IT364 IT ENTREPRENEURSHIP & INNOVATION Week 2 Moussa Academy PDF

Week 2: Entrepreneurs: The IT364 Driving Force Behind Small Business IT Entrepreneurship & Innovation Moussa Academy 00201007153601...

Week 2: Entrepreneurs: The IT364 Driving Force Behind Small Business IT Entrepreneurship & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents................................................................................................................................................. 1 I. What is An Entrepreneur?.............................................................................................................. 2 II. How to Spot Entrepreneurial Opportunities?................................................................................. 3 III. Benefits of Owning a Small Business......................................................................................... 3 IV. The Potential Drawbacks of Entrepreneurship........................................................................... 4 V. Why the Boom: The Fuel Feeding the Entrepreneurial Fire.......................................................... 5 VI. Contribution of Small Business.................................................................................................. 8 VII. Putting Failure into Perspective.................................................................................................. 8 VIII. Definitions................................................................................................................................... 9 1|Page www.MoussaAcademy.com 00201007153601  I. What is An Entrepreneur? What is An Entrepreneur? 1. Is a person who establishes new business 2. In a situation full of risk and uncertainty 3. To achieve profit and growth 4. By identifying opportunities and assembling resources 5. To benefit from these opportunities What are Serial Those who create and run more than one business at same time. Entrepreneurs? Characteristics Q: WHAT CHARACTERISTICS DO ENTREPRENEURS HAVE? of an Entrepreneur 1. Tenacity 2. Tolerance of ambiguity 3. Desire to take initiative 4. Competitiveness Most important 6 characteristics 5. Future oriented 6. Perseverance Does not give up even in the time of failure. 7. Committed 8. Desire for immediate feedback 9. Flexible 10. Preferers moderate risk NOTE: Entrepreneurship is a skill that can be learned by anyone with a 11. Self-Reliance diversity of characteristics. 12. Energetic 13. Skillful at organization 14. Confidence. 15. Values achievement over money 2|Page www.MoussaAcademy.com 00201007153601  II. How to Spot Entrepreneurial Opportunities? Creativity & Creativity Innovation It is the ability of developing ideas & new ways to look at problems. (Thinking) Innovation It is the ability of applying creative solutions to these problems and opportunities. (Doing) Techniques Q: WHAT ARE THE TECHNIQUES OF IDENTIFYING BUSINESS OPPORTUNITIES? TLP MRN 1. Take different approaches to a market 2. Look for creative ways to use existing resources 3. Put a new twist on an old idea. 4. Monitor trends 5. Realize that all face the same problems 6. Notice what is missing in the market III. Benefits of Owning a Small Business Benefits Q: WHAT ARE THE BENEFITS OF OWNING A SMALL BUSINESS? CMC RRD (The 6 Opportunity O’s) 1. Control your destiny. 2. Make a difference. 3. Contribute to society. 4. Reach full potential. 5. Reap profits. 6. Do what you enjoy. 3|Page www.MoussaAcademy.com 00201007153601  IV. The Potential Drawbacks of Entrepreneurship Drawbacks Q: WHAT ARE THE DRAWBACKS OF BECOMING AN ENTREPRENEUR? URL LH CD 1. Uncertainty of income 2. Risk of losing whole capital 3. Long working hours. 4. Low quality of life at the beginning. 5. High levels of stress. 6. Complete responsibility. 7. Discouragement Business Q: WHAT ARE THE TOP 5 REASONS BUSINESS FAIL? Failures BIL PL 1. Bad Location 2. Insufficient capital (At least 6 months!) 3. Lack of experience 4. Poor inventory control 5. Lack of planning. 4|Page www.MoussaAcademy.com 00201007153601  V. Why the Boom: The Fuel Feeding the Entrepreneurial Fire The Factors of Q: WHAT ARE THE MOST IMPORTANT FACTORS THAT LED TO THIS AGE OF Entrepreneurship ENTREPRENEURSHIP? Age 1. Shift to service economy 2. Entrepreneurs as heroes 3. Outsourcing 4. E-commerce & World Wide Web 5. Technology 6. Demographic & Economy Factors 5|Page www.MoussaAcademy.com 00201007153601  VI. The Cultural Diversity of Entrepreneurship The Cultural of Q: WHAT ARE THE DIFFERENT TYPES OF ENTREPRENEURS? Entrepreneurship 1. Women entrepreneurs 2. Copreneurs. 3. Corporate castoffs 4. Corporate “Dropouts” 5. Young entrepreneurs 6. Minority enterprises 7. Immigrant entrepreneur. 8. Part-Time entrepreneurs 9. Home-Based business owners 10. Family business owners 11. Retired baby boomers 1964 1946 6|Page www.MoussaAcademy.com 00201007153601 Rules Q: WHAT ARE THE RULES OF A SUCCESSFUL HOME-BASED BUSINESS? 1. Do your homework. 2. Find out zoning restrictions. 3. Dress appropriately 4. Create business zones isolated from family. 5. Focus the idea. 6. Discuss rules with family. 7. Select appropriate name. 8. Buy right equipment. 9. Learn to deal with distractions. 10. Phone can be friend or enemy. 11. Be firm with friends and neighbors. 12. Make sure you have insurance. 13. Create no-work time zones. 14. Take advantage of tax breaks. 15. Maximize productivity. 16. Understand circumstances of hiring outside employees. 17. Be prepared if clients come to home. 18. Get post box. 19. Networks of people 20. Be proud. 7|Page www.MoussaAcademy.com 00201007153601  VII. Contribution of Small Business Small Business that hires less than 100 people. Business Small businesses create more job opportunities than big businesses. VIII. Putting Failure into Perspective Failures Entrepreneurs are not paralyzed by the fear of failure Failure is a natural part of the process. Successful entrepreneurs have the ability to fail intelligently. 8|Page www.MoussaAcademy.com 00201007153601 IX. Definitions Entrepreneur Is a person who establishes new business. In a situation full of risk and uncertainty. To achieve profit and growth. By identifying opportunities and assembling resources. To benefit from these opportunities. Serial those who create and run more than one business simultaneously. Entrepreneurs Perseverance Does not give up even in the time of failure. Creativity It is the ability of developing ideas and discovering new ways to look at problems and opportunities. (Thinking) Innovation It is the ability of applying creative solutions to these problems and opportunities. (Doing) Small business that hires less than 100 people. Business 9|Page www.MoussaAcademy.com 00201007153601  IT364 Week 3: Strategic Management & the IT Entrepreneur ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Strategic Management & the Entrepreneur............................................................................................... 