PLANNING FOR CHANGE CHAPTER Nineteen

The Components of a Contingency Plan Identifying potential risks Buffer strategies to protect against potential risk that can’t be prevented Assess supply chain risks Product liability The loss of key employees Taxes and regulations Firm’s capabilities and the VIRO test

The Components of a Contingency Plan Calculating the probability that the risk will occur Assigning a level of significance to the losses Calculating the overall risk of loss @ Risk software

Crises and Symptoms Harvest/Stability

Dealing with Failure: Bankruptcy Chapter 11 Chapter 11 reorganizes the business so it can continue operating and paying its debt Chapter 7 An order for relief It liquidates the assets and discharges most types of debt

Dealing with Failure: Bankruptcy (continued) Chapter 7 (continued) Advice for making a bad situation better Talk to other entrepreneurs who have been in similar situations End a business before it affects the entrepreneur’s life Never commingle personal/business funds Do not ignore the government Begin looking for opportunity Pay back investors first

The Harvest Plan The essence Capturing Value Starts at inception of the idea

Harvest Strategy Guidelines Patience Realistic valuation Outside advise

Harvest Options Seven principle avenues “Capital cow” Employee stock ownership plan Management buyout Merger, acquisition, and strategic alliance Outright sale Public offering

Notes on Valuation of Closely-Held Firms Loss of key man Discounts for non-marketability Perspectives CPA Legal Beta

Entrepreneur/Entrepreneurship Entrepreneurship is A mindset A set of attitudes A skill set that can be learned Who should be an entrepreneur? Anyone who wants to experience the freedom and independence that comes from knowing that opportunity and resources to make that opportunity a reality are within their grasp!

Success in the Entrepreneurial Process Two habits necessary A passion for achieving goals A relentless competitive spirit and desire to win

Secrets to Success Seven points for your contemplation and amusement There are no secrets; understanding and practicing the fundamentals, along with hard work, will get results As soon as there is a secret, everyone else knows about it, too; searching for secrets is a mindless exercise Happiness is a positive cash flow

Secrets to Success (Contd.) If you teach a person to work for others, you feed him or her for a year, but if you teach a person to be an entrepreneur, you feed him or her, and others, for a lifetime Do not run out of cash

Secrets to Success (Contd.) Entrepreneurship is fundamentally a human process, rather than a financial or technological process; you can make an enormous difference Happiness is positive cash flow