TOPIC BUSINESS STARTUP AND ENTREPRENEURSHIP

Entrepreneurship - the process of starting new businesses, generally in response to opportunities.

Entrepreneurs are pursuing opportunities by changing, revolutionizing, transforming, or introducing new
products or services.

entrepreneurial ventures—organizations that pursue opportunities, are characterized by innovative

practices, and have growth and profitability as their main goals.

small business is one that is independently owned, operated, and financed; has fewer than 100
employees; doesn’t necessarily engage in any new or innovative practices; and has relatively little
impact on its industry. A small business isn’t necessarily entrepreneurial because it’s small. To be
entrepreneurial means that the business must be innovative, seeking out new opportunities.

WHY IS ENTREPRENEURSHIP IMPORTANT?

Importance of Entrepreneurship can be shown in three areas: innovation, number of new start-ups, and
job creation.

1. INNOVATION - Innovating is a process of changing, experimenting, transforming, revolutionizing, and

a key aspect of entrepreneurial activity. The “creative destruction” process that characterizes innovation
leads to technological changes and employment growth. Entrepreneurial firms act as “agents of change”
by providing an essential source of new and unique ideas that may otherwise go untapped.

2. NUMBER OF NEW START-UPS -the most suitable measure we have of the important role of
entrepreneurship is to look at the number of new firms over a period of time.

3. JOB CREATION - The latest figures show that small businesses accounted for most of the net new
jobs. In fact, over the last 15 years, small businesses have created some 65 percent of the net new jobs.
Small organizations have been creating jobs at a fast pace even as many of the world’s largest and well-
known global corporations continued to downsize. These numbers reflect the importance of
entrepreneurial firms as job creators.

GLOBAL ENTREPRENEURSHIP

An annual assessment of global entrepreneurship called the Global Entrepreneurship Monitor (GEM)
studies the impact of entrepreneurial activity on economic growth in various countries. One of the
principal aspects that GEM examines is “total early-stage entrepreneurial activity (TEA),” or the
proportion of people who are involved in setting up a business.

THE ENTREPRENEURIAL PROCESS

Entrepreneurs must address four key steps as they start and manage their entrepreneurial ventures.

1. Exploring the entrepreneurial context

The context includes the realities of today’s economic, political/legal, social, and work environment. It’s
important to look at each of these aspects of the entrepreneurial context because they determine the
“rules” of the game and which decisions and actions are likely to meet with success.
2. Identifying opportunities and possible competitive advantages

Once entrepreneurs have explored the entrepreneurial context and identified opportunities and
possible competitive advantages, they must look at the issues involved with actually bringing their
entrepreneurial venture to life.

3. Starting the venture

Included in this phase are researching the feasibility of the venture, planning the venture, organizing
the venture, and launching the venture.

4. Managing the venture

Which an entrepreneur does by managing processes, managing people, and managing growth.

WHAT DO ENTREPRENEURS DO?

 Initially, an entrepreneur is engaged in assessing the potential for the entrepreneurial venture
and then dealing with start-up issues. In exploring the entrepreneurial context, entrepreneurs
gather information, identify potential opportunities, and pinpoint possible competitive
advantage(s).
 Then, armed with this information, the entrepreneur researches the venture’s feasibility—
uncovering business ideas, looking at competitors, and exploring financing options.
 After looking at the potential of the proposed venture and assessing the likelihood of pursuing it
successfully, the entrepreneur proceeds to plan the venture. Planning includes such activities as
developing a viable organizational mission, exploring organizational culture issues, and creating
a well-thought-out business plan.
 Once these planning issues have been resolved, the entrepreneur must look at organizing the
venture, which involves choosing a legal form of business organization, addressing other legal
issues such as patent or copyright searches, and coming up with an appropriate organizational
design for structuring how work is going to be done.
 Only after these start-up activities have been completed is the entrepreneur ready to actually
launch the venture. Such a launch involves setting goals and strategies, and establishing the
technology-operations methods, marketing plans, information systems, financial-accounting
systems, and cash flow management systems.
 An important activity is managing the various processes that are part of every business: making
decisions, establishing action plans, analyzing external and internal environments, measuring
and evaluating performance, and making needed changes.
 Also, the entrepreneur must perform activities associated with managing people including
selecting and hiring, appraising and training, motivating, managing conflict, delegating tasks, and
being an effective leader.
 Finally, the entrepreneur must manage the venture’s growth including such activities as
developing and designing growth strategies, dealing with crises, exploring various avenues for
financing growth, placing a value on the venture, and perhaps even eventually exiting the
venture.
SOCIAL RESPONSIBILITY AND ETHICS ISSUES FACING
ENTREPRENEURS
 An overwhelming majority of respondents (95%) in a study of small companies believed that
developing a positive reputation and relationship in communities where they do business is important for
achieving business goals.
 Other entrepreneurs have pursued opportunities with products and services that protect the global
environment.
 Ethical considerations also play a role in decisions and actions of entrepreneurs. Entrepreneurs do need to
be aware of the ethical consequences of what they do. The example they set—particularly for other
employees—can be profoundly significant in influencing behavior.

