Strategies for Successful Entrepreneurship

1. ENT422: The Role of Entrepreneurship in Value Creation in Large and Small EnterprisesLecture 3Guest Speaker: Jim Doyle, Jr.Executive Director, ProVenture (Far East) Ltd. • What are some of the points we gained from Jim’s lecture? • What would you done differently if you had started ProVenture?

2. Highlights of September 21 • Corporations start new business because base is maturing, to meet strategic goals, new ideas from employees and others. • The success of corporate venturing varies; they can be excellent or very poor. • All organizations should attempt venturing – but they need support from management. • Major changes taking place in the economy resulting in opportunities for entrepreneurs are: technological, political and regulatory and social/demographic.

3. Highlights of September 21 (cont.) • Industry components influence new ventures: knowledge and demand conditions, life cycles and structure (capital needs, concentration, etc.) • Sources of ideas include consumers, distribution channels, federal government and personal R&D. • Other methods include focus groups, brainstorming and inventory analysis

4. Sources of Information for Evaluating Ideas Baron: Chapter 4 Acquiring Essential Information Readings: (handout materials) Alreck Chap. 1 Initiating a Survey; Chap. 2 Planning the Project; The Market Research Encyclopedia; The Business Plan Resources; Conjoint Analysis; Internet sources including Google; Business Week article: “Get Creative”

5. Background What not to do: Mr. and Mrs. “Bow Tie” • He was an engineer • She was the conductor ridding in the caboose; (should she have been driving?) • They wanted some advise

6. Conditions Favoring New Business Development • Industries that are growing rapidly and not controlled by a few companies. • Where innovations are coming from small companies. • Industries that are not capital intensive or require high advertising expenditures. • Industries that are in early life cycles.

7. Information Needed For Idea Evaluation • Market data concerning needs and preferences of potential customers. • Potential government regulations and policies that will impact the evaluation of the idea. • What entrepreneurs need to know about government regulations.

8. Market Information: Ways to Determine What Customers Want Direct Techniques: • Customer surveys – using market research to help determine if the idea will satisfy customers needs/wants. Peter will discuss • Perceptual mapping - a method used to identify the key dimensions (attributes) of an idea which can be used to gauge how customers perceive them. • Focus groups – group discussions can help determine how customers will perceive and evaluate the idea.

9. Market Information (cont.) Indirect Techniques (or Secondary Data): • Reading material - (handouts) contain a number of suggestions that could be used to evaluate ideas. • Industry associations and publications - could be vital sources of data. • Information from potential competitors - will be vital to the evaluation process.

10. Government Policies and Regulations: How They Affect New Ventures Compared to other countries starting a business in the U.S. is relatively simple. Other countries exercise greater control.

11. Government Policies and Regulations (cont.) Taxes: • Overall tax rates – total tax rates can negatively impact the growth of startups; when they increase they go down and conversely go up when they are lower. • Legal forms of startups can impact tax paid; • A “C” corporation must tax profits; a subchapter “S” passes profits to individuals. • Tax incentives – some government policies are positive for new businesses; benefit from depreciation; tax credit for R&D activities.

12. Other Government Policies Favorable Trends: • Support of innovation – to support small business innovation research (SBIR) requires all federal agencies to set aside 2% of their budgets for funding contracts, grants or cooperative agreements. • Small business administration (SBA) helps startups by loaning money. • Women and minority entrepreneurs – several programs to assist these groups to start businesses. Also there is a program designed to stimulate growth in select economic areas.

13. What Entrepreneurs Need to Know About Government Regulations • Employers required to provide a safe and healthy work environment. • To comply with specific with specific occupational safety and health standards. • To keep records of occupational injuries and illnesses. Occupational Safety and Health Act - 1970 (OSHA):

14. Government Regulations (cont.) Equal employment opportunity laws - protecting against discrimination: • Title VII of the Civil Rights Act of 1964 – prohibits discrimination on race, color, religion, sex or national origin. • Americans With Disabilities Act of 1990 – prohibits discrimination of persons who are able to perform the essential job functions in spite of disabilities.

15. Workshop • Hand in and discuss the idea generation guide for two ideas. • Work on the application of QuickScreen exercise for two ideas, deciding on one for further study (due at next class).

16. Market Research

17. CRITICAL ROLE OF MARKET RESEARCH The reasons companies do not to market research • Everyone agrees this is a great idea! • We have talked to several potential customers! • Can’t afford it… • Etc!!!

18. CRITICAL ROLE OF MARKET RESEARCH (cont.) The consequences of not doing market research. • 80% of new product fail • 65% of new product development funding is wasted • 75% of the products that are test marketed succeed

19. CRITICAL ROLE OF MARKET RESEARCH (cont.) Successes and Failures • A $29K “failure” • EPIC, Early Product In Color • The Xerox 5775/Fiery System… • TESCO

20. CRITICAL ROLE OF MARKET RESEARCH (cont.) Planning Your Research • Define critical planning assumptions (CPAs) • Have we defined the problem / potential consequences? • What information do we have? • What additional information do we need? • What are the options to gather this information?

21. CRITICAL ROLE OF MARKET RESEARCH (cont.) Market Research Options • Focus groups • Survey research • Internet

22. CRITICAL ROLE OF MARKET RESEARCH (cont.) Focus Groups • Define the hypotheses • Group dialogue can stimulate interaction • Use the information to prepare survey • Risk: data not projectable

23. CRITICAL ROLE OF MARKET RESEARCH (cont.) Survey Research • Phone interviews • Mail survey • Mall Interviews • Benefit: Data can be projectable

24. CRITICAL ROLE OF MARKET RESEARCH (cont.) Survey Implementation • Question wording • Scaling • Always pilot • Use Survey Research Handbook

25. CRITICAL ROLE OF MARKET RESEARCH (cont.) Internet • Harris Interactive • Internet Services • Advantages • Fast • Cost effective • Customer Suggestions

26. CRITICAL ROLE OF MARKET RESEARCH (cont.) Develop your research team • Key managers • Investors • Suppliers • Someone who knows something about market research!

27. CRITICAL ROLE OF MARKET RESEARCH (cont.) Analyzing data • Statistical tools • Relationships between variables • Analysis vs. interpretation • Use Survey Research Handbook

28. CRITICAL ROLE OF MARKET RESEARCH (cont.) Possible suppliers • Knowledgeable member of the team • Local Business School • “The Credit Audit”

29. CRITICAL ROLE OF MARKET RESEARCH (cont.) Getting the information you need • The Internet / Google • Simon School Management Library • The Rundle Memorial Library (Tradeshows) • Professional Associations • SBA • Rochester business Journal • Journals • RBA / HTR • GRE • Rochester Venture Capital Group • Friends, neighbors

30. CRITICAL ROLE OF MARKET RESEARCH (cont.) Market research follows the product life cycle • Product development • Introduction • Launch/national roll-out • Maturity • Withdrawal

31. CRITICAL ROLE OF MARKET RESEARCH (cont.) Conjoint Analysis

32. CRITICAL ROLE OF MARKET RESEARCH (cont.) The Market Research Encyclopedia

33. CRITICAL ROLE OF MARKET RESEARCH (cont.) Information Exists…You Do The Mining

34. Assignment for October 5 Guest Speaker: John Lacagnina, Ceo, Colorcentric Corp. Topic: The Importance of Creating Value For The Customer • Case due: examining the industry (Baron, page 372) individual preparation. The report should be typewritten, a maximum of two pages answering the questions. Workshop: • Hand in and discuss QuickScreen exercise for two • ideas, selecting one for further study. • Work on exercises 1 & 2.