2 II. Building a Competitive Advantage.............................................................................................................. 2 III. The Strategic Management Process (9 Steps)......................................................................................... 3 1|Page www.MoussaAcademy.com 00201007153601  I. Strategic Management & the Entrepreneur Intellectual The world’s economy has shifted from a base of financial to intellectual capital. Capital Intellectual capital DEFINITION: is the knowledge & information a company owns & uses to create a competitive advantage in its market segment. It is important to utilize & effectively make use of the intellectual capital the company has as a strategic resource & a weapon for competition. NOTE: Small businesses are better What are the 3 components of Intellectual Capital? than large companies in knowledge management due to their size 1. Human Capital: DEFINITION: talent skills of a company’s work force. 2. Structural Capital: DEFINITION: accumulated knowledge & experience of the company in an industry. 3. Customer Capital: DEFINITION: established customer base (EX: Positive reputation & ongoing relationships). Knowledge DEFINITION: gathering, organizing, & disseminating (Spread Widely) the collective Management wisdom & employees’ experience for competitive advantage. Strategic DEFINITION: The process of developing a game plan to guide the company during Management achieving its vision, missions & goals & objective to prevent going off its desired course. II. Building a Competitive Advantage Competitive DEFINITION: The collection of factors that differentiate a small business from its competitors & Advantage gives it a unique superior position within the market. Core DEFINITION: Refers to a unique set of skills, knowledge, & abilities a company develops in key Competencies areas such as: Superior quality NOTE: Entrepreneurs are given a Customer Service blueprint for matching strength, weaknesses, opportunities & threats. Innovation Team building How to gain a competitive advantage? By building core competencies & concentrate on providing superior service & value for target customers. Creativity, imagination, experience, & vision is a must to identify or develop core competencies. 2|Page www.MoussaAcademy.com 00201007153601 Features of a 1. Short planning horizons “2 years is better than 2 decades.” Strategic Management 2. Be informal & not overly structured “Shirt-sleeve approach.” Procedure 3. Encourage participation of employees & outside parties in planning. 4. Do not begin with setting objectives. 5. Maintain flexibility. 6. Focus on strategic thinking. III. The Strategic Management Process (9 Steps) Develop Clear Vision Vision & Translate into Vision addresses the question “What kind of company do we want to become?” Mission A clear vision helps a company in 4 ways: Statement Provides direction. Determines decisions. Motivates people. Continue to confront challenges. Vision is based on an entrepreneur’s values to guide his business. Teamwork (people-focused) Integrity (highest ethical standards) Commitment (client-driven) Mission Statement Establishes the purpose of the business & gives it a sense of direction. Reflects company core values. Answers the questions “why we are here” & “where we are going.”. Example: Intel’s mission statement is “We create world-changing technology that improves the life of every person on the planet.” 3|Page www.MoussaAcademy.com 00201007153601  Assess Strengths Company’s Strength & DEFINITION: positive internal factors that contribute to a company’s ability to achieve its Weakness mission, goals, & objectives. Weakness DEFINITION: negative internal factors that prevent achieving its mission, goals, & objectives. NOTE: A balance sheet is prepared to define company strength, weaknesses, opportunities, & threats. Scan Opportunities Environment to Find DEFINITION: positive external options that the company can benefit accomplishing its mission, Opportunities goals, & objectives. & Threats Threats DEFINITION: negative external forces that slows down a company’s ability to achieve its mission, goals, & objectives. Example: new competitors, economic recession, & government regulations. Identify Key Key Success Factors Value for Business DEFINITION: factors determine a company’s ability to compete in an industry. Success 4|Page www.MoussaAcademy.com 00201007153601  Analyse Competitive Intelligence Program: Competition 1. Avoid surprises from competitors. NOTE: A competitive matrix is used to evaluate competitors 2. Identify new competitors. 3. Improve reaction time to competitor’s action. Predict competitor’s next moves. Types of competitors: 1. Direct competitors DEFINITION: Businesses that offer the same products & services, & customers compare prices, features, & deals during shopping. 2. Significant competitors DEFINITION: Businesses that offer some of the same products & services. 3. Indirect competitors. DEFINITION: Businesses that offer the same or similar products or services only in a small number of areas & target a rare number of the same customers. Create Goals & Goals Objectives DEFINITION: A goal is a broad, general statement of what you want to achieve & are usually long-term & may take months or even years to achieve. Example, a goal for a business might be to increase its revenue by 20% over the next 3 years. Objectives DEFINITION: Objective is a specific, measurable, & achievable step that helps you to achieve your goals. It is smaller & usually short-term & can be accomplished within a few weeks or months. Example, an objective for the business goal mentioned earlier might be to increase its sales by 10% in the first year through targeted marketing campaigns. 5|Page www.MoussaAcademy.com 00201007153601  Select Strategy Appropriate Strategies DEFINITION: a road map that shows the actions necessary to fulfill a company’s mission, goals, & objectives. (Reaching Goals & Objectives) 3 basic strategies: 1. Cost leadership strategy: strives to be the lowest-cost producer. 2. Differentiation strategy: seeks to build customer loyalty. 3. Focus strategy: recognizes that all markets are not the same. Translate Plans Implementing the strategy. into Actions When implementing strategies, companies must make the best use of competitive advantage of their size by: 1. Responding quickly to needs. 2. Remain flexible. 3. Search for new market segments. 