BUS511- Entrepreneurship Assignment Answers for All Lessons
Important: You should take the time to carefully read this syllabus and the Student Handbook before you begin the assignments for this course.
This course focuses on the concepts, skills and know-how, information, attitudes and alternatives that are relevant for start-up and early-stage entrepreneurs, entrepreneurial managers and the relevant stakeholders. It has two fundamental objectives. The first objective is to teach future entrepreneurs and entrepreneurial managers to use the entrepreneurial perspective to make better decisions, and thereby increase their odds for success, and to minimize the odds, and costs, of blunder. The second objective is to introduce you to effective entrepreneurial and general management practice from the perspectives of the founder, and the vital stakeholders that can make a substantial difference in the ultimate success or failure of the entrepreneurial enterprise.
Myths abound about the entrepreneurial world. Entrepreneurs have once again become American heroes. They grace the covers of business journals; they star in television shows; they write best-selling books. And they perpetuate bigger-than-life myths. These Paul Bunyan myths can get in the way of an organization’s or an individual’s decision making about whether taking an entrepreneurial step makes sense. Thus, it is important to explore these myths and to examine the facts.
This course is the appropriate place to discuss and dismiss many of the myths associated with entrepreneurs. The Kauffman Center for Entrepreneurial Leadership has identified ten myths regarding entrepreneurship which are discussed below.
Myth # 1 Business Is Risky
Business is not intrinsically high risk; but people sometimes take risky actions. If people choose to put their homes up as collateral for a new venture, this is their choice, not the businesses. When a business is properly managed and set up, the risks are modest. The wise and adept entrepreneur selects a business and organizes it in such a way that the risk is manageable.
Hundreds of sound businesses making good profits have been ruined when taken over by new management. The business was not the risk—it was sound. The new people were the risk. They were inept, inexperienced, or unmotivated. Conversely, there have been numerous turnaround situations in which failing businesses have been taken over by new, more adept management to great economic advantage. There was nothing wrong with the old business, but there was a lot wrong with the old management. With new management installed, it was a new ball game.
Thus, the significant risk is people, not the business! High-risk businesses can easily be spotted and avoided. Moreover, there’s no relationship between the risks one assumes and the potential rewards for assuming those risks. Indeed, one of the most profitable types of businesses one can own is a government-granted monopoly in which there is little risk. Conversely, most extremely risky enterprises have very little profit potential.
Myth # 2 Entrepreneurs Take Big Risks
Closely akin to the previous myth that business is risky is the misconception that entrepreneurs take big risks. Risk takers is a term economists are fond of using in referring to people who start their own ventures. Many entrepreneurs love to think of themselves as high rollers and wheeler dealers, thus adding to the misconception. But studies and observation, when added to common sense, shatter this myth. Many studies have shown that entrepreneurial personalities are moderate risk takers when confronted with simulations in which they are asked to make a choice of risks and payoffs.
For some reason, economists harbor the quaint notion that the size of the profit is commensurate with the risk assumed. That is generally not so. Most huge risks offer little reward. Conversely, many low-risk enterprises pay off handsomely.
There is no universal law dictating that one’s rewards in this life are proportional to the risks assumed. Unlike most manufacturers, the medical doctor has few risks but is amply rewarded. Long-shot players at the track take big risks but generally die broke. One must know the difference between rewards and risks.
One managerial philosophy of the modern entrepreneur is to furnish the skill for the venture while letting other people furnish the money. Let others take the financial risk. The entrepreneur risks time, effort, and reputation. The ideal business requires no investment and has no risk of loss.
Myth # 3 You Need a Great Idea
“I have hundreds of ideas. Get ’em all the time. They pop up like kernels of corn from a popcorn machine.” The source of that statement must be credited as the inspiration for our designation of such people as popcorn heads. They are so in love with their ideas, and so impressed with their seemingly endless supply, that they seldom do much more than dream. They are particularly unlikely to take one of their ideas and turn it into a profitable business. They often are so infatuated with their ideas that they are unable to perceive their lack of economic merit. They want nothing so much as to see their brainchild on the market. Never mind that it may be a loser.
The reverse of the popcorn head is the person who proclaims, “I want to start a new venture, but I just can’t seem to be able to come up with a good idea.” Such people are forever seeking the Holy Grail, the El Dorado, that one stroke of genius that will somehow transform them into millionaires. It seldom happens. The reality is that an entrepreneur does not need a great idea on which to base an enterprise. All that is needed is an idea on which to make a profit, an idea that is attainable.