START-UP AND PLANNING ISSUES

The first thing that entrepreneurs do is to identify opportunities and possible competitive
advantages. Once they’ve identified the opportunities, they’re ready to start the venture by
researching its feasibility and then planning for its launch.

IDENTIFYING ENVIRONMENTAL OPPORTUNITIES AND COMPETITIVE ADVANTAGE

The late Peter Drucker, a well-known management author, identified seven potential sources of
opportunity that entrepreneurs might look for in the external context. These include the
unexpected, the incongruous, the process need, industry and market structures, demographics,
changes in perception, and new knowledge.

1. The unexpected

When situations and events are unanticipated, opportunities can be found. The event may be an
unexpected success (positive news) or an unexpected failure (bad news). Either way, it may
present opportunities for entrepreneurs to pursue.

2. The incongruous.

When something is incongruous, it exhibits inconsistencies and incompatibilities in the way it

appears. Things “ought to be” a certain way, but aren’t. When conventional wisdom about the
way things should be no longer holds true, for whatever reason, opportunities are present.
Entrepreneurs who are willing to “think outside the box”—that is, to think beyond the traditional
and conventional approaches—may find pockets of potential profitability.

3. . The process need

The emergence of pockets of entrepreneurial opportunity in the various stages of the process as
researchers and technicians continue to work for the monumental breakthrough. Because the full
leap hasn’t been possible, opportunities abound in the tiny steps.

4. Industry and market structures

When changes in technology change the structure of an industry and market, existing firms can
become obsolete if they are not attuned to the changes or are unwilling to change. Even changes
 in social values and consumer tastes can shift the structures of industries and markets. These
markets and industries become open targets for nimble and smart entrepreneurs.

5. Demographics.

The characteristics of the world population are changing. These changes influence industries and
markets by altering the types and quantities of products and services desired and customers’
buying power.

6. Changes in perception.

Perception is one’s view of reality. When changes in perception take place, the facts do not vary,
but their meanings do. Changes in perception get at the heart of people’s psychographic profiles
—what they value, what they believe in, and what they care about. Changes in these attitudes
and values create potential market opportunities for alert entrepreneurs.

7. New knowledge.

New knowledge is a significant source of entrepreneurial opportunity. Although not all

knowledge-based innovations are significant, new knowledge ranks pretty high on the list of
sources of entrepreneurial opportunity! It takes more than just having new knowledge, though.
Entrepreneurs must be able to do something with that knowledge and to protect important
proprietary information from competitors.

RESEARCHING THE VENTURE’S FEASIBILITY—GENERATING AND EVALUATING IDEAS

It’s important for entrepreneurs to research the venture’s feasibility by generating and evaluating
business ideas.

GENERATING IDEAS.

Studies of entrepreneurs have shown that the sources of their ideas are unique and varied. One survey
found that “working in the same industry” was the major source of ideas for an entrepreneurial venture
(60% of respondents). Other sources included personal interests or hobbies, looking at familiar and
unfamiliar products and services, and opportunities in external environmental sectors (technological,
sociocultural, demographics, economic, or legal-political).

