MGT3960 Entrepreneurship Management Fall 2015

11/4/15

New technological innovations have to adopt and fit into the existing market conditions. Some factors that impact how new technological innovation fits existing market conditions are path dependencies, network effects, standards and compatibilities.

• Path dependencies: the person must take into account the history of developments that are already being embedded in business. A new innovation must fit into an existing environment.
• Network effects: the impact that one user of a product or service has on the value for others.
• Standards and compatibilities: A new product or service can enter the market more easily if it is compatible with existing products and can meet standards already in the market.

Two factors that impact the “market window of opportunity” are hype and adoption cycles.

• Hype Cycle: Product or service popularized by the press as the next big thing.
• Adoption Cycles: Describes the acceptance of a new product or innovation.

An early adopter is a person who pays attention to new and innovative products. They are often referred to as opinion leaders because they are the first to try products. A product that is currently being used by early adopters is a drone. Drones are small aircrafts boarded by a high-resolution camera used to capture pictures and videos long distance. Only recently have the media put a spotlight on drones and their abilities. Drones are so new the government is in the process of making laws pertaining to privacy and where they can be used.

10/28/15

The primary drivers of social entrepreneurs are issues that deal with the well being of the planet. These issues include social warming, pollution, etc. Another good description of a social entrepreneur is a person that innovates solutions to society’s most pressing social problems. In my opinion green ventures should be classified as social entrepreneurs because the pollution and disintegration of our planet is a very big social problem, which needs attention. Nevertheless, I feel many businesses that deal with the care of people can also be classified as social entrepreneurships. In the case of my Daycares, I am serving my community by helping the young generation be model citizens. It is also better for the children to be entertained by using educational materials and games instead of being out in a bad neighborhood and getting into trouble by roaming the streets. A social venture can be formed as a non-profit. Some negatives for choosing a nonprofit is the limited resources you will have. By not having a market driven business there will be no income circulating only the donations. If you do not have profit it is very hard to earn income to help society. Stakeholders view social ventures differently from a traditional venture. This is because there are more emotions involved then merely ambition for making money. People have to believe in your vision for your social venture to work. Stakeholders also more carefully scrutinize a social venture because they want to know in detail how their money is being used. Some of the growth challenges of a social venture include the opinions and emotions employees have towards the social venture and its mission. Since employees tend to be emotionally invested in the venture they will have problems staying in the company if the mission has shifted or if they feel the venture should have taken different decisions.

CSR means corporate social responsibility. It is a management concept which companies integrate social and environmental concerns into their business. In a CSR business they make decisions that help benefit society. This type of business cares for the people, planet and also making profit. Philanthropy can be defined as a charity. It is the concept of giving donations of money to good causes that promote the welfare of others and the planet. Nevertheless, it is not limited to donating money; it is also an idea, event or action which helps society. Social entrepreneurship uses business techniques to find solutions to social problems. This is different to a regular business because it focuses on making a positive change in today’s society and the environment.

10/7/15

• What are the factors in deciding what form of ownership is best suited for the potential business?
  • The first thing I think of in deciding the type of ownership for a business is how much control you are willing to give up. For my Daycares I chose to own the business as a sole proprietorship because I wanted to be the only one making the decisions of the business.
  • Another factor to consider is how much capital is needed to start the business. If you cannot generate enough money to fund your own start up you will have to either get a loan or find investors which can become partners in the company.
  • An important question to ask is: How big do you want the company to grow or have the potential to grow? Since I knew my Daycares have a limit to how many children I can have at each location in total, I was not worried about getting partners or investors to grow the business because the department of health put a limit to it. Nevertheless for a product based business or a service without such limitations you can choose to incorporate your business to be able to have stocks in the future.
  • Will the company be big enough to continue after you no longer can be there to manage the company? This can include death and incapacitation. Can you pass it down to your children depending on the form of ownership you choose?
  • A very important question to ask is how much liability do you want to personally be responsible for? With my Daycares I am responsible for any failures because I am the sole proprietor. Therefore I get the full benefits if my business succeeds but I will also be liable if it fails.