There is also the inventor, the person who holds a special place in entrepreneurial folklore. Many people believe that the model entrepreneurial venture begins with an invention. In reality, few new enterprises are based solely on inventions. Moreover, relatively few inventions ever make a profit. According to The Wall Street Journal, less than one percent of inventors ever make a penny from their inventions.
Most new businesses are based on a tried-and-true product or service whose markets are well-established. They are carbon copies, or improvements, of enterprises of proven economic merit.
Entrepreneurs and investors are critical of ventures based on new inventions for several reasons:
- Inventors can be difficult to deal with and unrealistic in their business judgments.
- Inventors usually feel that the inventions are worth far more than they really are.
- Inventors seldom make good business partners as they seldom have the managerial talents to make their inventions into successful businesses. Moreover, they usually have little desire to run a business. Their strength is in inventing.
- Normally, inventions will require large amounts of money to bring them to market. Thus, the financial risks are usually considerable.
- It takes a long time from the inception of the venture to the cash break-even point, when the business can sustain itself without additional investments. Many years can be involved in this process.
- The market risk inherent in inventions is significant, even when the best research has been performed. No matter how excellent the invention might be, or how much it seems to be needed, the market has a way of making unexpected decisions on such matters and may not respond favorably.
One of the classic mistakes in entrepreneurship is the product or service that is looking for a market. Entrepreneurial dogma insists that market-driven ventures are far more likely to be successful than product-driven ones.
Myth # 4 You Need Considerable Experience
Experience is nice but not necessary. It is much more important for the entrepreneur to have the energy and enthusiasm to learn about a new field, its trade practices, and techniques than to have spent years in the field. Indeed, coming in with a fresh outlook and a willingness to learn often keeps the business from falling into status quo or stagnant traps that can immobilize the person who’s had lots of experience in a particular area.
Experience has its advantages including:
- In every business, there is much to know. There are trade practices and business know-how that are often the difference between success and failure. Seldom can one learn all one needs to know by reading about it. It helps to have some experience. One of the main reasons for the success of many franchise systems is that they supply the needed experience in capsule form to the franchisee, who is taught everything the franchiser has learned through the years. When one is interested in buying a business, it is often wise to work in it for a while before purchasing it-at least to keep the seller around for a while to train the new owner.
- One of the keys to a funder’s decision to finance an entrepreneur is the funder’s appraisal of the entrepreneur’s ability - and that is usually based on the entrepreneur’s track record experience. Entrepreneurs are not likely to attract much money from other people without some experience.
- Experience provides some maturity, which increases the credibility with the people with whom an entrepreneur must do business. Very young people, though they may be quite competent, report that they often encounter trouble gaining the confidence of potential customers who are much older than they are. While time eventually takes care of the problem, most people cannot wait for their wrinkles. They find other ways to gain the buyer’s confidence.
Advocates of the need for experience are uncomfortable when they read of successes such as that of Steve Jobs, who was one of the founders of Apple Computer; or Bill Gates, who founded the huge software firm Microsoft; or Debbie Fields, whose cookies now have worldwide distribution. These people had little business experience to support starting their enterprises, but this didn’t seem to interfere with their success. The point is that they associated themselves with people who had the necessary experience. There are several ways the entrepreneur can quickly get the experience needed for the firm to grow and become profitable.
The case for timing.
The following points support the case for going into one’s own business as soon as possible:
- Many years of experience might be of little use. It is possible for people who work for 10 years not to have 10 years’ experience. They have a month’s experience repeated 120 times. There is no guarantee that one really learns what is needed to know by working for someone else. But there are exceptions. Sales experience can be valuable, not only in acquiring certain techniques and work habits but in making valuable contacts in an industry.
- Energy and enthusiasm are key ingredients in entrepreneurial success.
- We acquire obligations as we travel down life’s pathways—mortgages, families, and other demands on our time. These inevitably conflict with a business. Starting a business usually requires large amounts of time. If people are not free to devote the time and energy required by their new ventures, their success is remote. Make the play before acquiring the obligations, when there isn’t as much to lose should things not go well for the venture.
- The founder of a company that builds boats attributes much of his ability to nurture his foundling enterprise to its present successful state to his ability to live at home on a few hundred dollars a month for the first two years of the venture’s existence. It is often exceedingly hard for a new venture to generate sufficient cash to support the entrepreneur and his or her family in the first few years of its existence.