4. Building & defending market niches 5. Act quickly in market. Establish Controlling projects & keeping them on schedule means that the key performance indicators. Accurate must be identified. Controls A balanced score board gives a quick & complete picture of the company’s performance against its strategic plan. 5 perspectives of scoreboard: 1. Customer perspective 2. Internal business perspective 3. Innovation & learning perspective. 4. Financial perspective 5. Corporate citizenship 6|Page www.MoussaAcademy.com 00201007153601  IV. Definition Table Intellectual is the knowledge & information a company owns & uses to create a competitive advantage in its market segment. Capital Human Capital talent skills of a company’s work force. Structural accumulated knowledge & experience of the company in an industry. Capital Customer Capital established customer base (EX: Positive reputation & ongoing relationships). Knowledge gathering, organizing, & disseminating (Spread Widely) the collective wisdom & employees’ Management experience for competitive advantage. Strategic The process of developing a game plan to guide the company during achieving its vision, Management missions & goals & objective to prevent going off its desired course. Competitive The collection of factors that differentiate a small business from its competitors & gives it a Advantage unique superior position within the market. Refers to a unique set of skills, knowledge, & abilities a company develops in key areas such Core as: Competencies positive internal factors that contribute to a company’s ability to achieve its mission, goals, & Strengths objectives. Weakness negative internal factors that prevent achieving its mission, goals, & objectives. positive external options that the company can benefit accomplishing its mission, goals, & Opportunities objectives. 7|Page www.MoussaAcademy.com 00201007153601  negative external forces that slows down a company’s ability to achieve its mission, goals, & Threats objectives. Key Success factors determine a company’s ability to compete in an industry. Factors Direct Businesses that offer the same products & services, & customers compare prices, competitors features, & deals during shopping. Significant Businesses that offer some of the same products & services. competitors Indirect Businesses that offer the same or similar products or services only in a small number competitors. of areas & target a rare number of the same customers. A goal is a broad, general statement of what you want to achieve & are usually long-term & Goals may take months or even years to achieve. Objectives Objective is a specific, measurable, & achievable step that helps you to achieve your goals. a road map that shows the actions necessary to fulfill a company’s mission, goals, & Strategy objectives. (Reaching Goals & Objectives) 8|Page www.MoussaAcademy.com 00201007153601  IT364 Week 4: Choosing a Form of Ownership & Franchising IT and the Entrepreneur ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Choosing a Form of Ownership................................................................................................................... 2 II. The Sole Proprietorship............................................................................................................................... 2 III. The Partnership and The Corporation..................................................................................................... 2 IV. Alternative Forms of Ownership............................................................................................................. 4 IV.A S Corporation....................................................................................................................................... 4 IV.B Limited Liability Corporation............................................................................................................... 5 V. Franchising and the Entrepreneur............................................................................................................... 5 V.A What is a Franchise?............................................................................................................................ 5 V.B Types of Franchising............................................................................................................................ 5 V.C Benefits and Drawbacks...................................................................................................................... 5 V.D Franchising and the Law...................................................................................................................... 6 V.E The Right Way to Buy a Franchise....................................................................................................... 6 V.F Franchise Contracts............................................................................................................................. 6 V.G Trends in Franchising........................................................................................................................... 7 V.H Franchising as a Growth Strategy........................................................................................................ 7 VI. Definition Table....................................................................................................................................... 8 1|Page www.MoussaAcademy.com 00201007153601  I. Choosing a Form of Ownership There is no best form of ownership. The best ownership depends on the entrepreneur’s situation. What are the issues to consider when choosing the form of ownership? Choosing a Form of Control Ownership Managerial ability. Business goal. Taxes consideration. II. The Sole Proprietorship DEFINITION: ownership where the owner only makes decisions ALONE. The MOST POPULAR and SIMPLEST FORM of ownership. Advantages Disadvantages Simple to create. Limited access to capital The Sole Low cost to establish. Limited abilities and skills. Proprietorship Encourages profits. Feelings of isolation Only one to make decisions. Lack of business continuity No legal restrictions Easy to stop and terminate III. The Partnership and The Corporation. Partnership DEFINITION: association of multiple people who own a business together to make profit. This is done by writing a partnership agreement. Advantages Disadvantages Easy to establish Authority conflicts Larger capital Partners are bound by the laws. Little government regulation Enhance skills 2|Page www.MoussaAcademy.com 00201007153601 Partnership DEFINITION: a document that states the terms of ownership to protect the rights of each owner. Agreement Contents of a partnership agreement: Names of partners. How profits/ loss will be distributed. Procedure for adding new members. Decision making authority. Financial