EVALUATING IDEAS.

Evaluating entrepreneurial ideas revolves around personal and marketplace considerations. Each of
these assessments will provide an entrepreneur with key information about the idea’s potential.

A more structured evaluation approach that an entrepreneur might want to use is a FEASIBILITY STUDY
—an analysis of the various aspects of a proposed entrepreneurial venture designed to determine its
feasibility. A feasibility study should give descriptions of the most important elements of the
entrepreneurial venture and the entrepreneur’s analysis of the viability of these elements. It covers a lot
of territory and takes a significant amount of time, energy, and effort to prepare it. However, an
entrepreneur’s potential future success is worth that investment.

RESEARCHING THE VENTURE’S FEASIBILITY—COMPETITORS

Part of researching the venture’s feasibility is looking at the competitors. What would entrepreneurs like
to know about their potential competitors? Here are some possible questions:

What are their products’ strengths and weaknesses? What competitive advantage(s) do they appear to
have? What are they not so good at? What competitive disadvantage(s) do they appear to have? How
large and profitable are these competitors?

Once an entrepreneur has this information, he or she should assess how the proposed entrepreneurial
venture is going to “fit” into this competitive arena. Will the entrepreneurial venture be able to compete
successfully? This type of competitor analysis becomes an important part of the feasibility study and the
business plan.

RESEARCHING THE VENTURE’S FEASIBILITY—FINANCING

Getting financing isn’t always easy. Because funds likely will be needed to start the venture, an
entrepreneur must research the various financing options. Possible financing options available to
entrepreneurs are :

 Entrepreneur’s personal resources (personal savings, home equity, personal loans, credit cards,
etc.)
 Financial institutions (banks, savings and loan institutions, government-guaranteed loan, credit
unions, etc.)
 Venture capitalists—external equity financing provided by professionally managed pools of
investor money
 Angel investors—a private investor (or group of private investors) who offers financial backing
to an entrepreneurial venture in return for equity in the venture
 Initial public offering (IPO)—the first public registration and sale of a company’s stock
 National, state, and local governmental business development programs
 Unusual sources (television shows, judged competitions, etc.)

PLANNING THE VENTURE—DEVELOPING A BUSINESS PLAN

BUSINESS PLAN—a written document that summarizes a business opportunity and defines and
articulates how the identified opportunity is to be seized and exploited.
The business plan requires careful planning and creative thinking. But if done well, it can be a
convincing document that serves many functions. It serves as a blueprint and road map for operating
the business. And the business plan is a “living” document, guiding organizational decisions and
actions throughout the life of the business, not just in the start-up stage.

EXECUTIVE SUMMARY

The executive summary summarizes the key points that the entrepreneur wants to make about the
proposed entrepreneurial venture. These points might include a brief mission statement; primary goals;
brief history of the entrepreneurial venture, maybe in the form of a timeline; key people involved in the
venture; nature of the business; concise product or service descriptions; brief explanations of market
niche, competitors, and competitive advantage; proposed strategies; and selected key financial
information.
ANALYSIS OF OPPORTUNITY

In this section of the business plan, an entrepreneur presents the details of the perceived opportunity.
Essentially, details include (1) sizing up the market by describing the demographics of the target market,
(2) describing and evaluating industry trends, and (3) identifying and evaluating competitors.

ANALYSIS OF THE CONTEXT

Whereas the opportunity analysis focuses on the opportunity in a specific industry and market, the
context analysis takes a much broader perspective. Here, the entrepreneur describes the broad external
changes and trends taking place in the economic, political-legal, technological, and global environments.

DESCRIPTION OF THE BUSINESS

In this section, an entrepreneur describes how the entrepreneurial venture is going to be organized,
launched, and managed. It includes a thorough description of the mission statement; a description of
the desired organizational culture; marketing plans including overall marketing strategy, pricing, sales
tactics, service-warranty policies, and advertising and promotion tactics; product development plans
such as an explanation of development status, tasks, difficulties and risks, and anticipated costs;
operational plans including a description of proposed geographic location, facilities and needed
improvements, equipment, and work flow; human resource plans including a description of key
management persons, composition of board of directors including their background experience and
skills, current and future staffing needs, compensation and benefits, and training needs; and an overall
schedule and timetable of events.