- It usually takes time for a business to become successful. Three to five years is often quoted as the time it takes to bring a business into sufficient maturity so it can survive. The sooner entrepreneurs start, the sooner they’ll reach their goals.
- People can learn what they need to know in a relatively short time. Once they have the knowledge, they can be more effective. The success of such decentralized manufacturing chains as Wendy’s Hamburgers proves how quickly one can be trained to manage such businesses. In the sale of a business, the former owner often can instruct the buyer about the business in a matter of weeks.
The enterprise decides how much experience.
Naturally, the nature of the proposed enterprise strongly affects how much experience is needed to enter it. It would be folly to go into the semiconductor business without knowing a great deal about semiconductors. The famous last words of many bankrupts when starting their businesses were, “What’s there to know about this business? There’s nothing to it.” There is always something “to it.” It may not be much, but the entrepreneur had better know “it” or pay a price to learn “it.”
Indeed, the entrepreneur often later admits that he or she paid a large price for lessons from the school of hard knocks. Thus, the advice is often given to the young, would-be entrepreneur to let someone else pay for his or her education. There is merit in this advice.
Making the decision on how much experience is needed.
The matter of acquiring needed experience is no simple decision. When should one take the plunge? Only the individual can make that decision. Here are some random observations that may help.
- Many entrepreneurs have said that if they had known everything they subsequently learned about the business they started, they would never have gone into it in the first place. Many businesses exist only because the owners were ignorant of what they were getting into. Once in the business, they were committed. They had to make it work.
- An entrepreneur often can hire or associate with someone who has the experience he or she feels is needed in the enterprise. If the firm needs sales experience, hire it. If the firm needs accounting controls, hire a CPA or consultant. A management team that has the experience the venture requires is put together. Indeed, one school of entrepreneurial thought holds that assembling the proper management team is one of the entrepreneur’s main functions.
Myth # 5 You Need a Lot of Money
It’s surprising how little money is needed to start some ventures, particularly in a corporate setting where access is available to its resources. Often an idea can be tried out on a small scale, on a test basis, for very little financial investment. Then, if the idea warrants it, larger amounts of money can be sought.
Indeed, business advisors caution that having too much cash at the beginning of a company’s existence can be just as disastrous as having too little. Management fails to develop needed controls and thus squanders the early capital that is so desperately needed later.
No one claims running a business is easy. Money makes things much easier. But if entrepreneurs haven’t got it, then they will just have to do without it if they want their own businesses. There are several strategies to doing that. Let’s examine each one.
Go into a low-investment business.
Some businesses require so little initial investment that even those of us without resources can find sufficient funds to start. Many prospering landscape-maintenance services began with a borrowed lawn mower.
The principle is quite simple: If the entrepreneur does not have much money and cannot get money, then he or she should choose a business that can be had for the available money. Many entrepreneurs go into business in which the key ingredient is their own labor. It’s called sweat equity. Equity in the enterprise is built up by hard work.
A businesswoman decided to leave the world of medical administration and do what she’d dreamed of for 20-plus years, be a children’s clothing designer and manufacturer. She started with the old sewing machine she had but soon acquired enough clients to afford the purchase of a cutting and sewing system. Her business venture was accomplished with determination and hard work every single day but she’s doing what she enjoys and gets paid for it as well.
Entrepreneurs not only can start a business with sweat equity and bootstrap financing, they can do it at just about any age, as long they have the drive, enthusiasm, and physical stamina.
Take over a turnaround situation.
For any number of reasons, a business can get into more trouble than its management can get out of. Some managers are inept. Some tired. Some just don’t care anymore. Whatever the reason, such enterprises present opportunities for the entrepreneur who wants to own a business without investing much money.
There is usually someone who cares greatly about the business. Perhaps it is the financial institution that has a large stake in it, a banker, venture capitalist, or a private investor. Perhaps it is an absentee owner. Perhaps it is a group of dissatisfied stockholders who fear the future of their investment. Whoever they may be, they know the business needs new management. They want to throw out existing management and put in someone they trust. Thus, the key to this strategy is obvious: by some means gain the confidence of those people who control the company.
Raise the money from other people.
If entrepreneurs have sufficient credibility, some collateral, and a sound business plan, they can sometimes get other people to furnish the funds for their enterprises.
