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Preface to the Fourth Edition As we write the fourth edition, the United States and world have gone through economic upheaval. Unemployment, foreclosures, government bailouts to the financial and auto sectors have created volatility and uncertainty. Yet, while the period has been bleak, we expect the future to be bright. The one truth for the United States—and for more and more nations as entrepreneurship has taken hold globally—is that worldchanging new ventures often are born at the depth of economic upheavals. During the Great Depression, Boeing emerged and changed the nature of aerospace; IBM was founded during the Long Depression (1872–1896); and many great companies opened shop during recessions, including Hyatt and Burger King during the 1957–1958 recession, FedEx during the 1973 oil embargo, and CNN and MTV during the 1980–1981 recession. Thus, entrepreneurship is even more important to economic recovery and ongoing health for countries worldwide. We hope that this book will inspire the next generation of great entrepreneurs and companies. Today, U.S. small businesses—firms with 500 or fewer employees—employ slightly more than 50 percent of the labor force and generate approximately half of the nonfarm private gross domestic product (GDP). If the small business sector of the U.S. economy were a nation, its GDP would rank third in the world behind the nonsmallbusiness sector of the United States and the entire economy of Japan, and far ahead of the entire economies of China, Germany, the United Kingdom, France, and Italy. Not only are small businesses the engine for job creation, they are also a powerful force for innovation. They employ 39 percent of all hightech workers and produce approximately 14 times more patents per employee than large firms. Since the publication of the third edition, a multitude of new, worldchanging companies have been started. Facebook, Skype, and Twitter, among others, are changing the way we communicate and interact with each other. And large existing companies that are entrepreneurial continue to create and rejuvenate their businesses. No example is better than Apple, which since 2003 has launched the iPhone and iTouch. Close to 50 million units have been sold in its first 18 months. No doubt about it, entrepreneurship is what America does best, bar none. No other advanced industrial nation comes close. U.S. entrepreneurial companies created the personal computer, biotechnology, fast food, and overnight package delivery industries; transformed the retailing industry; overthrew ATT’s telecommunications monopoly; revitalized the steel industry; invented the integrated circuit and the microprocessor; founded the nation’s most profitable airline; and the list goes on. ix x Preface to the Fourth Edition Is it any wonder that more and more people are choosing to be entrepreneurs? Entrepreneurship courses and programs have proliferated in the past 10 years. It is estimated that more than 2,000 U.S. colleges and universities, or about twothirds of the total, have at least one course in entrepreneurship. It is possible to study entrepreneurship in certificate, associates, bachelors, masters, and PhD programs. Every business student, regardless of their career plans, needs to understand the role of entrepreneurship in the economy. Today, a business education without an entrepreneurship component is as incomplete as medical training without obstetrics. The Portable MBA in Entrepreneurship is a book for wouldbe entrepreneurs, people who have started small firms and who want to improve their entrepreneurial skills, and others who are interested in entrepreneurship, such as bank loan officers, lawyers, accountants, investors, and consultants—indeed, anyone who wants to get involved in the birth and growth of an enterprise. The chapters are written by leading authorities on new business creation, including professors, entrepreneurs, and consultants with extensive experience in teaching the art and science of starting and growing a venture. These authors practice what they teach. They have started businesses, served on boards of venture capital funds, been on boards of directors and boards of advisers of entrepreneurial companies, raised startup and expansion capital, filed patents, registered companies, and, perhaps most important of all, have created new products and many new jobs. What’s more, they are tireless champions of entrepreneurship. They believe that entrepreneurs are crucial to America’s economic wellbeing. We would like to thank all the chapter authors for their contributions, as well as our research assistants, Mark Itskovitz, R. Gabriel Shih, and Henry McGovern. We hope you enjoy this book. WILLIAM D. BYGRAVE ANDREW ZACHARAKIS Arthur M. Blank Center for Entrepreneurship Babson College May 2009
The PORTABLE MBA in ENTREPRENEURSHIP i The PORTABLE MBA in ENTREPRENEURSHIP F O U R T H E D I T I O N Edited by WilliamD.Bygrave,DBAand AndrewZacharakis,PhD John Wiley & Sons, Inc iii This book is printed on acid-free paper ∞ Copyright C 2010 by William D Bygrave and Andrew Zacharakis All rights reserved Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www copyright.com Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose No warranty may be created or extended by sales representatives or written sales materials The advice and strategies contained herein may not be suitable for your situation You should consult with a professional where appropriate Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002 Wiley also publishes its books in a variety of electronic formats Some content that appears in print may not be available in electronic books For more information about Wiley products, visit our web site at www.wiley.com ISBN 978-0-470-48131-8 Printed in the United States of America 10 iv Contents Complete List of Downloadable Materials for The Portable MBA in Entrepreneurship Preface to the Fourth Edition vii About the Contributors xi The Entrepreneurial Process ix William D Bygrave Idea Generation 27 Heidi M Neck Opportunity Recognition, Shaping, and Reshaping 53 Andrew Zacharakis Entrepreneurial Marketing 83 Abdul Ali and Kathleen Seiders Business Planning 109 Andrew Zacharakis Building Your Pro Forma Financial Statements 137 Andrew Zacharakis Equity Financing: Informal Investment, Venture Capital, and