1. What are various sources of equity investment?

Public Stock:

Holding shares in publicly traded companies. Usually associated with larger corporations such as Ford Motors, Nike, Citibank. They can trade freely on the New York Exchange and NASDAQ. Smaller companies also trade on these exchanges. The company can sell or buy stocks. It is no longer a private held company.

Private Equity:

• Venture Capital: Capital invested in a project in which there is a substantial element of risk, typically a new or expanding business.

• Leveraged Buyout: The purchase of a controlling share in a company by its management, using outside capital.

• Growth Capital: Usually a minority investment, in relatively mature companies that are looking for capital to expand or restructure operations, enter new markets or finance a significant acquisition without a change of control of the business

• Special Situations: Usually referred to a company where value can be unlocked as a result of a one-time opportunity (e.g. change in government regulations or market dislocation).

• Mezzanine Capital: Any subordinated debt or preferred equity instrument that represents a claim on a company’s assets which is senior only to that of the common shares

2. What guidelines should entrepreneurs follow when they are selecting a venture capitalist?

The textbook mentions 6 different guidelines to follow when selecting the appropriate venture capitalist:

1. Scrutinize your business with a critical eye: Work out solid financial projections to prove the results to the venture capitalist.
2. Beef up management: Hire staffers who can make up the deficits.
3. Keep a high profile so the VCs will visit: Make your company look good inside and out to attract potential investors.
4. Target the search: Look for firms that specialize in the industry and the size of investment.
5. Keep a lookout: Look for smaller VC firms that may be more flexible and more receptive to investing in a company.
6. Investigate possible venture partners: Find out what the needs are for the venture capitalist so when a visit is made, the meeting can be more successful. 

7. What are the differences between a single-hit and a home-run business?

A single hit business is one that does not have a sustainable business model or product. A good example of this would be the selfie-stick. A home-run business, on the other hand, would be one like Apple, which is built on a firm foundation and builds off of its products. 

8. What are the four key factors that a banker seeks before providing a corporate loan? 

The four Cs of lending are:

1. Characters: That includes traits such as talent, reliability, and honesty.
2. Cash Flow: To cover debt throughout the term of the obligation.
3. Collateral: To support at least part of the loan if the company is unable to meet its obligations.
4. Contribution: By the entrepreneur towards the funding requirement.

1. What sources of funding are available to entrepreneurs at the early stage of the company?

The following eight sources are available, and mostly suited for entrepreneurs, who want to secure an early stage funding:

1. Self-Funding: The majority of new business are usually started with funds that come from personal savings or various forms of personal equity of the founder(s).

2. Moonlighting and Consulting: It might be a wise idea not to quit your full-time job. You could work part-time and still be engaged to your venture idea. You could also offer freelance consulting jobs to other startups or companies. Maybe you have expertise other companies could benefit from.

3. Bootstrapping: It is often applied in small business, and is a form of self-funding. It allows to analyze the operation process to save and improve efficiencies that will help and allow the entrepreneur to learn more about the company.

4. Family and Friends/Angels: An entrepreneur usually sees friends and family as a great source to go to when asking for funding. To guard themselves as well as their friends/family, the entrepreneur should treat them as he/she would if they were a “real” investor. It’s important to document any loans that come from friends or family. Angels often represent the best method to pursue when friends/family is not a viable option. Angels are high-net-worth individuals who have some funds they are willing to risk in startup companies.

4. Micro-Equity, Micro-Loans: Usually the entrepreneur receives a small amount of money to get by for a few months, and in return gives up a few percent of the company – usually 4%.

6. Personally Secured Bank Loans: The primary advantage of debt financing is that the entrepreneur does not have to give up any part of ownership to receive the funds.

7. Factoring and Supplier Financing: If you are unable or unwilling to provide personal or asset-backed guarantees but you have purchase orders from reputable customers, it may be possible to use these orders to secure funding from so-called factors.

8. Government Programs: The Small Business Administration agency, a government program, works with intermediaries, banks, and other lending institutions to provide loans and venture capital financing to small businesses unable to secure financing though normal lending channels.