FINANCIAL DATA AND PROJECTIONS

Every effective business plan contains financial data and projections. Although the calculations and
interpretation may be difficult, they are absolutely critical. No business plan is complete without
financial information. Financial plans should cover at least three years and contain projected income
statements, pro forma cash flow analysis (monthly for the first year and quarterly for the next two), pro
forma balance sheets, breakeven analysis, and cost controls. If major equipment or other capital
purchases are expected, the items, costs, and available collateral should be listed. All financial
projections and analyses should include explanatory notes, especially where the data seem
contradictory or questionable.

SUPPORTING DOCUMENTATION

For this important component of an effective business plan, the entrepreneur should back up his or her
descriptions with charts, graphs, tables, photographs, or other visual tools. In addition, it might be
important to include information (personal and work-related) about the key participants in the
entrepreneurial venture.

ORGANIZING ISSUES

Once the start-up and planning issues for the entrepreneurial venture have been addressed, the
entrepreneur is ready to begin organizing the entrepreneurial venture. Then, the entrepreneur must
address five organizing issues: the legal forms of organization, organizational design and structure,
human resource management, stimulating and making changes, and the continuing importance of
innovation.

LEGAL FORMS OF ORGANIZATION

The first organizing decision that an entrepreneur must make is a critical one. It’s the form of legal
ownership for the venture. The two primary factors affecting this decision are taxes and legal liability.

The three basic ways to organize an entrepreneurial venture are sole proprietorship, partnership, and
corporation. However, when you include the variations of these basic organizational alternatives, you
end up with six possible choices, each with its own tax consequences, liability issues, and pros and cons.
These six choices are sole proprietorship, general partnership, limited liability partnership (LLP), C
corporation, S corporation, and limited liability company (LLC)

SOLE PROPRIETORSHIP

A sole proprietorship is a form of legal organization in which the owner maintains sole and complete
control over the business and is personally liable for business debts. The legal requirements for
establishing a sole proprietorship consist of obtaining the necessary local business licenses and permits.
In a sole proprietorship, income and losses “pass through” to the owner and are taxed at the owner’s
personal income tax rate. The biggest drawback, however, is the unlimited personal liability for any and
all debts of the business.

GENERAL PARTNERSHIP

A general partnership is a form of legal organization in which two or more business owners share the
management and risk of the business. Even though a partnership is possible without a written
agreement, the potential and inevitable problems that arise in any partnership make a written
partnership agreement drafted by legal counsel a highly recommended thing to do.

LIMITED LIABILITY PARTNERSHIP (LLP)

The limited liability partnership (LLP) is a legal organization formed by general partner(s) and limited
partner(s). The general partners actually operate and manage the business. They are the ones who have
unlimited liability. At least one general partner is necessary in an LLP, but any number of limited
partners are allowed. These partners are usually passive investors, although they can make
management suggestions to the general partners. They also have the right to inspect the business and
make copies of business records. The limited partners are entitled to a share of the business’s profits as
agreed to in the partnership agreement, and their risk is limited to the amount of their investment in the
LLP.

C CORPORATION

Of the three basic types of ownership, the corporation (also known as a C corporation) is the most
complex to form and operate. A corporation is a legal business entity that is separate from its owners
and managers. Many entrepreneurial ventures are organized as a closely held corporation which, very
simply, is a corporation owned by a limited number of people who do not trade the stock publicly.
Whereas the sole proprietorship and partnership forms of organization do not exist separately from the
entrepreneur, the corporation does. The corporation functions as a distinct legal entity and, as such, can
make contracts, engage in business activities, own property, sue and be sued, and of course, pay taxes.
A corporation must operate in accordance with its charter and the laws of the state in which it operates.

