BOOK REVIEW BY- Ms. SHAILI VADERA, LECTURER, RESEARCH FELLOW- Amity Business School
Over the last three decades the importance of Entrepreneurship and its significant role in the development of the under-developed and the developed nations has been recognized for example: increasing the employment opportunities in both rural and urban sector, channelization of investment, tool for revenue generation, creation of wealth, reducing regional imbalances, improvement in per capita income of weaker section of the society, encouragement of women entrepreneurs to name just a few. This book provides comprehensive and detailed account of various aspects of a successful Business plan, creating new ventures, starting the venture, legal issues, financing, managing, growing and ending the new venture.
The term Entrepreneur has been defined as an individual who takes risk and starts something new.
The first chapter “The nature and importance of Entrepreneurs” deals with historical development of entrepreneurship theory and definitions which dates back to the seventeenth century, and includes reference of Richard Cantillon, Jean Baptiste Say, Francis Walker, Joseph Schumpeter, Peter Drucker, Albert Shapero, Robert Hisrich.
It highlights the entrepreneurial decision process of how an individual decides to become an entrepreneur by forming a new enterprise by leaving the present activity.
This chapter also includes the four types of start-ups namely- Lifestyle firms, Foundation company, high potential venture and gazelles. It also focuses on entrepreneurial careers and education, Ethics and social responsibility, and future of entrepreneurship.
The second and the third chapter deals with identifying formal and informal mechanisms for selecting business opportunities which leads to the beginning of evolution process. It also provides basic differences between entrepreneurial and managerial domains, the general characteristics of an intrapreneur and the process of establishing intrapreneurship within an existing organization with emphasis on commitment of top management to expand successful ventures and eliminate unsuccessful ones.
It focuses on the characteristics of and Individual like entrepreneurial motivations, background of individuals, importance of role models, similarities and differences between male and female entrepreneurs. It highlights the skills frequently present in successful entrepreneurs such as leadership traits, creativity, opportunism, Risk-taking, locus of control, Education, personal values, social status, age, and work history i.e. past work experience of an individual.
Chapter four is based on aspects and importance of international entrepreneurship.
It identifies strategic issues, entry modes comprising of direct and indirect exporting, Non equity arrangements- Licensing, turn-key projects, and management contracts, Foreign direct investments- Joint ventures, synergy, horizontal and vertical mergers, etc. and problems and barriers in international entrepreneurship.
The fifth chapter deals with creativity and methods available for generating new ventures ideas which are gathered from the consumers, existing companies, distribution channels, research and development through focus group, problem inventory analysis, techniques for creative problem solving like brainstorming, synectics, Gordon method, checklist method, free association, heuristics, kepner-tregoe method, value analysis, matrix charting, big-dream approach, aspects of product planning, starting new e-commerce business.
The sixth chapter identifies the legal issues like intellectual property rights, patents which are divided into utility patents, design patents, and plant patents, procedure for filling a trademark, copyright, trade secrets, value of licensing, contracts, insurance and product safety and liability.
The seventh chapter deals with writing a successful business plan, understanding the scope and value of the business plan to investors, employees, suppliers, and customers, a step by step explanation of the business plan. The business plan is essential is a comprehensive document with details regarding market information, industry analysis, recent demographic trends, competitor analysis, manufacturing operations, financial estimations, assessment of risk, monitoring and updating the progress of the business according to the changing internal and external factors of the organization.
The eight chapter explains marketing planning as a critical element in ensuring long term success of any entrepreneurial effort. Information for developing the marketing plan can be obtained by conducting marketing research activities for defining the purpose, gathering data from secondary sources, gathering information from primary sources, and finally analyzing and interpreting the results. The marketing system identifies the major internal and external components responsible for successful products and services launched in the market by studying the marketing mix variables like product, price, place, promotional strategies adopted by the firm.
The ninth chapter deals with the financial planning to forecast where the funds will come from, how they are disbursed, the amount of cash available, and the general well-being of the new venture. It also helps to understand the role of budgets in preparing pro forma statements, applications and calculation of break-even point and availability of software packages used for preparing financial statements.
The tenth chapter is based on the different forms of ownership for example sole proprietorship, partnership, and the corporation, their advantages and disadvantages, importance of management team in launching a new venture, its application in preparing job analysis, job description, job specification, and the role of board of directors in devising the policies, plans, rules, and taking other important decisions related to the business.
The eleventh chapter identifies the types of financing available, role of commercial banks in financing a new venture, types of loans available, and the bank lending decisions, reference of small business administration loans, aspects of research and development limited partnerships, government grants, and the role of private placement as a source of funds. Before seeking outside financing, an entrepreneur should first explore all sources available for internal financing such as profits, selling unused assets, reducing working capital, obtaining credit from suppliers, and collecting accounts receivable promptly.
When all internal sources have been exhausted, then the option of external financing should be considered. Commercial loans are most frequently used source of short term external debt financing. A special method of raising capital for high-technology firms is a research and development limited partnership. Government grants are another alternative available to small businesses through SBIR program.
The twelfth chapter covers Informal Risk Capital and Venture Capital. It explores basic stages of venture funding, informal risk-capital market, nature and process of venture capital industry, and valuation approaches. In financing a business the entrepreneur tries to determine the amount of finance available and when will it be required. Although venture capital can be used in the first stage, but it is primarily used in second and third stage to provide working capital for growth and expansion of the business enterprise.
Valuing the company is of concern to the entrepreneur and the factors used for the basis of valuation are: the nature and history of business, the economic conditions, book value, future earnings, dividend-paying capacity, intangible assets, sale of stocks, market price of stocks of similar companies. Numerous valuation approaches can be used and include as assessment of comparable publicly held companies, present value of future cash flow, replacement value, book value, earnings approach, factor approach, and liquidation value.
The thirteenth chapter is based on preparing for the new venture launch with respect to early management decisions related to strategies in recruiting and interviewing potential employees, motivating, enhancing leadership skills, and providing optimum work environment for the employees. It also elaborates the important procedures for effective record keeping, managing cash, expenses, assets, debt, profit and taxes.
The fourteenth chapter deals with issues that need to be addressed during the growth stage of the venture by the entrepreneur. One important role of an entrepreneur during a venture’s growth stage is to establish an effective organization culture. This could be accomplished through good communication skills, delegating responsibility effectively, providing employees with consistent and regular feedback, establishing employees incentives, and defining a clear mission and objective of the organization.
Fifteenth chapter explores the methods for expanding the venture, types of joint ventures, concepts of mergers, acquisitions, and evaluating different types of franchises.
The sixteenth chapter focuses on primary advantages of going public including liquidity and valuation, new capital, enhanced ability to obtain funds, and prestige along with disadvantages of expense, disclosure of information, loss of control to maintain the growth of the venture.
The last chapter deals with the decisions, problems, and issues, involved in ending the venture, issues related to bankruptcy, failure as a learning process for entrepreneurs who have turned a loss making venture into a profitable venture. It also distinguishes the entrepreneurial class between family and non-family owned business ventures.
This book also has case studies related to all the topics given in the text book.
This book will appeal to entrepreneur trainers, small business teachers, management students, small entrepreneurs, in various functional areas such as project planning, preparing a business plan, production, marketing, finance, and overall enterprise management.
I am Mrs. Shaili Vadera,a Lecturer working at a management institute and also pusuing my Ph.D Topic- a study of herbal medicinal plants in India from Dept. of Economics Lucknow University.
I have published two papers- 1) Role of agricultural retailing in india Corporate Social Resposibility in Business Organizations.