketing Research     128
How to Conduct Marketing Research     130
Secondary Sources     130
Primary Sources     131
Other Data Collection Methods     134
Using Research Data     135
Internet Marketing     136
Co-Marketing Deals and Banner Ads     136
Become a Popular Link     136
Sponsor Contests, Specials, and Other Interactive Features     137
Summary     137
Review and Discussion Questions     137
Endnotes     139
Strategic Pricing: The Hook     141
Introduction     141
Pricing Considerations     141
The Nature of the Product     141
The Competition     142
The Marketing Strategy     142
The Customer and Value Perceptions     143
General Conditions     143
Key Pricing Factors     143
The Cost of Goods     144
Competitive Prices     144
Pricing Strategies     145
Combination Strategies     153
How New Ventures Set Prices     154
Wholesalers     154
Retailers     155
Service Enterprises     159
Manufacturers     163
Summary     165
Review and Discussion Questions     166
Endnotes     167
New Venture Financing     169
Start-Up Capital: The Injection     169
Introduction     169
Basic Types of Capital     169
Debt Capital     171
Equity Capital     172
Sources of Capital     173
Personal Savings     173
Friends and Relatives     174
Venture Capitalists     174
Informal Investors     175
Internal Funds     175
Trade Credit     176
Banks     176
Other Private Sources of Capital     179
Small Business Administration     180
State and Local Development Companies     181
Small Business Investment Companies     184
Small Business Innovation Research Program     185
Minority Business Development Agency     186
Summary     187
Review and Discussion Questions     187
Endnotes     188
Financial Statements: The Scorecard     191
Introduction     191
Financial Statements     191
The Balance Sheet     191
Understanding the Balance Sheet     192
Why the Balance Sheet Always Balances     196
The Income Statement     198
Understanding the Income Statement     199
Keeping Proper Records     201
Sales and Cash Receipts Journal     201
Cash Disbursement, Purchases, and Expense Journal     201
Managing the Books     202
Computers, Software, and Financial Preparation     203
Early Warning Signs of Financial Trouble     205
Summary     205
Review and Discussion Questions     206
Endnotes     208
Financial Analysis: The Gauges     209
Introduction     209
Balance Sheet Analysis     209
Current-Position Ratios     211
Long-Run-Position Ratios     212
Income Statement Analysis     214
Income Statement Ratios     215
Combination Ratios     217
Limitations of Financial Statement Analysis     221
Financial Budgeting     222
Sales Budget     222
Cash Budget     223
Other Budgetary Considerations     225
Summary     226
Review and Discussion Questions     226
Endnotes     229
New Venture Growth Management     231
Human Resources: The People     231
Introduction     231
The Challenge of Managing Human Resources     231
Increasing Regulatory Concerns     232
Staffing     236
Assessing Staffing Needs     236
Human Resource Recruiting     237
Screening Potential Employees     238
Selecting and Orienting Employees     240
Principles of Effective Staffing     240
Performance Management     241
Training     241
Performance Appraisal     243
Management by Objectives     245
Compensation     247
Employee Discipline and Counseling     249
The Employee Handbook: A Key Tool for Employee Accountability     249
The Current State of Human Resource Management Practices     251
Critical Issues for the Future     254
Employee Morale     254
Improving Employee Performance     256
Summary     257
Review and Discussion Questions     258
Endnotes     259
Growing Ventures: The Future     261
Introduction     261
Unique Challenges of Growing Ventures     261
The Distinction of Smaller Size      261
The One-Person-Band Syndrome     262
Time Management     263
Community Obligations     263
Continuing Management Education     264
Other Issues in the Formative Years     264
Key Elements of Growth     266
Control     266
Responsibility     266
Effective Delegation     266
Tolerance of Failure     267
Change     267
Flexibility     267
The Transition from Entrepreneur to Manager     268
Balancing the Focus (Entrepreneur and Manager)     269
Outside Managerial Assistance     271
The Challenge of Ethical Practices in Growing Ventures     272
Ethical Codes of Conduct     273
Ethical Leadership by Entrepreneurs     275
The Quality Movement     276
Involve Top Management     276
Focus on Customer Needs     276
Train Employees     277
Empower Employees and Generate New Ideas     278
Recognize Employees     278
Conquer Fear     278
The Continuous-Improvement Challenge     278
Teamwork     279
The Challenges of Global Expansion      281
Why Globalize for Growth?     281
Researching the Global Market     283
Globalizing Your Product: Adaptation     283
Global Threats and Risks     285
Summary     286
Review and Discussion Questions     287
Endnotes     289
Green Fuel Alternatives     293
Executive Summary     293
Potential     293
Funding Need     293
Management     293
Business Description     295
General Description of Business     295
Industry Background     296
Competition Analysis     297
Products and Services     297
Strategy to Differentiate     298
Key Dynamics     298
Marketing     299
Economics     299
Market Analysis     299
Barriers to Entry     301
Product     301
Customers     303
Competition     303
Niche     304
Marketing Strategy     304
Management Segment     306
Legal Structure     306
Ownership     306
Management Team      306
Company Advisors     307
Operations     308
Plant Operations     308
Facilities and Equipment     309
Organizational Plan     310
Critical Risks     310
Soybean Oil Demand     310
Soybean Rust Fungus     311
Biodiesel Problems     311
Marketer Influence     311
Exit Strategies     311
Financial Segment     312
Start-Up Proposal     312
Financing Plan     312
Financial Assumptions     312
Start-Up Budgeting     314
Financial Appendix     314
Endnotes     324
Name Index     325
Subject Index     326