authority. Uniform DEFINITION: Arranges the law of dealing with partnerships in the US. Partnership Act Three key elements: Common ownership interest in a business Sharing the business’s profits and losses Right to participate in managing the partnership People must accept: Duty of loyalty Duty of follow the rule (obedience). Duty of care Duty to inform Limited DEFINITION: one or more general partners and one or more limited partners. Partnerships Limited partners are treated as investors and does not manage the business. Limited DEFINITION: All partners are limited partners. Liability Partnerships Corporation Corporation: DEFINITION: a legal entity created by the state that can sue or be sued in its name, enforce contracts, transfer property, and can be liable if violates law. C-corporations: creations of the state. Domestic corporation: a corporation doing business in the state of incorporation. Foreign corporation: doing business in another state. Alien corporation: formed in another country but doing business in the US. Publicly held corporations: have large numbers of shareholders. Closely held corporations: shares controlled by small number of people. 3|Page www.MoussaAcademy.com 00201007153601 Incorporation 1. Corporation’s name. Requirements 2. Statement of purpose 3. Time horizon 4. Place 5. Officers and director’s detail. Advantages Disadvantages Advantage and Disadvantages Limited liability of stockholders High cost and a lot of time needed in the process Ability to attract capital Double taxation Legal requirements and red tape Loss of control by founders Ex: when Steve Jobs lost control of Apple in 1985 IV. Alternative Forms of Ownership IV.A S Corporation DEFINITION: A type of corporation (Same as any corporation) only made for tax purposes. S corporation Criteria 1. U.S.-based corporation 2. At least 75 shareholders maximum 100 shareholders. 3. Corporations and partnerships cannot be shareholders. 4. No nonresident alien shareholders (Look at alien corporation page 3). When is it a When is an S Corporation a Wise Choice? Wise Choice? 1. Start-up companies that predict net losses. 2. Companies that reinvest most of their earnings Advantages Disadvantages Advantage and Disadvantages Passes all its profits or losses through to Tax advantages may not be permanent individual shareholders Income is only taxed once at the individual tax rate Avoids the tax C corporations pay on assets 4|Page www.MoussaAcademy.com 00201007153601  IV.BLimited Liability Corporation Limited DEFINITION: S-Corporation but is not subject to the same restrictions. Liability Corporation 2 Documents 1. Articles of organization 2. Operating agreement LLC cannot have more than 2 of these 4 characteristics: 1. Limited Liability 2. Continuity of life 3. Free transferability of interest 4. Centralized management V. Franchising and the Entrepreneur V.A What is a Franchise? What is it? DEFINITION: semi-independent owners pay fees to a company for the right to sell its products and services under the franchiser’s trade name. V.B Types of Franchising Types 1. Trade-name franchising 2. Product distribution franchising 3. Pure franchising (comprehensive franchising, business format franchising) V.C Benefits and Drawbacks Benefits & Benefits Drawbacks 1. Franchisee (The one who got the right to use the name) gets a ready working business. 2. Gets standard quality of product and service. 3. Increased chance of success Drawbacks 1. Limited freedom 2. Strict operations 3. Market saturation 5|Page www.MoussaAcademy.com 00201007153601  V.D Franchising and the Law Franchise Key tool for protection Disclosure Document A copy of the FDD must be presented before any offer or sale. (FDD) FDD must be written in English. Contains information such as: 1. business experience 2. Franchise fees and costs 3. Lawsuits involving the franchiser. V.E The Right Way to Buy a Franchise The Right Be prepared, have common sense and be patient. Ways 7 Steps: 1. Evaluate yourself. 2. Research market. 3. Consider options. 4. Get a copy of FDD and study it. 5. Talk to existing franchisees. 6. Ask franchisors questions. 7. Make you choice. V.F Franchise Contracts Contracts Govern the franchisor-franchisee relationship. Example: rights and obligations. Termination: Franchisors can terminate “with or without cause” while franchisees can’t. Renewal: Franchisors usually have the right to renew or refuse contract renewal Transfer and buybacks: Franchisees are usually not free to sell their business without approval 6|Page www.MoussaAcademy.com 00201007153601  V.G Trends in Franchising Trends Smaller, nontraditional locations: o Intercept the market. Conversion franchising: o offers instant name recognition. Refranchising: o DEFINITION: reducing the number of company-owned stores Area development: o offers exclusive rights to an area. Master franchising: o can be a good option in international markets. Cobranding: o involves teaming up with complementary products or services Serving dual-career couples and aging baby boomers V.H Franchising as a Growth Strategy Strategies To create a successful franchise operation, you need: 1. A unique concept 2. A replicable concept 3. Expansion plans. 4. Legal guidance 7|Page www.MoussaAcademy.com 00201007153601  VI. Definition Table The Sole ownership where the owner only makes decisions ALONE. Proprietorship Partnership association of multiple people who own a business together to make profit Partnership a document that states the terms of ownership to protect the rights of each owner. Agreement Uniform Arranges the law of dealing with partnerships in the US. Partnership Act Limited one or more general partners and one or more limited partners. Partnerships Limited All partners are limited partners. Liability Partnerships Corporation A legal entity created by the state that can sue or be sued in its name, enforce contracts, transfer property, and can be liable if violates law. S corporation A type of corporation (Same as any corporation) only made for tax purposes. Limited S-Corporation but is not subject to the same restrictions. Liability Corporation Franchise semi-independent owners pay fees to a company for the right to sell its products and services under the franchiser’s trade name. Refranchising reducing the number of company-owned stores 8|Page www.MoussaAcademy.com 00201007153601  IT364 Week 5: Buying an Existing Business IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Buying an Existing Business......................................................................................................................... 2 II. How to Buy a Business?............................................................................................................................... 