Harvesting William D Bygrave Debt and Other Forms of Financing 161 197 Joel M Shulman External Assistance for Start-ups and Small Businesses Elizabeth J Gatewood and Carol McLaurin 10 Legal and Tax Issues Richard Mandel 11 Intellectual Property 225 263 297 Kirk Teska and Joseph S Iandiorio v vi 12 Contents Selling in an Entrepreneurial Context 13 Mark P Rice and H David Hennessey Beyond Start-up: Developing and Sustaining 14 the Growing Organization Donna Kelley and Edward Marram Franchising 15 Steve Spinelli Social Entrepreneurship 329 355 385 411 Heidi M Neck Glossary 437 Index 459 Complete List of Downloadable Materials for The Portable MBA in Entrepreneurship Online Only: Chapter Web Site Material: Ideaspace Exercise Chapter Web Site Material: Customer Interview Chapter Web Site Material: Pro Forma Financial Statements Chapter Web Site Material: BFSW Cap Table Chapter Web Site Material: Where to Find SBDC’s Online and in Manuscript: Downloadable Exhibit 2.4: Nine-Dot Exercise Downloadable Exhibit 3.7: Value Chain Exercise Downloadable Exhibit 3.9: Competitive Profile Matrix Downloadable Exhibit 3.11: Opportunity Checklist Downloadable Exhibit 4.5: Product Diffusion Curve Downloadable Exhibit 4.6: Pricing Decision for an Entrepreneur Downloadable Exhibit 5.8: Competitive Map Downloadable Exhibit 5.11: Operations Flow Downloadable Exhibit 5.13: Launch Timeline Downloadable Exhibit 6.2: Financial Construction Checklist Downloadable Exhibit 6.5: Operating Expenses Worksheet Downloadable Exhibit 10.4: Comparison of Equity Sharing Methods Downloadable Exhibit 11.1: Patent Management Spreadsheet Downloadable Exhibit 14.3: License Agreement Key Provision Impact Analysis Downloadable Exhibit 14.6: Checklist for International Franchising Downloadable Exhibit 15.7: Wicked versus Tame Problems vii Preface to the Fourth Edition As we write the fourth edition, the United States and world have gone through economic upheaval Unemployment, foreclosures, government bailouts to the financial and auto sectors have created volatility and uncertainty Yet, while the period has been bleak, we expect the future to be bright The one truth for the United States—and for more and more nations as entrepreneurship has taken hold globally—is that world-changing new ventures often are born at the depth of economic upheavals During the Great Depression, Boeing emerged and changed the nature of aerospace; IBM was founded during the Long Depression (1872–1896); and many great companies opened shop during recessions, including Hyatt and Burger King during the 1957–1958 recession, FedEx during the 1973 oil embargo, and CNN and MTV during the 1980–1981 recession Thus, entrepreneurship is even more important to economic recovery and ongoing health for countries worldwide We hope that this book will inspire the next generation of great entrepreneurs and companies Today, U.S small businesses—firms with 500 or fewer employees—employ slightly more than 50 percent of the labor force and generate approximately half of the nonfarm private gross domestic product (GDP) If the small business sector of the U.S economy were a nation, its GDP would rank third in the world behind the non-small-business sector of the United States and the entire economy of Japan, and far ahead of the entire economies of China, Germany, the United Kingdom, France, and Italy Not only are small businesses the engine for job creation, they are also a powerful force for innovation They employ 39 percent of all high-tech workers and produce approximately 14 times more patents per employee than large firms Since the publication of the third edition, a multitude of new, world-changing companies have been started Facebook, Skype, and Twitter, among others, are changing the way we communicate and interact with each other And large existing companies that are entrepreneurial continue to create and rejuvenate their businesses No example is better than Apple, which since 2003 has launched the iPhone and iTouch Close to 50 million units have been sold in its first 18 months No doubt about it, entrepreneurship is what America does best, bar none No other advanced industrial nation comes close U.S entrepreneurial companies created the personal computer, biotechnology, fast food, and overnight package delivery industries; transformed the retailing industry; overthrew AT&T’s telecommunications monopoly; revitalized the steel industry; invented the integrated circuit and the microprocessor; founded the nation’s most profitable airline; and the list goes on ix x Preface to the Fourth Edition Is it any wonder that more and more people are choosing to be entrepreneurs? Entrepreneurship courses and programs have proliferated in the past 10 years It is estimated that more than 2,000 U.S colleges and universities, or about two-thirds of the total, have at least one course in entrepreneurship It is possible to study entrepreneurship in certificate, associates, bachelors, masters, and PhD programs Every business student, regardless of their career plans, needs to understand the role of entrepreneurship in the economy Today, a business education without an entrepreneurship component is as incomplete as medical training without obstetrics The Portable MBA in Entrepreneurship is a book for would-be entrepreneurs, people who have started small firms and who want to improve their entrepreneurial skills, and others who are interested in entrepreneurship, such as bank loan officers, lawyers, accountants, investors, and consultants—indeed, anyone who wants to get involved in the birth and growth of an enterprise The chapters are written by leading authorities on new business creation, including professors, entrepreneurs, and consultants with extensive experience in teaching the art and science of starting and growing a venture These authors practice what they teach They have started businesses, served on boards of venture capital funds, been on boards of directors and boards of advisers of entrepreneurial companies, raised start-up and expansion capital, filed patents, registered companies, and, perhaps most important of all, have created new products and many new jobs What’s more, they are tireless champions of entrepreneurship They believe that entrepreneurs are crucial to America’s economic well-being We would like to thank all the chapter authors for their contributions, as