2. What are “virtual” companies? What tools help them function? Why are they of interest to an entrepreneur?

A virtual company is a company that has no office, very few employees loaded with associated costs and benefits, no communication costs, low legal costs etc. A virtual company will use other services to get through the work day, for example, conference calls are held via Skype, BaseCamp for project team and document management, ADP for payroll and tax management, and Salesforce.com for sales tracking etc. The move to so-called cloud computing provides start-ups with access to highly sophisticated management tools on a free or a low pay-as-you-go basis. Virtual companies move quickly, change direction without disruption, and use the best resources without taking on long-term liabilities.

3. Describe the seven techniques for bootstrapping that you could use if you started a company.

1. Cooperative Purchases: There are often ways to work with other small companies to create a buyers’ club.

2. Access to Expensive Equipment: Schools sometimes have programs to help small business and allow accessing their equipment.

3. Outsourcing: To save money, it could be ideal to outsource activities such as bookkeeping, payroll services, and tax return services.

4. Credit Cards: The entrepreneur may contact major credit card companies to compare prices and options to see what company can offer the best deal.
5. Bartering for Goods and Services: You may have skills you can trade for skills you don’t have.

6. Renting or Leasing Equipment: Especially expensive equipment you only need in the start-up phase is best rented or leased.
7. Used Equipment: It is often possible to find inexpensive used equipment that with a little work will fill short-term needs.

4. Why is bootstrapping important for (a) closely held companies and (b) early-stage, high-growth companies seeking equity investors?

1. Bootstrapping is one of the few forms that give up no ownership.
2. Bootstrapping shows potential investors that you have “sweat equity” in the business and wont give up easily.

5. What is meant by factoring of purchase orders?

Factoring is an alternative to taking on a full loan from the bank, these are private lenders that provide funds for operations based on a percentage of sales but they charge a very high interest.

6. How can suppliers help in providing working capital?

While trying to gain capital supplies may be able to help. If they trust that the operations will be successful they may be inclined to open up a line of credit with their company.

1. What financial measurements should be prepared to measure company performance?

There are three main financial documents that need to be prepared to measure the economically performance of your company:

1. The balance sheet
2. The income statement; and
3. The statement of cash flows

2. What are the categories and steps in preparing a financial budget?

1. Prepare Financial Projections
   1. Measuring sales volume
   2. Measuring profits
   3. Measuring cash generated

2. Preparing An Annual Budget
   1. Sales
   2. Cost of goods sold
   3. Gross profit
   4. Operating expenses
   5. Operating profit/loss
   6. Other income and expenses
   7. Pretax income
   8. Income taxes
   9. Net income
   10. Earnings before interest expenses, interest income, and income taxes (EBIT)
   11. Earning before interest expense, interest income, income taxes, and amortization (EBITDA)

3. Preparing A Cash Flow Forecast
   1. Consider cash flow revenues
   2. Consider cash flow disbursements
   3. Reconcile the revenues and disbursements

3. Describe the breakeven technique in the decision-making model to determinate profit and loss.

 The break-even point is the point where the business’s sales have generated enough income to cover all of its fixed costs and expenses. At that point, all of the business’s incoming revenue is profit as long as the expenses and costs are not increased and the sales amounts are not reduced. To use this technique you only need to know the fixed costs of operations, variable costs of production, and price per unit.

The break-even point identifies the total amount of sales the business needs before profit can be earned. When analyzed closely, the break-even analysis also helps the business to identify excessive fixed costs. Since the break-even point is directly related to the fixed costs, reducing and controlling these costs aids the business in achieving a lower break-even point for quicker profitability.

4. Why is building a corporate culture to match a company’s mission important?

Every organization, from small businesses to large corporations, has a culture. The culture refers to the values and attitudes of employees in the business or organization. In a business with an unhealthy culture, employees act as individuals, performing their duties to meet their own needs, such as a paycheck or health benefits. A healthy corporate culture values each employee in the organization regardless of his job duties, which results in employees working as a team to meet the company’s and their own personal needs. Healthy corporate culture improves the performance of a business in a number of areas.