• Briefly describe the advantages and disadvantages of a sole proprietorship and partnership.
  • A sole proprietorship is a form of business with a single owner.
    • The advantages are: The start up for this type of business is easier because it only requires a business license to open. The business can be closed/terminated easily. Since there is only one owner, he or she has the right to make all business decisions. For paying taxes, the business and owner are not taxed twice; it is taxed as income or loss directly to the owner.
    • The disadvantages of a sole proprietorship include having limited access to money. Unless the owner has money to grow the business themselves, it will be stuck and not be able to grow because the fund are limited. The skills and capabilities of the owner are also limited and there is no one else to help the business be successful or grow. When there is only one owner you tend to think that your way of doing something or solving a problem is the only way, nevertheless, if there were partners involved there would be more ideas, education, knowledge and experience. The biggest disadvantage is being unlimitedly personally liable if something goes wrong. Any debts can be collected from the sole proprietor using their personal items like their house, car or any savings.
  • A partnership is an association of two or more people being co-owners of a business.
  • The advantages are: A general partnership is fairly easy to establish and is also inexpensive. Although it does require a registration. Another advantage is that there are more people to help run the business. Therefore there is more knowledge and skills then with just one person. It is also better because having multiple partners can increase the amount of money that can be available for the business.
  • The disadvantages are: There has to be at least one general partner, which assumes unlimited personal liability. This can give way to conflicts within a partnership between the partners. If a partner wants to leave the business or dies the business might dissolute and there are many restrictions in the way the partners can leave the company.
  • Explain the corporate form of ownership and how a business is incorporated.
    • First you have to choose the name of your business and check if no one else is using that name. You can check on the Clerks Commissions website. You then have to choose what state to register in and see if you will need an agent to represent the corporation for a fee if you are not a resident of that state. The next step is to prepare the certificate of incorporation and have the filing fee.
  • List the differences between the S-Corporation and the limited liability company.
    • S-Corporation: Is taxed like a partnership. They are limited to only 100 owners and to one class of stock. Only individuals and certain trusts may own stock. This type of corporation has many tax consequences if S-Corp status is broken. An S-Corp is not easy to form and there are restrictions to ownership.
    • Limited Liability Company: There are no restrictions on the number and types of owners. There can also be different classes of memberships. LLC’s are not a tax paying entity. The company cannot be taken public. Nevertheless it is an easy company to form and maintain.

9/30/15

Why do business plans fail?

A successful business plan is one that is able to attract investors and funding. It is used by entrepreneurs as a guide for the company and shows investors what the business is about, a market analysis for the product or service you will be providing, who are the competitors, how will you market your product, how will the business be managed, how much funding is necessary and what are the business’ financial projections in different time periods. There are many reasons why a business plan can fail. I think the most common mistake is that entrepreneurs do not set realistic values in their plans. Entrepreneurs should take ample time to study the market and know how their product or service will be received in the market. Business plans need to have specific information about their target audience, they can use primary or secondary market research although secondary is the most cost effective and most common. The text states that another common mistake is the lack to mention how the investors will be repaid with a return/interest. Investors want to be sure their money will be put to work and not only there to make the dreams of an entrepreneur a reality but they want to get richer too. The investors need to feel they can trust in the company therefore all the information in the business plan must be real and honest, even the resumes used must be of real potential employees that are qualified for the positions. Business plans that are not specific, relevant, honest, and valuable will most likely fail.

9/2/15

My definition of being an entrepreneur is having the innovation, ambition and courage to start your own business from the ground up, not always having a back-up plan. Entrepreneurs give everything to have their business succeed and have creative new ideas to set them apart from other similar businesses. Before reading the first chapter of the textbook I have always thought that to be an entrepreneur you have to have different types of businesses. From my point of view a small business owner is different because they can own a business without being creative, for example a franchise owner. A small business owner would have to have some characteristics of an entrepreneur because there are always risks but there does not have to be innovation.

When I started with my first daycare I expected and continue to expect to always be in control. Maybe because I like to interact with children and am committed to their safety and happiness, nevertheless, I would like to open a bigger center in which I am willing to share control to make more money as long as I am still able to oversee the wellbeing of the children. If that task is taken away I would lose the personal connection with my business and it will become just another paycheck.

Some growth issues entrepreneurs face are staying small because they do not want to lose control, or expose the business to many investors which become stockholders. In my opinion an entrepreneur should have a passion business and venture on to open other businesses that can build their wealth.