well as our research assistants, Mark Itskovitz, R Gabriel Shih, and Henry McGovern We hope you enjoy this book WILLIAM D BYGRAVE ANDREW ZACHARAKIS Arthur M Blank Center for Entrepreneurship Babson College May 2009 About the Contributors Abdul Ali is the President’s Term Chair and an associate professor of marketing at Babson College Earlier he taught at the University of Maryland in College Park and at Syracuse University He served as Chair of the Marketing Division for six years (2000 to 2006) at Babson College Dr Ali’s teaching and research interests include new product management, entrepreneurial marketing, marketing research methods, marketing strategy, and marketing high-tech products His work has appeared in Management Science, the Journal of Product Innovation Management, Managerial and Decision Economics, the Journal of Business Research, and Marketing Letters He and two co-authors produced A Casebook for Business Statistics: Laboratories for Decision Making, published by John Wiley & Sons He also co-authored a chapter each on entrepreneurial marketing in two books edited by William Bygrave and Andrew Zacharakis William D Bygrave, D.Phil., MBA, is a professor emeritus at Babson College Dr Bygrave joined the Center for Entrepreneurial Studies at Babson College in 1985 and directed it from 1993 to 1999 He was also the director of the annual Babson College– Kauffman Foundation Entrepreneurship Research Conference in 1994–1995 and 2001– 2003 He teaches and researches entrepreneurship, specifically financing of start-up and growing ventures In 1997, he and Michael Hay at the London Business School started the Global Entrepreneurship Monitor (GEM), which examines the entrepreneurial competitiveness of nations He is a member of the board of trustees of Babson College Dr Bygrave has founded a venture-capital-backed high-tech company, managed a division of a New York Stock Exchange–listed high-tech company, co-founded a pharmaceutical database company, and been a member of the investment committee of a venture capital firm He was the 1997 winner of the Ernst & Young Entrepreneur of the Year award in the supporter category for New England He has written more than 100 papers on topics that include venture capital, entrepreneurship, nuclear physics, hospital pharmaceuticals, and philosophy of science He is also co-editor of Entrepreneurship (2007); The Venture Capital Handbook (1999); The Portable MBA in Entrepreneurship (third edition, 2003); The Portable MBA in Entrepreneurship Case Studies (second edition, 1997); Realizing Enterprise Value (1993); and Frontiers of Entrepreneurship Research; he was also an editor of Entrepreneurship Theory and Practice He has served on the review boards of three entrepreneurship journals Translations of his books have been published in Chinese, Japanese, Spanish, and Bahasa Indonesia Areas of expertise include entrepreneurship, new venture creation, informal investment, and venture capital xi xii About the Contributors Elizabeth J (Betsy) Gatewood, PhD, has been the director of the University Office of Entrepreneurship & Liberal Arts at Wake Forest University since 2004 She served as the Jack M Gill Chair of Entrepreneurship and director of the Johnson Center for Entrepreneurship & Innovation at Indiana University from 1998 to 2004 She was the executive director of the Gulf Coast Small Business Development Center Network, an organization providing training and consulting services to entrepreneurs and small business owners in the 32 counties of the greater Houston region, from 1989 to 1998 Dr Gatewood founded the Center for Business and Economic Studies at the University of Georgia and served as its director from 1983 to 1989 She is a member of the Diana Project, a research study of women business owners and equity capital access, which won the FSF-NUTEK International Award for scientific work of outstanding quality and importance in the field of entrepreneurship Dr Gatewood serves on the board of directors of Delta Apparel, Inc (AMEX:DLA) and on the Advisory Board for Spring Mill Ventures, a venture capital firm of the Village Ventures network She is a past chair of the Entrepreneurship Division of the Academy of Management She received the 1996 Advocate Award for outstanding contributions to the field of entrepreneurship from the Academy of Management She holds a BS in psychology from Purdue University and an MBA with a concentration in finance and a PhD in business administration with a specialty in strategy from the University of Georgia H David Hennessey, PhD, is Professor of Marketing and International Business at Babson College After gaining his undergraduate degree in economics and business administration at Norwich University, Northfield, Vermont, and an MBA from Clark University, Worcester, Massachusetts, Dr Hennessey worked as a senior marketing analyst for the American Can Company He then became marketing director for Interpace Corporation, based in New Jersey He completed his PhD at New York University and joined Babson College in 1982 He has taught courses on global marketing, marketing strat-egy, sales management strategy, and foundations of management and entrepreneurship, and written numerous articles and case studies He has co-authored Global Marketing Strategies (6th edition, 2004, with Jean-Pierre Jeannet); Global Marketing: An Interactive Approach (2nd edition, 2006, with Jean-Pierre Jeannet and Kate Gillespie); Global Account Management (2004, with Jean-Pierre Jeannet); and How to Write a Marketing Plan (3rd edition, 1996, with Robert J Kopp) Dr Hennessey has had executive and MBA teaching experience in programs at Babson College, Ashridge, IMD International, Rotterdam School of Management (RSM) Erasmus, and Helsinki School of Economics and Business Administration, as well as in Costa Rica, France, Holland, Germany, Switzerland, Finland, Hong Kong, and Japan Participants are from many companies—for example, Electrolux, Unilever, IBM, Procter & Gamble, Investment Company Institute (ICI), Novartis, BBC, Cable and Wireless, BT Group, Compaq, Unisys, Philips, and Nokia Professor Hennessey is the faculty director of the Evening MBA program at Babson College He served as faculty director for the Irving Oil marketing program and the GTECH Corporation growth program Joseph S Iandiorio is a partner in the law firm of Iandiorio Teska & Coleman