2 III. Methods for Determining the Value of a Business................................................................................. 3 IV. Negotiating the Deal................................................................................................................................ 4 1|Page www.MoussaAcademy.com 00201007153601  I. Buying an Existing Business 1. Business continues to be successful. 2. Guarantees a job. 3. Easier access to financing. Advantages 4. Increase experience. 5. Can purchase without changing business model and products (Turnkey Business). 6. Install equipment with known capacity. 1. Requires cash. 2. Risk to buy business that is losing money. Disadvantages 3. Customers may be loyal to the old owner. 4. Hard to make changes. 5. Risk to buy overpriced business. II. How to Buy a Business? 1. Know the business that best fits your personality. 2. Develop a list of criteria to define the ideal business. 3. Prepare a list for the possible business that meets criteria. 7 Steps 4. Due diligence process 5. Explore financing options. 6. Negotiate with owner. 7. Ensure smooth transition of ownership. What are the sources used? Internet Preparing a Bankers List of Business Accountants Newspapers Trade associations 2|Page www.MoussaAcademy.com 00201007153601  DEFINITION: Investigating, studying, reviewing, and verifying relevant information concerning the most attractive business candidates in greater detail. What are the 5 critical areas of the business and the potential deal? 1. Motivation: why does the owner want to sell? Due Diligence Process 2. Asset valuation: Determine assets value by investigating: 3. Market potential: learning about customers and competitors. 4. Legal issues: legal aspects that represent risks. 5. Financial condition. III. Methods for Determining the Value of a Business 1. Balance Sheet 3 Techniques 2. Earnings approach 3. Market Approach Computes the company’s net worth (Owner’s equity). Net worth= assets – liabilities. Balance Sheet Variation 1: Adjusted Balance sheet technique. DEFINITION: a realistic method to determine a company’s value. more refined than the balance sheet. considers the future income potential of the business. Variation 1: Excess Earnings Method. Estimates goodwill. Calculates opportunity costs, extra earning power and tangible net worth. Earnings Variation 2: Capitalized Earnings Approach. approach Calculates risk level. Variation 3: Discounted Future Earnings Approach. (DFEA) Estimates net income for several years. 3|Page www.MoussaAcademy.com 00201007153601  1. Estimate the company’s earnings for 5 years. 2. Discount the future earnings using the present value factor. DFEA 5 Steps 3. Estimate the growth stream (more than 5 years). 4. Discount the income estimate growth using the present value factor. 5. Compute the total value of the business. Uses price/earnings ratio. Business value= average P/E ratio*estimated net earnings. Marketing Disadvantages Approach 1. Unrepresentative estimates. 2. Find similar companies for comparisons. 3. Apply after-tax earnings to determine the value. IV. Negotiating the Deal 1. Develop a negotiating strategy. 2. Focus on the issue, not the person. 3. Avoid seeing the other person as an enemy. Tips 4. Be a good listener. 5. Be patient. 6. Be flexible. 1. Get the highest price. 2. Minimize tax burden. Seller Goals 3. Maximize cash from deal. 4. Avoid unreasonable contract terms. 1. Buy at the lowest price. 2. Negotiate favorable price. Buyer Goals 3. Avoid the seller to compete against him. 4. Minimize payment upfront. 4|Page www.MoussaAcademy.com 00201007153601  1. Straight business sale. 2. Sale of Controlling Interest. 3. Restructure the Company. Structuring the 4. Employee Stock Ownership Plan (ESOP) Deal DEFINITION: a plan in which employees earn a part or the whole company. 5. Family Limited Partnership. 6. Sell to International Buyer. 1. Communicate with employees. 2. Be honest with employees. Ensuring a Smooth 3. Listen to employees. Transition 4. Ask the seller to be a consultant. 5. Talk about the vision with stakeholders. V. Definitions Investigating, studying, reviewing, and verifying relevant information concerning the most Due Diligence attractive business candidates in greater detail. Process Adjusted Balance sheet a realistic method to determine a company’s value. technique Employee Stock a plan in which employees earn a part or the whole company. Ownership Plan (ESOP) 5|Page www.MoussaAcademy.com 00201007153601  IT364 Week 6: New Business Planning Process IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Conducting a Feasibility Analysis and Crafting a Winning Business Plan.................................................... 2 II. The Elements of a Business Plan: What Lenders and Investors Look for in a Business Plan?..................... 4 III. The Pitch: Making the Business Plan Presentation................................................................................. 4 IV. Market Diversity: Pinpointing the Target Market. Determining Customer............................................ 5 V. Needs and Wants Through Market Research.............................................................................................. 5 V.A How to Conduct Market Research?..................................................................................................... 5 V.B The Marketing Mix.............................................................................................................................. 6 VI. Definitions............................................................................................................................................... 7 1|Page www.MoussaAcademy.com 00201007153601  I. Conducting a Feasibility Analysis and Crafting a Winning Business Plan 1. Feasibility Analysis Should we proceed with the idea? Planning 2. Business Model Requirements How should we proceed with the idea? 3. Business Plan Transforming the idea into a successful business. 1. Product/Service feasibility. Elements of a Feasibility 2. Financial feasibility. Analysis 3. Entrepreneur/team feasibility. 2 Areas of 1. Determining how attractive is the industry. Feasibility Analysis 2. Identifying possible niches. RBBTT 1. Rivalry among competing firms. Porter’s 5 2. Bargaining power of suppliers. Forces Model 3. Bargaining power of buyers. 4. Threat of new entrants. 5. Threat of substitute of products/services. Niches can: 1. Change Niche 2. Go away. Strategy Risk 3. Grow 4. Require adaptability of initial plans 2|Page www.MoussaAcademy.com 00201007153601  A feasibility analysis consists of 4 interrelated components: 1. Industry/Market feasibility analysis. 