Your company culture defines the way in which your organization interacts with one another and how the team interacts with the outside world, specifically your partners and suppliers. It’s the formula that guides the team, as well as inspires and motivates employees. It is also responsible for attracting and attaining great talent, as well as creating a fun, happy and exciting work environment.

A great company culture also attracts a great partner, which, in turn, creates great success. People will want to do business with you because of what you believe in and stand for, rather than solely on your products alone.

5. Select six leadership attributes that you feel are the most important when building a strong culture. Why?

1. Honesty – Whatever ethical plane you hold yourself to, when you are responsible for a team of people, its important to raise the bar even higher. Your business and its employees are a reflection of yourself, and if you make honest and ethical behavior a key value, your team will follow suit.
2. Organized – Are you prepared for meetings, presentations, events and confident that people around you are prepared and organized as well? You are a reflection of your company, and your employees see and evaluate you as much, if not even more, as you do them. Be organized.
3. Evaluative – Evaluation of events and programs is essential for an organization/group to improve and progress. An exceptional leader will constantly evaluate and change programs and policies that are not working.
4. Respectful – Treating others with respect will ultimately earn respect.
5. Well Educated – Knowledge is power. Work to be well educated on community policies, procedures, organizational norms, etc. Further, your knowledge of issues and information will only increase your success in leading others.
6. Communicative – Being able to clearly and succinctly describe what you want done is extremely important. If you can’t relate your vision to your team, you won’t all be working towards the same goal.

6. Name three important factors that you must take into account when hiring key people.

1. Work experience – Work experience might be one of the most important considerations you have for key jobs at your company.
2. Skills set – The specific skills set of potential key employees is a critical factor that can often determine who you hire and who you do not.
3. Confidence – An applicant who approaches you with a confident attitude makes a good first impression. This is also probably the way this person will approach your clients. An applicant who exudes self-confidence believes in him-/herself. (S)he will believe (s)he can handle the job and exceed expectations. Self-belief is important for facing and succeeding in challenges. Your workplace will benefit from the hiring of individuals who are confident they can learn and perform as needed.

Name three factors that impact how a new technological innovation fits existing market conditions.

1. Early users’ experience is rewarding and immediate
2. Early users discussing the needs and problems of the product with peers
3. Involving your early users in product or service development

Name two factors that impact “the market window of opportunity.”

1. Experiment with early adapters as you polish your marketing plan
2. Know where you are on the hype cycle as you promote your innovation

Name a product that is currently being used by early adopters only.

Google Glasses.

What is the primary driver of the social entrepreneur?

The primary driver for a social entrepreneur is change. He or she is concerned with issues such as global warming, pollution, and natural resource conservation. Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

Should green or cleantech ventures be classified as social enterprises? If so, why?

Yes, they should! Social enterprises are social mission driven organizations, which apply market-based strategies to achieve a social purpose. The movement includes both non-profits that use business models to pursue their mission and for-profits whose primary purposes are social. Their aim is to accomplish targets that are social and/or environmental. Many commercial businesses would consider themselves to have social objectives, but social enterprises are distinctive because their social or environmental purpose remains central to their operation. This brings home my point of why green or cleantech ventures should be classified as social enterprises. Green initiatives often require large changes to existing infrastructure, shifts in human behaviors, etc.; and the fact that they are mostly concerned with the overall well-being of society, classifies it as a social enterprise.

 What are some of the negatives of forming the social venture as a non-profit?

• Creating a nonprofit organization takes time, effort, and money. Because a nonprofit organization is a legal entity under federal, state, and local laws, the use of an attorney, accountant, or other professional may well prove necessary.

• A nonprofit must keep detailed records and submit annual filings to the state and IRS by stated deadlines in order to keep its active and exempt status.

• Although the people who create nonprofits like to shape and control their creations, personal control is limited. A nonprofit organization is subject to laws and regulations, including its own articles of incorporation and bylaws

• A nonprofit is dedicated to the public interest; therefore, its finances are open to public inspection. The public may obtain copies of a nonprofit organization’s state and Federal filings to learn about salaries and other expenditures.

Why do stakeholders view the social venture differently from a traditional venture?