in Waltham, Massachusetts The firm specializes in patents, trademarks, copyrights, trade secrets, licensing, litigation of intellectual property matters, employee and consultant Index Rural Energy for America, 247–248 Small Business Innovation Research Program, 255–257 Green, Jennifer, 27 “Grocery Cart Challenge,” 45, 54 Gross margins, 65–68, 73–74, 144–145, 150–151 Growth: business plan strategy for, 121 challenges of, 356–362, 366–367 external factors impacting, 356–358, 372, 378 financing, 197–198, 360, 364–365, 367, 378–380 four domains for managing, 364–381 franchises as method of (see Franchises) internal factors impacting, 358–360 leadership/management team for, 358–360, 364, 366, 372– 377 levels of, 357–359 managing pace of, 371–372 of market demand, 62–64 marketing skills for managing, 105–106 organization impacting, 364, 365–366, 368–372 performance measures during, 369–371 personal factors impacting, 360–362 as product life cycle stage, 90 resources needed for, 197–198, 360, 364–365, 367, 378–381 stages of, 362–364, 366–367 strategic focus during, 358–360, 364, 367, 377–378 Guerrilla marketing, 103–104 H Habitat for Humanity, 422 Hackney, Sean, 137 Hart, Stuart, Capitalism at the Crossroads, 412, 414 Harvesting investments, 184–193 Health insurance, 291 Helena, Montana, 28–29 Hewlett-Packard, 25 471 Hoffmann-La Roche, 24 Home Depot, 5, 24, 67–68, 118, 185 Home equity lines of credit, 199–200 Hoovers.com, 144 Hormel, 72–73 How to Read a Financial Report: Wringing Vital Information out of the Numbers (Tracy), 141 Huizenga, Wayne, 6, 16 Human resource practices, 380–381 See also Employment Hybritech, 24 I IBM, 24–25, 71, 341 Idea generation: brain orientation and, 38–40 case studies of, 28–30 classification matrix of, 32–33, 50 creativity and, 27, 31–32, 33–48 improvisation as building block of, 39–40, 42–44, 47–48, 55 industry-specific, market testing after, 53–56 mastery of, 39–48 mindmapping as tool of, 48–50 mock-ups of, 55–56 observation as building block of, 39–40, 44–48, 54–55 paths of, 30–33 play as building block of, 39–40, 41– 42, 47–48 uniqueness of, 13 viability of, 56–77 IDEO, 45, 54–55 Image, brand, 106 Improvements, 32–33 Improvisation, 39–40, 42–44, 47–48, 55 Inc 500, 6, 8, 21 Income See also Earnings; Sales revenue calculating potential, 10 compensation as, 130–131, 280–281, 403 revenue needed to generate, 22, 61–62 statements, 133–134, 140, 141–149, 152–153, 403–404 valuation methods utilizing, 164–168 472 Index Incubators, 10, 260 Independent contractors, 286, 321–322, 325–326 Industry: business plan analysis of, 116, 118 code, 336–337 comparable financials in, 139, 149–151 comparable valuations in, 164–165, 166–168 competition in (see Competition) customer’s, 335–338 fragmented, 67–68, 118, 177 knowledge of, 6, 15–16, 130, 335– 338 profit margins in, 21–22 segmentation of, 87–88, 118 Industry Norms and Key Business Ratios (Dun & Bradstreet), 150 Informal investors, 21, 162, 171–172, 198–199 Initial public offerings, 20–21, 178–180, 185–189, 195 Innovations, 32–33, 91–92, 250–259, 322–325 See also Inventions Insurance: business interruption, 291 disability, 291 export credit, 242 health, 291 key person, 219, 291 liability, 290 life, 282–283, 291 political risk, 243 property, 290 workers compensation, 287 Intel, 24–25, 73–74, 116, 185 Intellectual property: agreements, 317–320, 321–327 copyrights on, 313–314, 315, 324–325 international protection for, 314, 316–317 Internet infringement on, 320–321 licensing, 317–320, 389 noncompetition clauses on, 323–327 patents on, 298–307, 315, 316–317 reasons for protecting, 297–298 trademarks as, 310–313, 315, 317, 389, 394 trade secrets as, 265–266, 307–310, 315 Interest rates, 148, 150, 216, 217–219, 233–234 Intermediary Relending Program, 248 International Buyer Program, 241 International Company Profile, 240 International Franchise Association, 407 International market: exports to, 76, 239–244 external assistance in selling to, 239–244 franchising in, 406–407 global environment of, 74–77 intellectual property protection in, 314, 316–317 letters of credit for suppliers in, 217 International Trade Administration, 240–241 International Trade loans, 242 Internet: businesses operating via the, 60, 65–66, 110, 123, 176, 178–180 couponing through the, 101 intellectual property right infringement on, 320–321 marketing via the, 103 Web sites on, 135–136, 239 (see also specific Web sites by name) Internet businesses See also specific businesses by name business plans for, 110 convergent trends and, 60 distribution of, 123 prices charged by, 65–66 venture capitalist involvement with, 176, 178–180 Inventions See also Innovations chemical, 299 electrical, 299 general/mechanical, 299 patents on, 298–307, 315, 316–317 transfer of intellectual property rights on, 322–323, 324–325 value/usefulness of, 32–33 Index Inventions and Innovations Program, 258–259 Inventory, 200–201, 206–207, 213–215, 292, 368–369 Investments: business angels making, 19, 20, 72, 162, 172–176, 184–193 buyback of, 184–185 equity financing as (see Equity financing) foreign direct, 76–77 franchises as (see Franchises) harvesting, 184–193 informal investors making, 21, 162, 171–172, 198–199 legal issues related to, 293–295 profit potential of, 21–23 public stock offerings of, 20–21, 178–180, 185–189, 195n33 return on (see Return on investment) socially responsible, 427–430 venture capitalists making (see Venture capital/capitalists) Investors Circle, 432, 433 iPod, 372 J J Crew, 97 Jobs See Employment Jobs, Steven, 19–20, 162, 173, 174 Justis, Robert T., 385 K Kanter, Rosabeth, 23 Kassalow, Jordan, 421–422 Kauffman Foundation, 135 Kautz, Judith, 173 Kenny, Noreen, Kentucky Fried Chicken, 389 Keynes, John Maynard, 163 Key person insurance, 219, 291 Key success factors, 336–337 KickStart International, 417, 419, 426 Kilby, Jack, 13 Kildall, Gary, 71 473 Kleiner Perkins Caufield and Byers, 177, 182 Kmart, 24 Kolen, Joel, 371 Kozmo.com, 65 Kraft, 372 Kroc, Ray, 386, 397 L Labor costs, 145, 147 Lane, Ray, 182 Lawrence, Stephen, 159 Lawrence-Lightfoot, Sara, 41 Leadership: board of directors providing, 130, 270, 272, 376–377 delegation of, 372–374 growth of business requiring, 358–360, 364, 366, 372–377 management team providing (see Management team) Leasing, 18, 171, 222, 392–393, 403– 404 Lee, Tim Berners, 60 Leftbrain/right-brain thinking, 38–39 Legal issues: