Essentials of Entrepreneurs^ and Small Business Management. GLOBAL
EDITION. Norman M. Scarborough. Presbyterian College. Boston Columbus ...
SIXTH
EDITION
Essentials of Entrepreneurs^ and Small Business Management GLOBAL
EDITION
Norman M. Scarborough Presbyterian College
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Contents Preface 13
SECTION I
The Challenge of Entrepreneurship
19
Chapter 1 The Foundations of Entrepreneurship 19 The World of the Entrepreneur What Is an Entrepreneur?
20
21
The Benefits of Entrepreneurship
25
The Potential Drawbacks of Entrepreneurship
28
Behind the Boom: What's Feeding the Entrepreneurial Fire The Cultural Diversity of Entrepreneurship The Power of "Small" Business
41
Putting Failure into Perspective
42
How to Avoid the Pitfalls Conclusion
30
34
43
45
Chapter Summary . Plan Pro 47 •
46 e Discussion Questions Beyond the Classroom 49
47
•
Business
Chapter 2 Inside the Entrepreneurial Mind: From Ideas to Reality 50 Creativity, Innovation, and Entrepreneurship Creativity—A Necessity for Survival Creative Thinking
51
53
54
Barriers to Creativity
57
How to Enhance Creativity The Creative Process
61
66
Techniques for Improving the Creative Process
SECTION II
72
Intellectual Property: Protecting Your Ideas
76
Chapter Summary Plan Pro 84 •
84
83 • Discussion Questions Beyond the Classroom 85
•
Business
Building the Business Plan: Beginning Considerations 87
Chapter 3 Designing a Competitive Business Model and Building a Solid Strategic Plan 87 Building a Competitive Advantage
89
The Strategic Management Process Conclusion
92
114
Chapter Summary Plan Pro 116 •
114 • Discussion Questions Beyond the Classroom 117
115
•
Business
Chapter 4 Conducting a Feasibility Analysis and Crafting a Winning Business Plan 118 Conducting a Feasibility Analysis Why Develop a Business Plan? The Elements of a Business Plan
119 127 130
What Lenders and Investors Look For in a Business Plan
140
10
CONTENTS Making the Business Plan Presentation Conclusion
142
144
Business Plan Format
145
Chapter Summary 148 • Discussion Questions Plan Pro 149 • Beyond the Classroom 150
Chapter 5
148
•
Business
Chapter Summary 175 • Discussion Questions Plan Pro 175 • Beyond the Classroom 176
175
•
Business
Franchising and the Entrepreneur
177
•
Business
Forms of Business Ownership The Sole Proprietorship The Partnership Corporations
155
157
164
Other Forms of Ownership
Chapter 6
Types of Franchising
169
179
The Benefits of Buying a Franchise
180
The Drawbacks of Buying a Franchise Franchising and the Law
185
189
The RightWay to Buy a Franchise Trends Shaping Franchising Conclusion
151
192
198
203
Chapter Summary 203 • Discussion Questions Plan Pro 204 • Beyond the Classroom 205
203
Appendix A: A Franchise Evaluation Checklist 205 Chapter 7
Buying an Existing Business 207 Buying an Existing Business
209
The Steps in Acquiring a Business
214
Evaluating an Existing Business—The Due Diligence Process Methods for Determining the Value of a Business Understanding the Seller's Side Negotiating the Deal
217
225
233
240
Chapter Summary 241 • Discussion Questions Plan Pro 243 • Beyond the Classroom 243
242
•
Business
SECTION III Building the Business Plan: Marketing and Financial Considerations 245 Chapter 8
Building a Powerful Marketing Plan 245 Building a Guerrilla Marketing Plan Pinpointing the Target Market
246
249
Determining Customer Needs and Wants Through Market Research Plotting a Guerrilla Marketing Strategy: How to Build a Competitive Edge 255 The Marketing Mix
276
Chapter Summary 279 • Discussion Questions Plan Pro 281 • Beyond the Classroom 282
Chapter 9
280
•
Business
E-Commerce and the Entrepreneur 283 Factors to Consider before Launching into E-Commerce Ten Myths of E-Commerce Strategies for E-Success
286 295
Designing a Killer Web Site
303
285
251
CONTENTS Tracking Web Results
311
Ensuring Web Privacy and Security
313
Chapter Summary 315 • Discussion Questions Plan Pro 316 * Beyond the Classroom 317
316
•
Business
Chapter 10 Pricing Strategies 318 Three Potent Forces: Image, Competition, and Value Pricing Strategies and Tactics
320
327
Pricing Strategies and Methods for Retailers Pricing Concepts for Manufacturers
332
334
Pricing Strategies and Methods for Service Firms The Impact of Credit on Pricing
338
339
Chapter Summary 343 • Discussion Questions Plan Pro 344 • Beyond the Classroom 344
343
»
Business
Chapter 11 Creating a Successful Financial Plan 345 The Importance of a Financial Plan Basic Financial Statements
346
347
Creating Projected Financial Statements Ratio Analysis
350
356
Interpreting Business Ratios Break-Even Analysis
372
378
Chapter Summary 382 • Discussion Questions Plan Pro 383 • Beyond the Classroom 384
383
•
Business
417
•
Business
Chapter 12 Managing Cash Flow 385 Cash Management
386
Cash and Profits Are Not the Same Preparing a Cash Budget
389
390
The "Big Three" of Cash Management Avoiding the Cash Crunch Conclusion
400
410
416
Chapter Summary 416 • Discussion Questions Plan Pro 417 • Beyond the Classroom 418
SECTION IV Putting the Business Plan to Work: Sources of Funds 419 Chapter 13 Sources of Financing: Debt and Equity 419 Planning for Capital Requirements Equity Capital vs. Debt Capital Sources of Equity Financing
421
421
423
The Nature of Debt Financing Federally Sponsored Programs
438 448
Small Business Administration (SBA)
450
State and Local Economic Development Programs Internal Methods of Financing
456
456
Chapter Summary 458 • Discussion Questions Plan Pro 460 • Beyond the Classroom 461
459
•
Business
Chapter 14 Choosing the Right Location and Layout 462 Location: A Source of Competitive Advantage
463
Location Criteria for Retail and Service Businesses
477
Location Options for Retail and Service Businesses
480
11
12
CONTENTS The Location Decision for Manufacturers Layout and Design Considerations
485
488
Layout: Maximizing Revenues, Increasing Efficiency, or Reducing Costs Chapter Summary 499 • Discussion Questions Plan Pro 500 • Beyond the Classroom 501
Chapter 15
Global Aspects of Entrepreneurship Why Go Global?
494
Business
502
506
Barriers to International Trade International Trade Agreements
523 528
530
Chapter Summary 530 • Discussion Questions Plan Pro 532 • Beyond the Classroom 532
Chapter 16
•
503
Strategies for Going Global
Conclusion
500
531
«
Business
Building a New Venture Team and Planning for the Next Generation 533 Leadership in the New Economy
534
Building an Entrepreneurial Team: Hiring the Right Employees
537
Creating an Organizational Culture That Encourages Employee Motivation and Retention
548
Management Succession: Passing the Torch of Leadership Exit Strategies 564 Chapter Summary 565 • Discussion Questions Plan Pro 566 • Beyond the Classroom 567
Appendix: Think Archimedes 568 Cases 589 Endnotes 603 Name Index 631 Subject Index 641