Since the social need being redressed is the primary driver, everything else feels more intense. Stakeholders both external and internal to the venture tend to view the social venture as more than just a company. They view the social venture as a change agent that can impact the world for the better. The primary goal is not to make money, but rather change.

What are some of the growth challenges of a social venture?

1. With growth come the stresses on the ability of the venture to communicate internally
2. It runs the danger of starting to appear to its employees as just another company
3. Keeping the employees motivated and informed about how to keeping the mission alive
4. The conflict of hiring followers or employees who will see themselves as just employees

The differences between Social Entrepreneurship, Corporate Social Responsibility, and Philanthropy: 

Philanthropy and corporate social responsibility are closely related concepts in that philanthropy is a slice of the bigger corporate social responsibility pie. When integrated into a company’s mission and used to guide a company’s actions, corporate social responsibility can benefit the communities it serves, the company itself and its employees.

Corporate social responsibility not only deals with corporate philanthropy, but also other issues that affect the environment, consumers, human rights, supply-chain sustainability and transparency for the greater good of the world at large. Businesses that integrate social responsibility into their missions acknowledge that their business processes have an impact beyond the company. Therefore, they address issues like philanthropy, environmental-impact assessments and providing good working conditions.

Social entrepreneurship is different in the sense that the entrepreneur makes “the change” his or hers primary goal for the business, whereas CSR is just a part of the overall business – usually an expense for the company. Philanthropy is something the company can stress within the company to its employees.

The differences between Social Entrepreneurship and Business Entrepreneurs

Perceptions of Value

For the business entrepreneur, value lies in the profit the entrepreneur and investors expect to reap as the product establishes itself in a market that can afford to purchase it. The business entrepreneur is accountable to shareholders and other investors for generating these profits. To the social entrepreneur, there’s also value in profits, as profits are necessary to support the cause. That said, value for the social entrepreneur lies in the social benefit to a community or transformation of a community that lacks the resources to fulfill its own needs.

Approach to Wealth Creation

Although the business entrepreneur and the social entrepreneur are similarly motivated to change the status quo, their missions differ significantly. The business entrepreneur is driven to innovate within a commercial market, to the ultimate benefit of consumers. To the social entrepreneur, wealth creation is necessary, but not for its own sake. Rather, wealth is simply a tool the entrepreneur uses to effect social change. The degree to which minds are changed, suffering is alleviated or injustice is reversed represents the organization’s success.

Real Case

Volkswagen has been cheating in emission tests by making its cars appear far less polluting than they are. The US Environmental Protection Agency discovered that 482,000 VW diesel cars on American roads were emitting up to 40 times more toxic fumes than permitted – and VW has since admitted the cheat affects 11 million cars worldwide. It means far more harmful Nix emissions, including nitrogen dioxide, have been pumped into the air than was thought – on one analysis, between 250,000 to 1 million extra tonnes every year.

If VW had some sense of CSR, this would never had happened!

For my venture idea, I’ll pick up where I left off. I’m ready to pitch my idea about my juice and sandwich shop that I once operated in Alanya, Turkey. Although I know there are a lot of other companies that offer juice, smoothies, coffee, and sandwiches, in Alanya now, I do strongly believe that “DJ’s Favorite Juices” (DJ’s) could once again rise and be a profitable business.

The focus on health and eating right is greater than ever. It is a trend that has developed over the past ten (10) years and is still growing. Eating right and not turning to an unhealthy snack during the day, is rapidly being replaced by healthier choices. In today’s fast-paced society, it seems that many of us measure our meals by minutes rather than what is good for us. If it isn’t fast, it doesn’t fit into our schedule, and we don’t want it. We turn to food we know is bad for us in an effort to save time, and in some cases we will skip eating altogether. Eating healthy, and eating fast, do not have to be mutually exclusive.

People are getting more concerned about what they eat and drink, every calorie counts. People in our target group are relatively more aware of what they eat and drink and tend to spend more on health compared to people who are out of, under, or above the age group. The customers are locals and tourists; and our product line appeals to everyone within the target group regardless nationality. DJ’s’ focuses on the young independent individuals who are able and willing to spend the same amount as one would on fast food.

