Starting Your Business On Being Your Own Boss: I haven’t been wrong since 1961, when I thought I made a mistake. Bob Hudson. I may have my faults, but being wrong ain’t one of them. Jimmy Hoffa

Means of Entry Start from scratchStart from scratch Purchase existing businessPurchase existing business FranchiseFranchise Inheritance (or marriage!)Inheritance (or marriage!)

Purchase vs. Start-up Key factors: Skills and Interests of EntrepreneurSkills and Interests of Entrepreneur Costs of EntryCosts of Entry

Entrepreneurial Skills InventorEntrepreneur PromoterManager Low High General management skills High Creativity and innovation

Start-up Quiz Name the two individuals involved with each start-up Apple ComputerApple Computer MicrosoftMicrosoft NetscapeNetscape

Implications of These Entrepreneurial Teams?

Implications of These Entrepreneurial Teams Starting a businesses is hard work, having a partner helps.Starting a businesses is hard work, having a partner helps. Members of team bring different skillsMembers of team bring different skills –Conceptual –Managerial –Financial Over time, partners interests will likely divergeOver time, partners interests will likely diverge

Key Advantages/Disadvantages of Purchase Advantages Disadvantages Less hassleResistance to change Easier financingUsually more costly Greater probabilityLess likely to be of success“home-run”

Investigating the Purchase Want to be sure you aren’t buying someone else’s problems (Akerlof’s Lemons)

Key Advantages/Disadvantages of Start-up Advantages Disadvantages Complete control Extensive effort to start to start Investment often Financing often not not substantial available Good growth High failure rate potential

Key Reasons for Start-up Develop new invention or serviceDevelop new invention or service Development of ideal locationDevelopment of ideal location Avoid negative policies and precedents associated with existing firmsAvoid negative policies and precedents associated with existing firms

Small Business Management, 11th edition Longenecker, Moore, and Petty South-Western College Publishing Types of Ideas That Develop into Startups New Market Example: Targeting the “New Age” beverage market by selling soft drinks with nutritional value New Technology Example: Using high-tech computers to develop a simulated helicopter ride New Benefit Example: Developing a personal misting device to keep workers cool TYPE A TYPE B TYPE C TYPE A:Providing customers with a product or service that is not in their market but already exists elsewhere. TYPE B:Using new technology that provides the basis for new product or service ideas. TYPE C:Performing an old function for customers but in a new and improved way.

Sources of Business Ideas WorkWork HobbyHobby TravelTravel ResearchResearch SerendipitySerendipity

Small Business Management, 11th edition Longenecker, Moore, and Petty ©South-Western College Publishing Sources of Startup Ideas Prior Work Experience 45% Family Business 6% Other 4% Chance Happening 11% Education/Courses 6% Suggestion 7% Personal Interest/Hobby 16% Friends/Relatives 5%

Creativity Nothing is more dangerous than an idea when it is the only one you have. - Emile Chartier - Emile Chartier The best way to get a good idea is to get a lot of ideas. - Linus Pauling - Linus Pauling

Creativity Creativity is the ability to look at the same things as everyone else but to see something different Willing to break the rules Don’t fear failure Creativity is possible

Find the Pattern Group 1: A E F H I Group 2: B C D G J Where do K, R, T belong?

Assessing the Start-up Clearly defined marketClearly defined market Sustainable competitive advantageSustainable competitive advantage Sufficient profitsSufficient profits Matches entrepreneur’s skills and interestsMatches entrepreneur’s skills and interests

Competitive Advantage I’ve seen the future, and it is a lot like the past, only longer. Dan Quisenberry Barriers to entryBarriers to entry –Market size, location –Name, –Patent protection

Discussion of Silver Lining Type of start-up Source of idea Problems faced

Attributes of Means of Entry Cost Skills Fulfillment Cost Skills Fulfillment Start-up Low High Med Purchase High Med Med Franchise Med Low Low