2. Product/Service feasibility analysis. DEFINITION: Determines the degree to which the product/service appeals to customers. 3. Financial feasibility analysis. 4 Capital requirements. Interrelated Components Estimated earnings. Time out of cash DEFINITION: Surviving at current rate of negative cash flow. Return on Investment (Roi) 4. Entrepreneur feasibility analysis. (Is the idea right for me?) Entrepreneurial readiness DEFINITION: knowledge, experiences, and skills necessary to have any chance to be successful. What are the components of a business model canvas? 1. Value proposition 2. Customer segments 3. Customer relation Business 4. Channels Model 5. Key activities 6. Key resources 7. Key partners 8. Revenue streams 9. Cost structure 3|Page www.MoussaAcademy.com 00201007153601  II. The Elements of a Business Plan: What Lenders and Investors Look for in a Business Plan? 1. Title page and table of contents. 2. Executive summary 3. Mission statement. 4. Business strategy. Elements of a 5. Description of product/services Business Plan 6. Goals & objectives 7. Business strategy 8. Marketing strategy 9. Competitor analysis 1. Make sure the plan has an attractive cover and is visually appealing. Tips for an 2. Use spreadsheets for financial forecasting. Entrepreneur 3. Always include cash flow projections 4. Keep your plan crisp (long enough, but not too long) What Lenders and Investors Look for in a Business Plan? 1. Capital 5 Cs of 2. Capacity Credit 3. Collateral 4. Character 5. Conditions III. The Pitch: Making the Business Plan Presentation 1. The company & Service/Products 2. The problem to be solved. 5 Basic 3. Description of the solution. Areas 4. Business model 5. Competitive edge 4|Page www.MoussaAcademy.com 00201007153601  Prepare Practice Steps of Demonstrate enthusiasm. Presentation Focus on talking about the opportunity of your idea, Hook investors quickly IV. Market Diversity: Pinpointing the Target Market. Determining Customer Identify target market DEFINITION: the group of customers at whom the company aims its 1st Step in products or services. Building a Marketing The program depends on a clear, concise definition of the targeted customers. Plan (NOT one-size-fits-all approach) Long Tail of Marketing V. Needs and Wants Through Market Research Market DEFINITION: gathering information about demographic, social, and cultural trends to determine Research strategies. V.A How to Conduct Market Research? Individualized DEFINITION: gathering data based on individuals and then developing a marketing plan (one-to-one) designed specifically to appeal to their needs and preferences. Marketing Surveys and questionnaires Primary Social media Research Techniques Focus groups. Daily transactions 5|Page www.MoussaAcademy.com 00201007153601  DEFINITION: Using software that uses statistical analysis, database technology, and AI to find Data Mining hidden patterns, trends, and connections within the data so for prediction and decision making. 1. Geographic 3 Types of 2. Demographic Information 3. Psychographic How to Become an Effective One-to-One Marketer? 1. Identify the best customers. 2. Collect information on these customers. Effective One- 3. Calculate the lifetime of these customers. to-One Marketer 4. Know the customer’s buying cycle. 5. Make sure that Service/Product surprises customers. 6. See customer complaints. 7. Use information to appeal individual needs V.B The Marketing Mix Product The Marketing Place Mix Price Promotion Introductory Growth and acceptance Product Life Maturity and competition Cycle Market saturation Product decline DEFINITION: any commercial news covered by the media that boosts sales bit for which a small Publicity company does not pay. The right price for a product or service depends on: 1. Company’s cost structure. 2. An assessment of what the market will endure. Price 3. The desired company image. 6|Page www.MoussaAcademy.com 00201007153601  1. Manufacturer to consumer 4 Channels of 2. Manufacturer to retailer to consumer Distribution (Consumer 3. Manufacturer to wholesaler to retailer to consumer Goods) 4. Manufacturer to wholesaler to wholesaler to retailer to consumer 2 Channels of 1. Manufacturer to industrial user Distribution 2. Manufacturer to wholesaler to industrial user (Industrial Goods) VI. Definitions Product/Service feasibility Determines the degree to which the product/service appeals to customers. analysis. Time out of Surviving at current rate of negative cash flow. Cash the group of customers at whom the company aims its products or services. Target Market Market gathering information about demographic, social, and cultural trends to determine Research strategies. Individualized gathering data based on individuals and then developing a marketing plan designed (one-to-one) specifically to appeal to their needs and preferences. Marketing Using software that uses statistical analysis, database technology, and AI to find hidden Data Mining patterns, trends, and connections within the data so for prediction and decision making. any commercial news covered by the media that boosts sales bit for which a small Publicity company does not pay. 7|Page www.MoussaAcademy.com 00201007153601  IT364 Week 7: Creative Use of Advertising and Promotion & Pricing and Credit Strategies IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Creative Use of Advertising & Promotion................................................................................................... 2 I.A Define Your Company’s Unique Selling Proposition (USP).................................................................. 2 I.B Creating a Promotional Strategy......................................................................................................... 2 I.C Selecting Advertising Media. How to Advertise Big on a Small Budget?............................................ 3 I.C.1 Selecting Advertising Media............................................................................................................ 3 I.C.2 How to Prepare an Advertising Budget?......................................................................................... 3 II. Pricing: A Creative Blend of Art and Science............................................................................................... 4 III. Pricing Techniques for Service Businesses.............................................................................................. 4 IV. Definitions............................................................................................................................................... 