administrative obligations as, 279 attorney retained to manage, 267–268 choice of legal entity as, 268–279 control of business as, 270–272 corporate opportunity doctrine as, 264–265 employmentrelated, 264–267, 285–290 financingrelated, 291–295 insurance and, 290–291 names of businesses as, 279–280 noncompetition agreements as, 266–267 operating and stockholder agreements as, 280–284 personal liability as, 272–274 proprietary information as, 265–266 recruitment of fellow employees as, 265 sale of securities to investors as, 293–295 474 Index Letters of credit, 217 Lewis Institute, 433 Liability: insurance, 290 personal, 272–274 vicarious, 286 Libera, Anne, The Second City Almanac of Improvisation, 43 Libraries, 260–261 Licensing/licensing agreements, 76, 317–320, 389–402 Liens, floating, 214 Life insurance, 282–283, 291 Limited, The, 24 Limited liability companies: as legal entity form, 269, 271–274, 276–279 names of, 280 operating agreements of, 280–284 Limited liability partnerships, 269, 270, 279, 280 Limited partnerships, 269, 271–274, 277–280 Lines of credit, 199–200, 217, 241 LinkedIn.com, 103 Liquidation value, 165, 202 Liquidity, 201–202, 404 Listening, 105, 340–341, 345–347, 351 Little, Roger, 173 Loans See also Financing accounts receivables as collateral for, 211–213 asset-based, 211–215 bank, 171, 208, 211–222 Certified Development Company, 232 collateral for, 211–215, 219, 292 credit card, 199–200 disaster, 232 Economic Development Administration, 250 Export-Import Bank, 239, 242 Export Working Capital Program, 241 family/friends providing, 171–172, 198–199 franchises requiring, 405–406 home equity lines of credit as, 199–200 interest on, 148, 150, 216, 217–219, 233–234 Intermediary Relending Program, 248 International Trade, 242 inventory as collateral for, 213–215 legal issues related to, 291–293 lines of credit as, 199–200, 217, 241 maturity of, 217 micro-, 232–233, 429–430 Overseas Private Investment Corporation, 243 Patriot Express, 246 pollution control, 231–232 RBS-guaranteed, 247 restrictive covenants on, 220–222 Rural Energy for America, 247–248 SBA, 171, 223, 230–235, 241–242, 246 Section 108-guaranteed, 249 tax effects on, 292–293 LoJack Corporation, 377–378 LowerMyBills.com, 190–192 Lowes, 67 M Maclean, Norman, Young Men and Fire, 28 Madison, Stacy, 69–70 Maker’s Mark, 90, 101, 104, 105, 106 Management team: acquisition impact on, 192–193 board of directors interaction with, 130, 270, 272, 376–377 business plan description of, 128–131 business planning by, 109–110 compensation of, 130–131, 403 delegation to, 372–374 development of, 375 former employment limitations on, 264–267 of growth-phase businesses, 358–360, 364, 366, 372–377 key person insurance on, 219, 291 layers of, 24 loan restrictive covenants on, 222 skills/strengths of, 16, 128–130, 375 venture capitalist interest in, 11–12, 177 Index Manual on Bookselling (Whouley, ed.), 144 Manufacturing Extension Partnership (MEP) centers, 251–252 Marcus, Bernie, 5, 24, 67, 185 Marginal costs, 18 Margins: analysis of, 118 gross, 65–68, 73–74, 144–145, 150– 151 pricing strategy and, 92–94 profit, 65–66, 67 suppliers/vendors impacting, 73–74 Market: business plan analysis of, 116, 118 competition in (see Competition) demand, 60–66, 116, 123, 204 dynamic, 334–335 fragmented, 67–68, 118, 177 international, 74–77, 217, 239–244, 314, 316–317, 406–407 knowledge of, 6, 15–16, 130, 335–338 lease factors, 392–393 marketcomparable valuation, 164–165, 166–168 research, 86–87, 143–144, 149 (see also Surveys/studies) segmentation of, 87–88, 118 size of, 61–64, 116, 118 target, 88, 122, 177 testing, 53–56 trends in, 60–61 Marketing See Entrepreneurial marketing Markkula, Armas, Jr., 20, 162, 173, 174 Marram, Edward, 192 Marriott, 340 Massachusetts Institute of Technology (MIT), 8–9, 175 Mastery of idea generation, 39–48 Matchmaker delegations, 241 Mathematics of Bookselling, The (Shatzkin), 144 Mayo, Merrilea, 42 MBA curriculum: business planning in, 109 entrepreneurial marketing in, 83 entrepreneurship in, 475 equity financing in, 161 external assistance information in, 225 financing options in, 161, 197 franchising in, 385 growth-stage of businesses in, 355 idea generation in, 27 intellectual property information in, 297 legal and tax issues in, 263 opportunity recognition and shaping in, 53 pro forma financial statements in, 137 selling in entrepreneurial context in, 329 social entrepreneurship in, 411 McClelland, David, The Achieving Society, 6–7 McDonald’s, 113, 311, 386, 387, 407 McKenna, Regis, 20, 24 Media, 98–99, 100, 101–102, 103 Mentor-Proteg´e´ program, 237 MEP (Manufacturing Extension Partnership) centers, 251–252 Mergers and acquisitions, 77, 189–193, 360–361 Micro-loans, 232–233, 429–430 Micromanagement business angels, 174 Microsoft See also Gates, Bill cash flow of, 23 dominant design by, 71, 73–74 growth of, 24–25 industry of, 116 intellectual property of, 308, 311 IPO by, 185, 193 supplier power of, 73–74 Midas, 388, 406 Military, 237–238, 246 Milstein, Monroe, 17 Mind-mapping, 48–50 Minority Business Development Agency, 245 Minority-owned businesses, 9, 233, 245 Miracle Whip, 372 MIT (Massachusetts Institute of Technology), 8–9, 175 Mock-ups, 55–56 476 Index Money See Capital; Costs; Financial statements; Financing; Income; Price; Profits; Resources; Sales revenue MoneyMaker, 417 MoneyTree, 72 Monitor Group, 428–429 Moon, Nick, 417 More, Gordon, 185 Morebusiness.com, 136 Moyes, Frank, 159 MySpace.com, 103 N Naked Restaurants, Names of businesses, 279–280, 311, 389, 394 Nantucket Nectars, 88, 94, 96, 104 NASA Regional Technology Transfer Centers (RTTCs), 253 National Aeronautics and Space Administration, 253, 256 National Business Incubation Association, 135 National Federation of Independent Business, 135 National Institute of Science and Technology, 251–252 National Institute of Standards and Technology, 258 National Science Foundation, 256 National Technical Information Service (NTIS), 254 National Technology Transfer Center (NTTC), 253–254 National Trade DataBank, 240 Neiman-Marcus, 96 Net Impact, 432, 433, 434 Netscape Communications, New businesses See also Entrepreneurship business plans for (see Business plans) critical factors for starting, 3–10 economic impact of, 1–3, 8–9 environmental factors impacting, 8–9 external assistance for (see External assistance) financial plans/statements for (see