The management of Staar Surgical Company raised $6 million from the public simply because the financiers were ophthalmologists. They recognized the company’s product as possessing great profit potential and had great faith in the two founders, Dr. Thomas Mazzaco and Tom Waggoner, whom they knew because both had been active in the industry.
All sorts of entrepreneurs have raised money by selling securities of various descriptions. The method that is used depends upon market conditions and tax laws, but it’s done all the time—entrepreneurs must know whom to work with in the money markets. They need to make contacts with the right people to play this game.
Myth # 6 Big Business Will Ruin the Small One
It is true that big business has great financial power. Large businesses have access to the money markets, which make huge amounts of money available to them at a relatively low cost. Such sums allow big businesses to dominate markets, either through large advertising campaigns or by buying companies that have significant shares of a market.
Big businesses find it difficult to compete in the people market. Their managements prefer to invest in fixed assets, advertising, and things they can control. They have difficulty controlling people. Moreover, they prefer to engage in businesses in which size gives them a decided competitive advantage. Perhaps that advantage is in low production costs due to an automated plant.
Perhaps the advantage is in selling through mass merchandisers backed by large advertising programs. They are like the government; they tend to throw money at their problems. The parent corporation is a big business, too, so a small venture can compete equally. Even then, it will be important to find the niche that positions the venture with a competitive advantage. Niching is the insurance that protects the venture from any competitor, small or large.
One example is a small defense-electronics company that concentrated on short runs, so small that its large competitors could not bid on the jobs because their overhead charges made their bids too high. Another example is a specialty job shop producing a narrow line of goods in depth. Large retailers cannot carry lines in much depth because their inventory costs would soar. They must carry only the best sellers.
Another advantage small firms have over large firms is the ability to innovate and respond to market and customer needs more quickly. Often, small firms are hungrier and can provide better customer service.
Here are some rules for competing with business:
- Find a niche in the market that is being overlooked by large business.
- Seek businesses in which size is of little advantage in either costs or attractiveness to the market.
- Seek businesses in which additional added-value services are important.
Another way to look at big businesses is that they are possibly the entrepreneur’s best friend. Many entrepreneurs exist because the big businesses are their customers. Big businesses feed the smaller subcontractors or outsource some activities. Moreover, big businesses that one fears may ultimately be one’s exit; the entrepreneur will sell out to them.
Myth # 7 You Will Get Rich Quick
It is a rare entrepreneur who makes a venture pay off rapidly. It takes time to develop a product or service, test it, market it, and develop and expand (grow) the market. Entrepreneurs should not expect immediate rewards of any significant size. It is very typical for a venture to take at least five years to break even. Therefore, the business plan of the venture needs to be very clear in terms of financial projections. It takes dollars and time to make dollars.
Myth # 8 Entrepreneurs Are Born, Not Made
Entrepreneurial patterns and techniques can be learned. Indeed, the many schools of business around the country that now teach entrepreneurial education have gotten great results in helping would-be entrepreneurs learn how to build successful enterprises.
Planning and analysis are learned behaviors that can be successfully taught. Writing a solid business plan is important for an entrepreneurial venture to be successful and profitable. During the process of writing a plan, the entrepreneur learns new objective thought patterns, and ways to systematically analyze each decision based on how it affects each part of the business, such as the management team, marketing plan, financial strategy, control and operating procedures, and potential growth of the business.
Myth # 9 Entrepreneurs Are Unethical Because of their Desire to Succeed
There have been many stories in the media about unethical or immoral entrepreneurs who achieved success by any means. Unfortunately, their reputations have given entrepreneurship a bad name. However, they are the exception, not the rule. Entrepreneurs must be highly ethical and have moral convictions that parallel those of our society. If they do not hold these convictions, their actions will be highly criticized and their reputations tarnished. Most will not survive.
Myth # 10 Entrepreneurs Have No Personal Life
Many people think that entrepreneurs work long hours and have no family life. Many do. And many do not. It depends on the person and the situation. It has been observed that entrepreneurs have more control over their time than do their corporate counterparts.
Many myths that stem from the early days of business have been formed about entrepreneurs. These myths can be likened to those about the early gunslingers. Entrepreneurial myths are just that—myths that are misleading and often scare away potential entrepreneurs. The stories about entrepreneurs cause people to think of them as being mysterious and big risk takers. In reality, they are just driven by a burning need to control their own destinies and bring their dreams to the marketplace.