5 1|Page www.MoussaAcademy.com 00201007153601  I. Creative Use of Advertising & Promotion. I.A Define Your Company’s Unique Selling Proposition (USP) DEFINITION: a key benefit of a product or service that sets it apart from its competitors. (Better than USP competitors). Focuses on intangible or psychological benefits. I.B Creating a Promotional Strategy. Promotion DEFINITION: Influencing customers to buy Products/Services through persuasive communication. 1. Publicity Examples 2. Personal Selling 3. Advertising Publicity DEFINITION: any commercial news “FREE OF CHARGE” that boosts sales. 1. Articles of interest 2. Sponsoring events/seminars Examples 3. Involve celebrities (On the Cheap) 4. Newsletters Personal DEFINITION: Personal contact between sales personnel and customers. Selling 1. Enthusiastic 2. Understand the Service/Product Top 3. Use direct approach. Salespeople 4. Plan thoroughly 5. Selecting accounts with the greatest sales potential. Advertising DEFINITION: non-personal sales presentation paid by sponsor. 1. Plan more ads at a time. Advertising 2. Set long run objectives and monitor them. Tips 3. Use themes that appeal to target customers. 4. Focus ads on UPS. See UPS DEFINITION 2|Page www.MoussaAcademy.com 00201007153601  I.C Selecting Advertising Media. How to Advertise Big on a Small Budget? I.C.1 Selecting Advertising Media 1. Email 2. Social Media Media 3. TV Options 4. Radio 5. Newspaper/Magazine 6. Word-of-mouth I.C.2 How to Prepare an Advertising Budget? 1. What is affordable The 4 2. Matching competitor’s ad expenditures methods 3. Percentage of sales (Past/Future) 4. Objective-&-task 1. Continuous Spend on Ads budgets consistently over time. Ad Scheduling 2. Flighting Spend budget in carefully timed batches. Strategies 3. Pulsing Spending is consistent across the year but concentrates the rest in carefully timed batches. 1. Comparative: DEFINITION: shares the cost of advertising with the retailer. The 3 2. Shared: Advertising Techniques DEFINITION: A group of businesses that produces ads. 3. Stealth: DEFINITION: innovative ads located in unexpected areas. Repeat successful ads. Other Use identical ads in different media. Techniques Concentrate advertising when customers are most likely to buy. 3|Page www.MoussaAcademy.com 00201007153601  II. Pricing: A Creative Blend of Art and Science DEFINITION: The area between the price ceiling and price floor. Price Range Communicate with customers. How to Face Raise prices incrementally. Rising Shift to less expensive raw materials Costs Include a service charge instead of raising prices III. Pricing Techniques for Service Businesses Based on: Materials Services Labor employed. Pricing Allowance for overhead Profit 4|Page www.MoussaAcademy.com 00201007153601  IV. Definitions A key benefit of a product or service that sets it apart from its competitors. (Better than USP competitors). Promotion Influencing customers to buy Products/Services through persuasive communication. Publicity Any commercial news “FREE OF CHARGE” that boosts sales. Personal Personal contact between sales personnel and customers. Selling Advertising Non-personal sales presentation paid by sponsor. Comparative Shares the cost of advertising with the retailer. Shared A group of businesses that produces ads. Stealth Innovative ads located in unexpected areas. Price Range The area between the price ceiling and price floor. 5|Page www.MoussaAcademy.com 00201007153601  IT364 Week 9: Creating a Solid Financial Plan and Managing Cash Flow IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Basic Financial Reports and Creating Projected Financial Statements Ratio Analysis and interpreting Business Ratios.................................................................................................................................................... 2 I.A Basic Financial Reports........................................................................................................................ 2 I.B Creating Projected Financial Statement.............................................................................................. 2 I.C Ratio Analysis....................................................................................................................................... 2 I.C.1 12 Key Ratios................................................................................................................................... 3 I.C.2 Interpreting Ratios........................................................................................................................... 4 II. Even Analysis............................................................................................................................................... 5 III. Cash Management & Profits Are Not the Same...................................................................................... 6 IV. Preparing a Cash Budget, The “Big Three” of Cash Management........................................................... 6 IV.A Preparing a Cash Budget..................................................................................................................... 6 IV.B The “Big Three” of Cash Management................................................................................................ 6 IV.C Bootstrapping to Avoid the Cash Crunch............................................................................................ 7 V. Definitions................................................................................................................................................... 7 1|Page www.MoussaAcademy.com 00201007153601  I. Basic Financial Reports and Creating Projected Financial Statements Ratio Analysis and interpreting Business Ratios. I.A Basic Financial Reports Balance Sheet It is a snapshot of a business that is used to estimate a firm’s worth on a specific date. DEFINITION Assets Asset = Liabilities (Debt) + Owner’s Equity (Assets that the owner can claim). 1. Current assets Types of 2. Fixed assets Assets 3. Intangible assets 4. Current Liability Types of 5. Long-term Liability Liabilities 6. Owner’s Equity Income It is used to compare a firm’s expenses against its income to show its net income/loss Statement DEFINITION Cash Flow Shows the change in the firm's capital over time by listing how funds are used. Statements DEFINITION I.B Creating Projected Financial Statement Financial It is an estimate of the future financial condition of a business. Statements DEFINITION I.C Ratio Analysis Ratio expressing the relationships between any two accounting elements for financial analysis. Analysis DEFINITION 2|Page www.MoussaAcademy.com 00201007153601  I.C.1 12 Key Ratios I.C.1.1 Liquidity Ratio Current Ratio Quick Ratio I.C.1.2 Leverage Ratio Debt Ratio Debt Ratio Debt to Net Ratio Time Interested Earned Ratio I.C.1.3 Operations Ratio Average Inventory Turnover Ratio 3|Page www.MoussaAcademy.com 00201007153601  I.C.1.4 Other Ratios Average Collection Period ratio Average Payable Period Ratio Net sales to asset ratio I.C.1.5 Profitability Ratios Net profit to sales ratio Net profit to assets ratio Net profit to equity ratio I.C.2 Interpreting Ratios Key A performance measurment that evaluates a success of an organization. Performance Indicator (KPI) DEFINITION 4|Page www.MoussaAcademy.com 00201007153601  II. Even Analysis Break-Even the level of operation at which it neither earns a profit nor a loss happens. Point DEFINITION 1. Determine expenses 2. Categorize expenses into fixed & variable. 