S CORPORATION

The S corporation (also called a subchapter S corporation) is a specialized type of corporation that has
the regular characteristics of a corporation but is unique in that the owners are taxed as a partnership as
long as certain criteria are met. The S corporation has been the classic organizing approach for getting
the limited liability of a corporate structure without incurring corporate tax. However, this form of legal
organization must meet strict criteria. If any of these criteria are violated, a venture’s S status is
automatically terminated.

LIMITED LIABILITY COMPANY (LLC)

The limited liability company (LLC) is a relatively new form of business organization that’s a hybrid
between a partnership and a corporation. The LLC offers the liability protection of a corporation, the tax
benefits of a partnership, and fewer restrictions than an S corporation. However, the main drawback of
this approach is that it’s quite complex and expensive to set up. Legal and financial advice is an absolute
necessity in forming the LLC’s operating agreement, the document that outlines the provisions
governing the way the LLC will conduct business.

ORGANIZATIONAL DESIGN AND STRUCTURE

At some point, successful entrepreneurs find that they can’t do everything alone. More people are
needed. The entrepreneur must then decide on the most appropriate structural arrangement for
effectively and efficiently carrying out the organization’s activities. Without some suitable type of
organizational structure, the entrepreneurial venture may soon find itself in a chaotic situation.

In many small firms, the structure may be simple—one person does whatever is needed. As the
entrepreneurial venture grows and the entrepreneur finds it increasingly difficult to go it alone,
employees are brought on board to perform certain functions or duties that the entrepreneur can’t
handle. Many entrepreneurs are greatly concerned about keeping that “small company” atmosphere
alive even as the venture grows and evolves into a more structured arrangement. But having a
structured organization doesn’t necessarily mean giving up flexibility, adaptability, and freedom. In fact,
the structural design may be as fluid as the entrepreneur feels comfortable with and yet still have the
rigidity it needs to operate efficiently.

HUMAN RESOURCE MANAGEMENT ISSUES IN ENTREPRENEURIAL VENTURES

As an entrepreneurial venture grows, additional employees will need to be hired to perform the
increased workload. As employees are brought on board, the entrepreneur faces certain human
resource management (HRM) issues. Two HRM issues of particular importance to entrepreneurs are
employee recruitment and employee retention

EMPLOYEE RECRUITMENT

Recruiting new employees is one of the biggest challenges that entrepreneurs face. In fact, the ability of
small firms to successfully recruit appropriate employees is consistently rated as one of the most
important factors influencing organizational success.
EMPLOYEE RETENTION

A unique and important employee retention issue entrepreneurs must deal with is compensation.
Whereas traditional organizations are more likely to view compensation from the perspective of
monetary rewards (base pay, benefits, and incentives), smaller entrepreneurial firms are more likely to
view compensation from a total rewards perspective. For these firms, compensation encompasses
psychological rewards, learning opportunities, and recognition in addition to monetary rewards (base
pay and incentives).

STIMULATING AND MAKING CHANGES

Entrepreneurs need to be alert to problems and opportunities that may create the need to change.
During any type of organizational change, an entrepreneur also may have to act as chief coach and
cheerleader. Because organizational change of any type can be disruptive and scary, the entrepreneur
must explain the change to employees and encourage change efforts by supporting employees, getting
them excited about the change, building them up, and motivating them to put forth their best efforts.

THE IMPORTANCE OF CONTINUING INNOVATION

In today’s dynamically chaotic world of global competition, organizations must continually innovate new
products and services if they want to compete successfully. Innovation is a key characteristic of
entrepreneurial ventures and, in fact, it’s what makes the entrepreneurial venture “entrepreneurial.”

LEADING ISSUES

Leading is an important function of entrepreneurs. As an entrepreneurial venture grows and people are
brought on board, an entrepreneur takes on a new role—that of a leader.

PERSONALITY CHARACTERISTICS OF ENTREPRENEURS

One list of personality characteristics included the following: high level of motivation, abundance of self-
confidence, ability to be involved for the long term, high energy level, persistent problem solver, high
degree of initiative, ability to set goals, and moderate risk-taker. Another list of characteristics of
“successful” entrepreneurs included high energy level, great persistence, resourcefulness, the desire
and ability to be self-directed, and relatively high need for autonomy.