DJ’s will be widely spread over the main bazaar area and Alanya through different promotions. We will have posters at bus stops and a promotion video on the busses. We will create a Facebook page for people to follow with a monthly competition and make brochures to hand out to people walking by the store and around the bazaar. This will promote the sale and let potential customers know that DJ’s is out there and ready to serve healthy beverages and food. In order to build up its client base, DJ’s will use banners and fliers and cross-promotions with other businesses in the Alanya area.

DJ’s marketing strategy will focus on getting new customers, getting customers to spend more, and come back more often. Having a loyal customer base is the most important for DJ’s since such customer core will not only generate most of the sales but they will also recommend DJ’s to others.

DJ’s will position itself as unique healthy fast food place where its customers can not only enjoy a freshly squeezed juice/smoothie and sandwich but also spend their time in a relaxing environment. Comfortable sofas and chairs, dimmed light and quiet relaxing music will help the customers to relax from the daily stresses and will differentiate DJ’s from its competitors.

1. What are the factors in deciding what form of ownership is best suited for the potential business?

When you start a business, you must decide whether it will be a sole proprietorship, partnership, corporation, or limited liability company (LLC). Which of these forms is right for your business depends on the type of business you run, how many owners it has, and its financial situation. No one choice suits every business: Business owners have to pick the structure that best meets their needs. Here are some of the most important factors to consider when starting a business:

• The potential risks and liabilities of your business
• The formalities and expenses involved in establishing and maintaining the various business structures
• Your income tax situation, and
• Your investment needs

2. Briefly describe the advantages and disadvantages of a sole proprietorship and partnership.

 Advantages of sole proprietorship:

1. Profit incentive – after all the debt are paid, the owner receives
2. Total decision-making authority – the owner is in total control, thus he/she can respond quickly to changes, which is an asset in rapidly shifting markets
3. No special legal restrictions – it’s the least regulated form of business ownership
4. Easy to discontinue – if the owner no longer wishes to continue his/her business it can be terminated whenever.

Disadvantages of sole proprietorship:

1. Unlimited personal liability – the owner is personally liable for all business debts
2. Limited skills and capabilities of the sole owner – the owner might not know much of how to run a business and lack skills, education, work experience, and training
3. Limited access to capital – sole proprietorships often find it difficult to raise capital unless they have great personal wealth
4. Lack of continuity for the business – if the proprietor dies or becomes incapacitated, the business automatically terminates unless a family member can take over the business

Advantages of partnership:

1. (General Partnership) Easy to establish – like sole proprietorship, partnerships are easy and inexpensive to establish
2. Complementary skills of partners – in successful partnerships, the parties’ skills usually complement one another
3. Division of profits – profits can be divided among partners with no restrictions
4. Larger pool of capital – each partner’s asset base improves the ability of the business to borrow needed funds
5. Ability to attract limited partners – there can be any number of limited partners as long as there is at least one general partner
6. Flexibility – a partnership can generally react quickly to a changing market
7. Taxation – the partnership itself is not subject to federal taxation, but the involved parties’ salaries are

Disadvantages of partnership:

1. Unlimited liability of at least one partner – the general partner has unlimited personal liability
2. Capital accumulation – partnerships usually have limitations and restrictions to raising capital
3. Restrictions of elimination for the general partnership – when other partners don’t have money to buy the partner’s part, the existing partners are forced to accept a new partner or dissolve the partnership
4. Lack of continuity for the general partnership – if one partner dies, the other partners may not be interested in overtaking that partner’s interests
5. Potential for personality and authority conflicts – friction among partners in inevitable and difficult to control

3. Explain the corporate form of ownership and how a business is incorporated

 A corporation is a business or organization formed by a group of people, and it has rights and liabilities separate from those of the individuals involved. It may be a nonprofit organization engaged in activities for the public good; a municipal corporation, such as a city or town; or a private corporation (the subject of this article), which has been organized to make a profit.

In the eyes of the law, a corporation has many of the same rights and responsibilities as a person. It may buy, sell, and own property; enter into leases and contracts; and bring lawsuits. It pays taxes. It can be prosecuted and punished (often with fines) if it violates the law. The chief advantages are that it can exist indefinitely beyond the lifetime of any one member or founder, and that it offers its owners the protection of limited personal liability.