Financial statements) financing (see Financing) franchises of (see Franchises) growth of (see Growth) idea generation for (see Idea generation) ingredients for successful, 23–25 intellectual property of (see Intellectual property) legal issues involving (see Legal issues) marketing of (see Entrepreneurial marketing) names of, 279–280, 311, 389, 394 opportunities for starting (see Opportunities) personal attributes of founders, 6–7, 33–34, 39–40, 364 profits of (see Profits) resources for (see Resources) social entrepreneurs starting (see Social entrepreneurship) sociological factors impacting, 9–10, 335 start-up capital for (see Start-up capital) surveys/studies on, 5–6, 8–9 survival rates of, 11 tax issues involving, 148, 274–278, 279, 285–290, 292–293 Newell Rubbermaid, 109–110 New media, 103 See also Internet New Profit, Inc., 427–429 New Venture Creation (Spinelli and Timmons), 33–34 Nike, 113 Nine-dot exercise, 35–36 Nine Fs for entrepreneurial success, 23–25 Noncompetition agreements, 266–267, 320, 323–327, 361 Nonprofit/not-for-profit entities, 269, 279, 416–421, 427–430 Noyce, Robert, 13, 185 Index NTIS (National Technical Information Service), 254 NTTC (National Technology Transfer Center), 253–254 O Observation, 39–40, 44–48, 54–55 Occidental Chemical, 340 Office Max, 67 Open source code, 322 Operating agreements, 280–284 Operating costs: business plans including, 126–127, 132 financial statements including, 144–146, 150–151, 153 stabilizing, 67 working capital to finance, 200–206 Operational plans, 111, 126–127 OPIC (Overseas Private Investment Corporation), 243, 244 Opportunities: business plans to capitalize on (see Business plans) checklist for evaluating, 79 competition as element of, 70–73 corporate opportunity doctrine, 264–265 customers as element of, 56–70 demographics impacting, 57–59, 61 distribution impacting, 68–70 elasticity of demand impacting, 64–66 evaluating, 11–16, 77–80, 86–87, 334–339 expansion, 377–378 (see also Growth) franchises as (see Franchises) global environment as element of, 74–77 government as element of, 74 margins of, 67–68 market research on, 86–87 market size impacting, 61–64 market testing for, 53–56 sales, 334–339, 342–347 social entrepreneurial, 423–426 suppliers/vendors as element of, 73–74 477 timing of, 14–15 trends and, 60–61 viability of ideas as, 56– 77 Oracle, 185 Organization, 364, 365–366, 368–372 Ornstein, Robert, 38 Osborn, Alex, 40 Osborne, Richard, 378 Outback Steakhouse, 233 Outsourcing, 76, 126–127 See also Subcontracting Overseas Private Investment Corporation (OPIC), 243, 244 Owades, Ruth, 78 Ownership See Equity P Packaged Facts, 61 Page, Larry, 16, 18–19, 162, 173 Panera Bread, 406 Parametric Technology, 177 Partnerships: general, 268, 270–274, 277–278 limited, 269, 271–274, 277–280 limited liability, 269, 270, 279, 280 Patents, 298–307, 315, 316–317 Patrimonio Hoy program, 45, 426 Patriot Express Pilot Loan Initiative, 246 Pauling, Linus, 40 Peapod, 65–66 Penetration pricing, 65, 93 Perceived value pricing, 93–94 Performance metrics, 369–371, 394–395 Perot, Ross, Personal attributes of entrepreneurs, 6–7, 33–34, 39–40, 364 Personal liability, 272–274 Personal selling, 102, 124–125 Peters, Tom, 24 Pets.com, 123 Pink, Daniel, A Whole New Mind, 38–39 Pizza Hut, 406 Plans: business (see Business plans) development, 128, 129, 132 478 Index Plans (Continued ) financial (see Financial statements) marketing (see Entrepreneurial marketing) operational, 111, 126–127 Play, 39–40, 41–42, 47– 48 Pledging, 211–212 Poe, Sheri, 124 Political factors, 74, 335 See also government-related entries Political risk insurance, 243 Pollution control loans, 231–232 Positioning, 88, 122–123 Poss, Jim, 56, 161–162, 173, 176, 414–416, 430–431 Pratt’s Guide to Private Equity and Venture Capital Sources, 181 Price: costs covered by, 65–68, 92–93, 123 customer sensitivity to, 64–66, 94, 99, 101 demand and supply impacting, 62, 64–66, 123 discounts to, 93–94, 99, 101 discrimination, 94 gross margins and, 65–68 as marketing strategy, 92–94, 99, 101, 123 penetration pricing, 65, 93 perceived value pricing, 93–94 price to earnings ratio, 164, 166–167 promotions, 93–94, 99, 101 skimming, 93 of stock in IPO, 188–189 Price Waterhouse, 231 Prime interest rate, 218 Procter & Gamble, 68, 94, 103–104 Procurement, 236–239 Product: attributes, 89–90, 119 brand building of, 99, 101, 105–106 demand for, 60–66, 116, 123, 204 demonstrations, 107–108 description of, 120–121 differentiation, 90 diffusion curves, 91–92 franchise purchases of, 396–397 franchises, 386, 387 life cycle, 90 names of, 280 quality of, 92, 94, 397 strategy, of marketing mix, 88–92, 122–123 value of, to customer, 89–90, 121, 331–332, 339–341, 344 venture capitalist interest in, 177 Professional business angels, 174 Professional corporations, 268–269 Profits: distribution of company, 221, 284 evaluation of potential, 21–23 financial statements reflecting, 140 franchises generating, 403–404 growth vs., 362–363 pricing strategy ensuring, 92–93 profit margins, 65–66, 67 Pro forma financial statements See Financial statements Projections See Forecasting Promotion: consumer, 94, 99 of franchises, 396 price, 93–94, 99, 101 sales, 99, 101, 124–125 sales force, 99, 124– 125 trade, 94, 99 Prontaprint, 407 Property insurance, 290 Proprietary information, 265–266 See also Intellectual property Provisional patents, 303–304 Psychographics, 58–59, 80–81n6, 87–88, 118 Public relations, 101–102, 104 Public stock offerings, 20–21, 178–180, 185–189, 195n33 Public warehousing, 215 Q Quality, 92, 94, 397 Index R Rainmakers, 347 RBS (Rural Business-Cooperative Service) Business and Industry Guaranteed Loan Program, 247 Redemption agreements/provisions, 282–283, 284 Referrals, 344 Rejection, 345 Rent, 170 Replacement value, 165 Research and development: engineering and technical assistance programs for, 250–259 entrepreneurial businesses providing, 24 in franchising, 395 market research, 86–87, 143–144, 149 (see also Surveys/studies) Resources: business planning, 134–136 evaluation of, 16–23 external assistance with (see External assistance) financing as (see Financing) growth of business requiring, 197–198, 360, 364–365, 367, 378–381 human, 380–381 prioritization of, 17–18 sales, 352 social entrepreneurial, 427–430, 433–434 Web sites providing, 135–136, 239 Respondent superior doctrine, 286 Restoration Hardware, 233 