MOTIVATING EMPLOYEES THROUGH EMPOWERMENT

Although it’s not easy for entrepreneurs to do, employee empowerment—giving employees the power
to make decisions and take actions on their own—is an important motivational approach. Empowered
employees can provide that flexibility and speed. When employees are empowered, they often display
stronger work motivation, better work quality, higher job satisfaction, and lower turnover.

Another way to empower employees is through delegation—the process of assigning certain decisions
or specific job duties to employees. By delegating decisions and duties, the entrepreneur is turning over
the responsibility for carrying them out.

THE ENTREPRENEUR AS LEADER

LEADING THE VENTURE

One way an entrepreneur leads is through the vision he or she creates for the organization. In fact, the
driving force through the early stages of the entrepreneurial venture is often the visionary leadership of
the entrepreneur. The entrepreneur’s ability to articulate a coherent, inspiring, and attractive vision of
the future is a key test of his or her leadership. But if an entrepreneur can articulate such a vision, the
results can be worthwhile.

LEADING EMPLOYEE WORK TEAMS

Employee work teams tend to be popular in entrepreneurial ventures. to varying degrees. The three
most common ones respondents said they used included:

1. Empowered teams (teams that have the authority to plan and implement process improvements)

2. Self-directed teams (teams that are nearly autonomous and responsible for many managerial
activities)

3. Cross-functional teams (work teams composed of individuals from various specialties who work
together on various tasks).

CONTROLLING ISSUES

Those unique control issues that face entrepreneurs include managing growth, managing downturns,
exiting the venture, and managing personal life choices and challenges.

1. Managing Growth

Growth is a natural and desirable outcome for entrepreneurial ventures. Growth is what distinguishes
an entrepreneurial venture.

PLANNING FOR GROWTH

Ideally, the decision to grow doesn’t come about spontaneously, but instead is part of the venture’s
overall business goals and plan. Rapid growth without planning can be disastrous. Entrepreneurs need
to address growth strategies as part of their business planning but shouldn’t be overly rigid in that
planning. The plans should be flexible enough to exploit unexpected opportunities that arise. With plans
in place, the successful entrepreneur must then organize for growth.

ORGANIZING FOR GROWTH

The key challenges for an entrepreneur in organizing for growth include

1. Finding capital - Having enough capital is a major challenge facing growing entrepreneurial ventures.
The money issue never seems to go away, does it? It takes capital to expand. The processes of finding
capital to fund growth are much like going through the initial financing of the venture. Part of that
planning should be how growth will be financed.

2. Finding people - If the venture is growing quickly, this challenge may be intensified because of time
constraints. It’s important to plan the numbers and types of employees needed as much as possible in
order to support the increasing workload of the growing venture
3. Strengthening the organizational culture -Finally, when a venture is growing, it’s important to create a
positive, growth-oriented culture that enhances the opportunities to achieve success, both
organizationally and individually.

CONTROLLING FOR GROWTH

Another challenge that growing entrepreneurial ventures face is reinforcing already established
organizational controls. Maintaining good financial records and financial controls over cash flow,
inventory, customer data, sales orders, receivables, payables, and costs should be a priority of every
entrepreneur—whether pursuing growth or not. However, it’s particularly important to reinforce these
controls.

MANAGING DOWNTURNS

Nobody likes to fail, especially entrepreneurs. How can downturns be managed success- fully? The first
step is recognizing that a crisis is brewing.

RECOGNIZING CRISIS SITUATIONS

An entrepreneur should be alert to the warning signs of a business in trouble. Some signals of potential
performance decline include inadequate or negative cash flow, excess number of employees,
unnecessary and cumbersome administrative procedures, fear of conflict and taking risks, tolerance of
work incompetence, lack of a clear mission or goals, and ineffective or poor communication within the
organization.