4. List the differences between the S-Corporation and the limited liability company

 The main differences between an S corp. and LLC are:

• S-corporations are more restrictive on who the shareholders (owners) of the company can be
• S-corporations are required to pay a salary to those owners who work for the company and own more than 2% of the company. In contrast, LLCs are not obligated to pay a salary to its members (owners). This has tax implications for some companies like single-person ventures
• S-corporations are required to maintain and file formal records for the board and shareholder meetings
• S-corporations are allowed to have only one class of stock
• It is a little easier to set up employee stock option plans for S corporations than for LLCs

Practical questions:

How do you think the large corporation, VW, should handle the emission? Could they have done anything to prevent this scandal; and why do you think it happened?

To make my point as clear as possible, I’ve decided to attack this question from a different angle. When my sister was getting married, there were a lot of things she and her fiancé had to consider. Building a business plan is sort of the same as building your wedding, so think about business planning like planning your wedding. When you plan your wedding you start with the big picture (your perfect day), you then break it up into its essential elements (venue, catering, photography, guest list, ceremony, budget etc.), you organize what needs to get done and in what order (book venue, decide on guest list, send invites etc.), develop a series of action plans (to do lists) and then delegate tasks to your team (unsuspecting family members). You monitor progress frequently and make adjustments to your plan as you go… but you never loose sight of the big picture (your perfect day).

If most people can plan their wedding day, why do most companies fall short when it comes to business planning? So, looking back at my sister’s wedding I came to think of 6 reasons why a business plan might fail:

#1 – The plan is too short sighted…

Most businesses lack a long-term vision of what they will become. Often business plans focus on achieving unrealistic short-term aims, without any perspective about where they want to be in the long term.

#2 – Biting off more than you can chew…

Many business plans fail because they attempt to take on too much at one time. To make sure you don’t choke, you need to break down your goals into bite size chunks. Think of your business plan like a meal (10 courses) that you enjoy over the course of the evening rather than a university burger eating competition.

#3 – The plan is too complicated…

A lot of business plans have too many moving parts. A breakdown in one part can cause the whole plan to collapse like a house of cards. Complicated plans that have lots of detailed and complex steps that take time to develop, are hard to communicate and harder to implement. The best plans are simple.

#4 – Focusing in the wrong thing…

Many business plans include initiatives that seem like a good idea, but at the end of the day don’t contribute much to the result you are aiming for. While working on these “seemingly good ideas” businesses are distracted from working on what really matters.

#5 – “Business as usual” takes over…

Many businesses are re-active in nature. When they get busy with the day-to-day “business as usual” activities, working on the business plan goes out the window. To successfully implement a business plan, you need to be pro-active. Being pro-active means taking a long-term view and making the implementation of your business plan a priority.

#6 – Poor Leadership…

Poor leaders are those that lack vision and direction, and they place no value on strategic planning and fail to lead by example. At the end of the day, the buck stops with you.

If entrepreneurs and other venture seeking individuals keep these things in mind when building and organising their business plans, then they will be much more well-equipped to handle any unforeseen problems that may arise in the long or short term. Most entrepreneurs don’t get it right the first time. Just think about Steve Jobs. Why do you think he didn’t succeed with Apple at first? After all, he was one of the founders of the company.

From the two business models, “The Five Component Model” and “The Business Model Canvas”, I personally prefer the last of those two. You may ask why? Well, to me the canvas model seems more thorough. The model is based on research, and it is suggested that the model is made in teams. I see myself as a team player, and I like the idea that several people collaborate on designing a business model. The questions are fairly straightforward, yet very in-depth questions. They touch all segments of your business, creating a more thorough business model.

The two models are two completely different models. Here are two main differences:

• The five-component model doesn’t include a representation of the main business goals, e.g. strategic business objectives, critical success factors and key performance indicators, which a holistic business model approach should include. The canvas model offer insight in many areas of business, including: customers, financing, infrastructure, and value-propositions (for example, overall customer experience and outcome)
• The five-component model doesn’t have a clear cause and effect linkages between the competencies, desired outcomes and measurements. Thereby the business model can’t help with possible strategic decisions. The business model canvas is a better fit due to its in-depth questions, making it easier to strategize the decisions of the business.