Restrictive covenants: on bank loans, 220–222 employment-related, 264–267, 309, 320, 321–327, 361 Retailmenot.com, 101 Retained earnings, 140 Return on investment: for business angels, 175 determining potential, 22–23 harvesting investments for, 184–193 479 interest as, 148, 150, 216, 217–219, 233–234 profits as (see Profits) risk-return tradeoffs, 91 social, 427, 428 valuation including, 166–168 for venture capitalists, 175, 178, 179 Revenue See Sales revenue Ricciardelli, Mario, 16 Rightbrain/left-brain thinking, 38–39 Riskreturn tradeoffs, 91 Risks, critical, 131–132 Roaring Lion Energy Drink, 137 Robert, Don, 191 Robert Morris Associates, 21–22 Robot Coupe, 313 Rock, Arthur, 20 Rockefeller, John D., III, 427 Rockland Trust, 235 Roddick, Anita, 16 Role models, 8–9 Root Cause, 434 Rose, Howard, Rosen, Ben, 13 Royalty rates, 319–320, 394 RTTCs (NASA Regional Technology Transfer Centers), 253 Rubin, Jordan, Rural/agricultural entrepreneurs, 247–248 Rural Business-Cooperative Service (RBS) Business and Industry Guaranteed Loan Program, 247 Rural Energy for America Program, 247–248 Ryka shoes, 124 S Salary See Compensation Sales: aligning buying and selling process, 333–334 of businesses (see Mergers and acquisitions) case studies on making, 330, 341 480 Index Sales (Continued ) challenges of, 329–330 closing, 347–349 cold calls vs warm calls in, 342–343 consultative selling, 331–333, 352 customer service after, 349–350 customer’s strategic issues impacting, 338 data analysis for, 338–339 environmental context of, 334–335 establishing common ground with customers for, 344 of franchises, 399, 408 to government, 236–239 handling rejection in, 345 knowledge of customer’s industry impacting, 335–338 mindset for making, 331–333 objection response in, 345–347 opportunities, finding/pursuing, 334–339, 342–347 personal selling for, 102, 124– 125 precall planning for, 343 repeat, 349 resources on, 352 skill development for, 350–352 value selling/proposition, 331–332, 339–341, 344 volume of, 67, 93 Sales force promotion, 99, 124–125 Sales promotion, 99, 101, 124–125 Sales revenue: accounts receivables of, 200–206, 210–211, 211–213, 292, 368–369 business plans including, 133–134 cash vs credit, 202, 203–204 forecasting, 125, 138–139, 142–144, 149, 153, 203 income based on, 22, 61–62 seasonality of, 153, 155 Samuels, Bill, Jr., 101, 105, 106 Sawyer, Keith, Explaining Creativity: The Science of Human Innovation, 31 SBA See Small Business Administration (SBA) SBDCs (Small Business Development Centers), 227–229, 251 SBICs (Small Business Investment Companies), 233 SBIR (Small Business Innovation Research) Program, 255–257 SBTT (Small Business Technology Transfer) Program, 256–257 Schumpeter, Joseph, Schwab Foundation for Social Entrepreneurship, 434 Scojo Vision, 421–422 SCORE (Service Corps of Retired Executives), 10, 135, 229–230, 246 Scott, Mike, 20, 174 Scott, Tom, 88 S curves, 62, 64 Seahorse Power Company, 161–162, 173, 176 Search path/process, 30–31 Sears, 24 Seasonality, 153, 155 Second City, The, 43 Second City Almanac of Improvisation, The (Libera), 43 Section 108 Loan Guarantee Program, 249 Securities Act (1933), 293, 294 Securities and Exchange Commission, 172, 175, 187, 188, 294 Securities laws, 293–295 Segmentation, 87–88, 118 Service, customer, 123, 349–350 Service Corps of Retired Executives (SCORE), 10, 135, 229–230, 246 Service marks, 311 7-Eleven, 406 Sexual harassment, 287 Shane, Scott, 358 Shatzkin, Leonard, The Mathematics of Bookselling, 144 Signature Financial Group, 299 Silicon Graphics, Silverstein, Craig, 19 Skills/strengths: creativity as, 33–37, 39–40 of employees, 380–381 of entrepreneurs, 12, 15–16, 128–130, 363–364 Index of management team, 16, 128–130, 375 of sales force, 350–352 Skoll Foundation, 434 Small Business Administration (SBA): contact information for, 243 export assistance from, 239–240 external assistance from, 10, 171, 223, 226–237, 239–242, 244, 246, 251 loans guaranteed by, 171, 223, 230–235, 241–242, 246 MentorProteg´e´ program by, 237 Patriot Express Pilot Loan Initiative of, 246 procurement assistance from, 236–237 Resource Partners of, 227–230 SCORE (Service Corps of Retired Executives) and, 10, 135, 229–230, 246 Small Business Development Centers and, 227–229, 251 Small Business Investment Companies and, 233 Surety Bond Guarantee Program by, 233, 236 Women’s Business Centers and, 230, 244 Small Business Development Centers (SBDCs), 227–229, 251 Small businesses, 1–3, 227 See also Entrepreneurship Small Business Innovation Research (SBIR) Program, 255–257 Small Business Investment Companies (SBICs), 233 Small Business Knowledge Base, 135 Small Business Technology Transfer (SBTT) Program, 256–257 Social Capitalist awards (Fast Company), 419 Social consequence ventures, 422 Social Edge, 434 Social Enterprise Alliance, 432, 434 Social entrepreneurship: corporate social responsibility vs., 422–423 definition of, 412–414 481 enterprising nonprofits in, 416–421, 427–430 financing, 427–430 for-benefit organizations in, 422 hybrid models of, 420–423 importance of, 411–412 resources for, 427–430, 433–434 social consequence ventures in, 422 social purpose ventures in, 414–416, 430 stakeholders of, 430–432 types of, 414–423 wicked problems challenging, 423–426 Social Fusion, 434 Social Innovation Forum (Social Innovator’s Award), 419, 434 Social networking, 103 Social purpose ventures, 414–416, 430 Social venture capital, 427 Social Venture Network, 432, 434 Sociological factors, 9–10, 335 Software, 299, 308, 313–314, 317 Sole proprietorships, 268, 270–271, 272, 274 SolidWorks, 177 Solstice Capital, 427 Sony, 104, 388 Sony Ericsson Mobile, 104 Southland Corporation, 406 Southwest Airlines, 17 Sovereign Bank, 235 Spade, Kate, 96 Sperry, Roger, 38 Spinelli, Stephen, New Venture Creation, 33–34 Spire Corporation, 162, 173 Stacy’s Pita Chips, 69–70, 90 Stakeholders, social entrepreneurial, 430–432 Stamp, Jeff, 412 Staples, 67–68, 118 Starbucks, 95, 422 Start-up businesses See New businesses 482 Index Start-up capital: acquisition of, 19–21, 170– 171, 198–200 from business angels, 19, 20, 162, 172–176 from entrepreneurs, 162, 170–171, 198–200 equity financing providing, 19–21, 170–184, 198–200 from families/friends, 21, 162, 171–172, 198–199 for franchises, 403 from venture capitalists, 20–21, 162, 176–184 State government See Government, state Statements, financial