Expected Student Learning Outcomes
Upon the successful completion of this course you should be able to:
- Evaluate the critical driving forces in a new venture success.
- Identify how successful entrepreneurs and investors create, find and differentiate profitable and durable opportunities from just "other good ideas," and how opportunities evolve over time.
- Appraise how successful entrepreneurs and investors create and build value for themselves, and others.
- Explain the necessary financial and non-financial resources available for new ventures, identify the criteria they use to screen and evaluate proposals, their attractiveness and risk, and how to obtain start-up and early growth capital.
- Identify the future consequences of decisions made by entrepreneurs at each point in time; options that are precluded or preserved; and the nastier minefields and pitfalls one should anticipate, prepare for and respond to.
- Evaluate decisions that can be made to increase the reward to risk ratio at various stages of the company's development, and thereby change the odds.
Spinelli, S., & Adams, R. (2016). New venture creation – Entrepreneurship for the 21st century (10th edition). Columbus, OH: McGraw-Hill.
NOTE: You should not re-sell this textbook until you have completed all courses in the Program. Certain assignments from other courses may also utilize this text.
Bloomberg BusinessWeek – Small Business: http://www.businessweek.com/small-business
Suggestions for getting the most out of this course:
- Read professional journals and periodicals.
- Participate in the course discussion forums and learn from the experience and knowledge of your faculty mentor and fellow students.
- If possible, form a relationship with someone who works in an area related to your course. Explain that you would like to obtain their insights and perspectives from time to time.
Each academic course at William Howard Taft University is assigned a semester unit value equivalent to the commonly accepted and traditionally defined units of academic measurement in accredited institutions. Credit bearing courses are measured by the learning outcomes normally achieved through 45 hours of student work for one semester unit. For example, a course with a value of 3 semester units would require a typical student to commit 135 hours to complete the course requirements.
This course contains a number of lesson assignments. Work through the lessons one at a time. Unless otherwise instructed, you should complete all assignments for a particular lesson in one WORD document.
When you complete all of the assignments in a lesson, submit it to the faculty for grading and feedback. Submit only one lesson at a time, completing them in sequence. Continue on to the next lesson but be sure to incorporate any feedback received on previous lessons into your subsequent assignments – if necessary.
Unless otherwise instructed, Lesson Assignments should be prepared in Microsoft Word® using the Times New Roman font, 12 point, single space, double space between paragraphs. Each page must be numbered, and your last name and student number included on the upper left hand corner of each page.
Your lesson assignment responses should be evidenced from the course textbook and/or from peer-reviewed sources not more than 5 years old. In general, Wikipedia is not a professionally-reviewed resource and should not be used as an assignment reference. You must cite your references so that readers can verify your conclusions, and easily determine what is your work, and what is paraphrased or taken directly from other sources. Failure to give credit for the work of others in your assignments and writing projects constitutes plagiarism.
Citation Machine is an online tool to assist in proper citation of researched information. We recommend APA format, although you may use other approved formats as long as you remain consistent.
Final examination requirements and procedures are set forth in the Student Handbook. Notwithstanding any other provision in this syllabus, if you are required to take a Final Examination for this course you must pass the exam to pass the course.
It is the policy of the University that any student found guilty of cheating and/or plagiarism will be subject to immediate dismissal from the University. All students are required to sign a Coursework Certification Form for each course. This form is provided as a link in the last lesson of each course.
Your grade will be influenced by the accuracy of your research and the quality of your writing. The extent of research necessary will vary from assignment to assignment. In most cases, your work product should not simply consist of quoting from the assigned text.
When grading your assignments, the faculty will consider three general components:
- A demonstrated understanding of the material and the learning objectives
- Your ability to articulate, synthesize and analyze the concepts and issues presented in the material
- Clear and logical composition supported by examples and appropriate references
If at any time you desire additional feedback, you should contact your faculty advisor directly via email. Feel free to ask questions about course progress, grades, etc., at any time, and remember that the faculty and administration are interested in helping you learn and succeed.
The final grade for the course is determined by the sum of each of the grades in the Lesson Assignments. Each of the lesson assignments is weighted equally in determining your grade for the course. Total Possible Points = 700 (100 Points per lesson).
Course Completion Requirements
The course will be deemed completed only when all the following has been accomplished:
• You have completed all the lesson Assignments and they have been received by the University
• You have passed the course Final Examination (if required)
• You have completed the Course Certification Form and it has been received by the University
• You have completed the Course Evaluation Survey
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