To add to these differences, I’m a bit surprised that neither of the two business models includes corporate structure & responsibility, which, in my opinion, a business model should include.

A perfect example of listening to customers, and steer your business in a direction that serves what the customers want, is the Greif Packaging case. An internal entrepreneur decided to listen carefully to its customers. He saw there were unmet need and new sources of value to be accessed. Greif converted its business model into a “trip-leasing” company for special chemicals. Their customers didn’t want all the hassle of buying and owning steel drums; they just wanted to move toxic chemicals from A to B efficiently.

Speaking of changing a business model, it is also worth mentioning that businesses have the opportunity grow and expand their business through either franchising or licensing. The primary difference between a franchisee and a licensee is that franchisees can expect to have a much closer relationship with their parent company than their licensee counterparts. Franchisees typically retain rights to the parent company’s trademark and logo. This is important because it is a visible representation of the connection between franchisor and franchisee.

In many ways, franchisees are the public face of the company and so their relationship with the franchisor will be close. For that reason, franchisors usually provide a certain level of training and support to franchisees and their employees. Franchisees can also expect a certain amount of territorial exclusivity as well as controls over the products and services they offer.

The relationship between licensees and the licensing company is looser than the relationship between franchisors and franchisees. In most cases, the licensee does not retain rights to use the company’s trademark. Instead, the licensee is expected to establish its own identity in the marketplace.

Similarly, licensees usually don’t receive exclusive territorial rights. This means that the licensing company is free to sell similar licenses and products to other people in the same geographic area. Licensees also don’t receive much in the way of training or ongoing support from the licensing company.

On the upside, license opportunities are often less expensive than franchises in both the upfront investment and ongoing fees. Once the licensee launches the operation, the relationship with the licensing company is frequently limited to purchasing products whereas franchisees can expect to pay royalties on a go-forward basis.

It’s easy to copy what is seen as working in today’s market. It’s a tough game, and anything you can do to help kick-start your new business, blog, WebTV show, podcast, service, product or digital magazine in a positive manner is understandable. However, I’m a big believer that the advantages of innovation in business go way beyond just doing well, or making money. It’s about creating the right kind of persona as an entrepreneur. It’s about moving and shaking in the right circles. It’s about “killing it” live on stage, in the boardroom, over the dining table, or on the golf course for that matter. The benefits of being innovative in the way you startup, grow and develop your business far outweigh the benefits you’ll enjoy by simply copying someone else’s idea, or model. I do see a trend of cutting corners, copying, etc. in various industries; for example, Uber was the first to offer an alternative to Taxis, and then along came Lyft and now Gett. There are always going to be those that copy and duplicate what you have done. Innovation is essential for everyone to evolve and grow stronger into a better society. Without innovation the world would run idle.

Innovation can help you discover what opportunities exist now, or are likely to emerge in the future. Successful businesses not only respond to their current customer or organizational needs, but also often anticipate future trends and develop an idea, product or service that allows them to meet this future demand rapidly and effectively. Innovation will help you stay ahead of your competition as markets, technologies or trends shift. Trends and technology are constantly changing, thus it is vital for any business to stay on top of their games to meet the demands of their customers.

Innovation is not only about designing a new product or service to sell, but can also focus on existing business processes and practices to improve efficiency, find new customers, cut down on waste and increase profits. This is also another way of how innovation changes. As new opportunities emerge so does the kind of customer that buys your product or service.

Constantly innovating and improving business practices is also likely to help you attract better staff members and retain more of your existing staff – something that is crucial to the long-term health and performance of your business. Having innovative and engaged employees are very important, without them you would not be able to exist.

I think the no. one thing why Dell managed to be so successful is that they were efficient. Michael Dell was spending time with customers to figure out exactly what they wanted before the product was made as well as offering customized orders. Listening to the customer ahead of time takes the guesswork and wasted resources out of the equation altogether. Other companies offered only one solution, whereas Dell told the consumer that they basically could “Have it your way,” in true Burger King fashion.