See Financial statements Stealth competition, 71–72, 119–120 Stemberg, Thomas, 68 Stevens, Melanie, Steve’s Ice Cream, Stock: acquisition impact on, 192 convertible debt vs., 176 disposition of, in operating agreements, 281–284 employees owning, 288–290 employment termination resulting in disposition of, 283–284 equity financing in exchange for, 176, 183–184 legal entity selection affecting, 275, 277–279 options, 289–290 owner’s death causing disposition of, 281–283 public stock offerings of, 20–21, 178–180, 185–189, 195n33 transfer to third parties, 281 Stockholder agreements, 280–284 Strategic focus: of customers, 338 of growth-phase businesses, 358–360, 364, 367, 377–378 Strategic patenting, 304–306 Strengths See Skills/strengths Strong National Museum of Play, 41 Subchapter S corporations, 268, 270, 275–276 Subcontracting, 18, 76, 126–127 See also Consultants Success: key success factors, 336– 337 Nine Fs for, 23–25 survival rate of, 11 Sun Microsystems, 187 Suppliers: accounts payable to, 200–202, 207–210, 368–369 agency relationships with, 285–286 competitor information from, 72 distribution through, 68–70, 94–97, 123–124 evaluation of, 73–74, 127 international, 74–77, 217 letters of credit to, 217 marginal costs of, 18 operational plans including, 127 subcontracting through, 18, 76, 126–127 (see also Consultants) trade credit from, 170, 207–210, 369 tying arrangement with, 397 Surety Bond Guarantee Program, 233, 236 Surveys/studies: on accounts receivables, 205–206 on business angel investments, 175 on credit card debt, 199 customer feedback through, 105, 106–108 on economic impact of entrepreneurship, 8–9 on entrepreneurial creativity, 34, 39–40 on franchises, 407 Global Entrepreneurship Monitor, 170, 171, 356 on growth of businesses, 362–363 on intellectual property, 297 on international market, 75 on minority-owned businesses, 245 on philanthropy, 433 Index on play, 41–42 primary data from, 86–87 on product value to customers, 339 on SBA-guaranteed loans, 231 on social entrepreneurship, 420–421, 427 on starting a business, 5–6 on start-up capital, 170, 171 on venture capital-backed companies, 178–180 Survival rate, 11 Sustainability, 412, 414 Swanson, Robert, 10 Sycamore Networks, 189 Szaky, Tom, 416 T Taglines, 113, 114 Tandy Radio Shack, 71 Target market, 88, 122, 177 TARP (Troubled Asset Relief Program), 216 Taxation, 148, 274–278, 279, 285– 290, 292–293 Team, 128–131 See also Management team TECH-NET, 257–258 Technological assistance programs, 250–259 Technological factors, 335 Technology Innovation Program (TIP), 258–259 Technology licensing, 76 Technology transfers, 76, 253–254 Term Asset-Backed Securities Loan Facility (TALF), 216 TerraCycle, 416 3M, 341 Timing: of cash flow, 200, 368–369 development timeline, 128, 132 of financing, 132, 139–140 of patent applications, 300 of potential opportunities, 14–15 of revenue generation, 139, 153 483 Timmons, Jeffry, 33–34, 116, 139 TIP (Technology Innovation Program), 258–259 Tracy, John, How to Read a Financial Report: Wringing Vital Information out of the Numbers, 141 Trade credit, 170, 207–210, 369 Trademarks, 310–313, 315, 317, 389, 394 Trade Opportunities Program, 241 Trade promotion, 94, 99 Trade secrets, 265–266, 307–310, 315 Training, 350–352, 375, 393–394 Travel Alberta International, 104 Treiber, Bob, 162 Trends, 60–61 TripAdvisor, 103 Troubled Asset Relief Program (TARP), 216 Troy, Leo, Almanac of Business and Industrial Financial Ratios, 150 Tudor, Frederic, 29–30 Twitter.com, 103 Tying arrangements, 397 U Uniform Commercial Code (UCC), 292 Uniform Franchise Offering Circular (UFOC), 403, 408 United Nations “Millennium Development Goals,” 425, 426 Universities See Colleges/universities Urban entrepreneurs, 248–249 U.S Department of Agriculture (USDA), 247–248 U.S Department of Commerce, 239–241, 243, 245, 250 U.S Department of Defense, 256 U.S Department of Energy, 256, 258–259 U.S Department of Health and Human Services, 256 U.S Department of Housing and Urban Development (HUD), 248–249 484 Index U.S Export Assistance Centers (USEAC), 239 U.S government See Government, U.S U.S Patent and Trademark Office, 300, 301, 302, 312–313 U.S Small Business Administration See Small Business Administration Usefulness See Value Utility patents, 298–303 V Valentine, Don, 20 Valuation of businesses, 163–170, 175, 183, 184 Value: book, 165, 168 of business planning, 110–111 chain, 68–69 of entrepreneurial marketing, 84 of ideas, 32–33 of intellectual property licenses, 319 liquidation, 165, 202 perceived value pricing, 93–94 of product to customer, 89–90, 121, 331–332, 339–341, 344 replacement, 165 selling/proposition, 331–332, 339–341, 344 of social entrepreneurship, 411–412, 430–431 Vendors See Suppliers Venture capital/capitalists: business plans to secure, 111, 114, 178 candidates for, 176–178 competitor knowledge of, 72, 177, 183 dealing with, 181–183 follow-on rounds of, 184 global expansion through, 77 harvesting investments of, 184–193 negotiating with, 183–184 new business evaluation process of, 11–16 return on investment for, 175, 178, 179 Small Business Investment Companies providing, 233 social, 427 start-up capital from, 20–21, 162, 176–184 study on actual, 178–180 Venture philanthropy, 417, 427–430 VentureWire Alert, 72 Vesting provisions, 283–284 Veterans business assistance programs, 246 Vicarious liability, 286 Video games, 42 Virgin Money, 172 VisionSpring, 422 Volkswagen, 103 Volume, sales, 67, 93 W Walker, James, 110 Walker, Sam, 101 Wal-Mart: corporate social responsibility of, 422 distribution through, 123–124 economics of, 2–3 fragmented market consolidation by, 67, 118 profits of, 67 success of, 24 Walt Disney Company, 423 Walton, Sam, 2–3, 24 Warehousing, 214–215 Warren, Rick, 61 Wasserman, Noam, 360 Waterstone, Tim, Weber, Max, 431 Web site resources, 135–136, 239 See also specific Web sites by name Webvan, 65 Wetzel, Bill, 173 Wexner, Les, 24 Whole New Mind, A (Pink), 38–39 Whouley, Kate (ed.), Manual on Bookselling, 144 Index485Wicked problems, 423–426Working capital, 200–206, 220–221William James Foundation, 434Wozniak, Stephen, 19–20, 162, 173, 174Women, external assistance for, 230,Y232–233, 244, 430Women’s Business Centers, 230, 244Yelp, 103Woolworths, 24“Yes, And” exercise, 43–44, 55Word-of-mouth marketing, 103– 104Young Men and Fire (Maclean), 28Workers compensation, 287Yunus, Muhammad, 429–430