CFA 201: The Entrepreneurial Mindset in Communications and Fine Arts, Online Professor Edward Lee Lamoureux, Ph.D. Bradley University College of Communications and Fine Arts CLASS SEVEN

Organization Contexts WE ARE AT PHASE 8 Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

#8 Economic Models/ Logic of the Enterprise Degree/type of operating leverage “leverage” = ways to balance gains (profits/benefits) v. loses (risks/costs) There are many ways to juggle leverage aspects. Here are two examples: If you have to borrow a LOT of money at high interest rates, your business is highly leveraged (and you have narrow profit opportunities & high risks) As your business acquires fixed assets, your operating revenue can increase.

#8 Economic Models/ Logic of the Enterprise Relative Volume Base your business on high volume & you can lower prices, but then you have to do a high volume to survive. Base your business on low volume and you’ll have to charge more. You don’t have to do much business, but you have to do at least some.

#8 Economic Models/ Logic of the Enterprise Contribution margin How much does the product/service cost (to make/provide) against it’s price (when sold)? [in effect, what’s the “profit margin”?] High profit margins=lower sales requirements Low profit margins=higher sales requirements

#8 Economic Models/ Logic of the Enterprise Revenue Drivers Certain activities/positions “drive” success & profit. How many can (or do you need to) achieve for success? Marketing Strength Leadership/management strength New opportunity developments Performance excellence

Organization Contexts PHASE 9 Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

#9 Resources Types and Strategies Types of Resources you’ll need (some more, others less) Physical Relational Organizational Financial Intellectual Human Technological

#9 Resources Types and Strategies Strategies for acquiring needed resources Purchase them DIY Sell shares/give equity Borrow/Share/Barter Lease/Rent Outsource License/Partner

Organization Contexts PHASE 10 Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

#10 Prioritizing Financing Sources Variables when considering financing Founder’s need for control (high to low) Risk (high to low) Amount of Money needed (high to low) Potential Sources Self FFF: Friends/Family/Fools Bank loans: always want collateral SBA loans: sometimes have category set-asides Angels: thousands to tens of thousands VCs: hundred thousand and above Public Offering: sell public stock (usually not until one has had bunches of success or has high potential or visibility)

#10 Prioritizing Financing Sources Variables when considering financing Founder’s need for control (high to low) Self --- F&F --- Bank loan --- SBC loan --- angels --- VCs Risk (high to low) Self --- F&F --- angels --- VCs ---SBA --- Bank loan Amount of Money needed (high to low) VCs --- Angels --- Bank loan --- SBA --- F&F --- self

Organization Contexts PHASE 11 Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

#11 Venture Types Start Up Small Business Family Business Social Venture Corporate Venture (Intre-preneurial) Public sector Entrepreneurship

#11 Venture Types Growth Orientation Marginal/Survival Lifestyle Managed Growth High Growth

Organization Contexts PHASE 12 Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

#12 Venture Life Cycle Pre-Start Up Existence/Survival Sustainable Business Model Success Maintenance or Success-Growth Resource Maturity Harvest (or not) Re-cycle/start over/serial

Organization Contexts #2: Find Opportunities and #3: Analyze Opportunities in detail in classes 10 & 11 respectively Find (2) Evaluate (3) Opportunities #2 & 3 Types of Ventures (11) Types of Entrepreneurs (4) Entrepreneurial Enterprise #1 Organization Contexts The Entrepreneur #4 & 5 Life cycles/stages (12) Type(s) of investments they make (5) The Concepts Resources Types of Innovation (6) Prioritizing sources (10) Competitive Entry Wedge (7) Types and strategies (9) Economic models (8)

For class 8 I of the I’MART analyses (p. 16 & 17).Watch “Eat, Sleep, Make Art,” Jeffrey Fisher Webinar 4:00-43:00. http://www.youtube.com/watch?v=ABURSj01kLQ#t=2505. Assignment 3, I of the I’MART analyses Chart, is due , Oct. 10. We won’t meet on the 10th Watch the video, do the assignments and reading, work on paper 2, do Oct 24.

CFA 201: The Entrepreneurial Mindset in Communications and Fine Arts, Online Professor Edward Lee Lamoureux, Ph.D. Bradley University College of Communications and Fine Arts CLASS SEVEN