Another perspective on recognizing performance declines revolves around what is known as the “boiled
frog” phenomenon in which subtly declining situations are difficult to recognize.

“boiled frog” phenomenon - A perspective on recognizing performance declines that suggests watching
out for subtly declining situations

DEALING WITH DOWNTURNS, DECLINES, AND CRISES

An entrepreneur wants to be prepared before an emergency hits. This plan should focus on providing
specific details for controlling the most fundamental and critical aspects of running the venture—cash
flow, accounts receivable, costs, and debt. Beyond having a plan for controlling the venture’s critical
inflows and outflows, other actions would involve identifying specific strategies for cutting costs and
restructuring the venture.

EXITING THE VENTURE

Getting out of an entrepreneurial venture may seem to be a strange thing for entrepreneurs to do.
However, the entrepreneur may decide at some point that it’s time to move on. That decision may be
based on the fact that the entrepreneur hopes to capitalize financially on the investment in the venture
—called harvesting—or that the entrepreneur is facing serious organizational performance problems
and wants to get out, or even on the entrepreneur’s desire to focus on other pursuits (personal or
business). The issues involved with exiting the venture include choosing a proper business valuation
method and knowing what’s involved in the process of selling a business.

BUSINESS VALUATION METHODS

Valuation techniques generally fall into three categories:

1. asset valuations

2. earnings valuations

3. cash flow valuations

Setting a value on a business can be a little tricky. In many cases, the entrepreneur has sacrificed much
for the business and sees it as his or her “baby.” Calculating the value of the baby based on objective
standards such as cash flow or some multiple of net profits can sometimes be a shock. That’s why it’s
important for an entrepreneur who wishes to exit the venture to get a comprehensive business
valuation prepared by professionals.

OTHER IMPORTANT CONSIDERATIONS IN EXITING THE VENTURE

Although the hardest part of preparing to exit a venture is valuing it, other factors also should be
considered. These factors include being prepared, deciding who will sell the business, considering the
tax implications, screening potential buyers, and deciding whether to tell employees before or after the
sale. The process of exiting the entrepreneurial venture should be approached as carefully as the
process of launching it. If the entrepreneur is selling the venture on a positive note, he or she wants to
realize the value built up in the business. If the venture is being exited because of declining
performance, the entrepreneur wants to maximize the potential return.

MANAGING PERSONAL LIFE CHOICES AND CHALLENGES

Being an entrepreneur is extremely exciting and fulfilling, yet extremely demanding, often with long
hours and high stress. Yet, being an entrepreneur can offer a variety of rewards, as well. Entrepreneurs
are a special group. They are focused, persistent, hardworking, and intelligent. Because they put so
much of themselves into launching and growing their entrepreneurial ventures, many may neglect their
personal lives. Entrepreneurs often have to make sacrifices to pursue their entrepreneurial dreams.
However, they can make it work. They can balance their work and personal lives.

1. Become a good time manager. Prioritize what needs to be done. Use a planner (daily, weekly,
monthly) to help schedule priorities.

2. Seek professional advice in those areas of business where it’s needed. Although entrepreneurs may
be reluctant to spend scarce cash, the time, energy, and potential problems saved in the long run are
well worth the investment. Competent professional advisers can provide entrepreneurs with
information to make more intelligent decisions.

3. Deal with conflicts as they arise—both workplace and family conflicts. If an entrepreneur doesn’t deal
with conflicts, negative feelings are likely to crop up and lead to communication breakdowns. The best
strategy is to deal with conflicts as they come up. Talk, discuss, argue (if you must), but an entrepreneur
shouldn’t avoid the conflict or pretend it doesn’t exist.

4. Develop a network of trusted friends and peers. Having a group of people to talk with is a good way
for an entrepreneur to think through problems and issues. The support and encouragement offered by
these people can be an invaluable source of strength for an entrepreneur.
5. Recognize when your stress levels are too high. Entrepreneurs are achievers. They like to make things
happen. They thrive on working hard. Yet, too much stress can lead to significant physical and emotional
problems. Entrepreneurs have to learn when stress is overwhelming them and to do something about it.