4 Steps to 3. Calculate the ratio of variable expenses to net sales Calculate Break-Even 4. Use this formula. Point Sales Break-Even Volume 1. Label the horizontal axis as sales volume in dollars. 2. Label the vertical axis as income and expenses in dollars. 6 Steps to 3. Draw fixed expenses line (horizontal line) Construct Break-Even 4. Draw a total expense line Chart 5. Draw revenue line 6. Locate the break-even point by finding the intersection of the total expense line and the revenue line Break-Even Chart 5|Page www.MoussaAcademy.com 00201007153601  III. Cash Management & Profits Are Not the Same Cash forecasting, collecting, disbursing, investing, and planning the cash a company needs to operate Management smoothly DEFINITION Cash Flow Profit Cash Flow vs The difference between total revenue and Profit company’s liquidity and its ability to pay its bills expenses. and other financial obligations on time Total Revenue- Expenses IV. Preparing a Cash Budget, The “Big Three” of Cash Management IV.A Preparing a Cash Budget Cash Budget a cash map showing the amount and the timing of a firm's cash receipts and disbursements over time DEFINITION 1. Determine an adequate minimum cash balance. 2. Forecast sales. 5 Steps to Prepare a 3. Forecast cash receipts. Cash Budget 4. Forecast cash disbursements. 5. Estimate end-of-month cash balance What is the result of cash planning? Cash Increase cash in. Planning Reduce cash out. Impress lenders and investors IV.B The “Big Three” of Cash Management 1. Accounts Receivable. The Big 3 of Cash 2. Accounts Payable. Management 3. Inventory. 6|Page www.MoussaAcademy.com 00201007153601  IV.C Bootstrapping to Avoid the Cash Crunch Bootstrapping Lowering overhead expenses, operating costs to increase sales volumes. DEFINITION Use credit cards to make small purchases. Tools for Start selling gift cards. Bootstrapping Be on the lookout for employee theft. V. Definitions It is a snapshot of a business that is used to estimate a firm’s worth on a specific date. Balance Sheet Income It is used to compare a firm’s expenses against its income to show its net income/loss Statement Cash Flow Shows the change in the firm's capital over time by listing how funds are used. Statements Financial It is an estimate of the future financial condition of a business. Statements Ratio Analysis Expressing the relationships between any two accounting elements for financial analysis. Key A performance measurment that evaluates the success of an organization. Performance Indicator (KPI) Break-Even the level of operation at which it neither earns a profit nor a loss happens. Point Cash forecasting, collecting, disbursing, investing, and planning the cash a company needs to Management operate smoothly a cash map showing the amount and the timing of a firm's cash receipts and disbursements Cash Budget over time Bootstrapping Lowering overhead expenses, operating costs to increase sales volumes. 7|Page www.MoussaAcademy.com 00201007153601  IT364 Week 10: E-Commerce and Entrepreneurship IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Benefits of Selling on the Web and the Factors to Consider Before Launching into E-Commerce. Ten Myths of Ecommerce.......................................................................................................................................... 2 I.A Benefits of Selling on the Web............................................................................................................ 2 I.B Factors to Consider Before Launching into E-Commerce.................................................................... 2 I.C 10 Myths of E-commerce.................................................................................................................... 3 I.D Reasons for not Buying Online............................................................................................................ 3 II. Strategies for E-success............................................................................................................................... 3 III. Tracking Web Results and Ensuring Web Privacy and Security 444........................................................ 4 III.A Tracking Web Results.......................................................................................................................... 4 III.B Ensuring Web Privacy & Security......................................................................................................... 4 IV. Definitions............................................................................................................................................... 5 1|Page www.MoussaAcademy.com 00201007153601  I. Benefits of Selling on the Web and the Factors to Consider Before Launching into E-Commerce. Ten Myths of Ecommerce I.A Benefits of Selling on the Web 24 hours & 7 days availability. Benefits of Purchase products anywhere in your house. Selling on the Web Create websites on the internet and do lots of things. Easy to market & brand products on the web. I.B Factors to Consider Before Launching into E-Commerce Knowledge Cost Value of a website Factors Online security issues A plan for integrating the web into the strategy. How to create connections with customers & suppliers using the web. Measure success of web-based sales. Acquiring Customers Optimizing Customers E-commerce Success Ensure positive user experience (UX) Essentials Maximize website performance. Use web analytics. 2|Page www.MoussaAcademy.com 00201007153601  I.C 10 Myths of E-commerce 1. If I launch a site, will groups of customers attract (flock) to it? 2. Online customers are easy to satisfy. 3. Making money on the web is easy. 4. Online privacy is not an important issue. 5. You do not need strategy to sell on the web. 10 Myths 6. Technology is important in e-commerce. 7. Customer service is not important on the web. 8. Fast loading (Flash) makes a website better. 9. It’s what’s up front that counts. 10. My business doesn’t need a website I.D Reasons for not Buying Online Unexpected shipping and handling charges. Common Insufficient product information. Reasons Lack of trust. Difficult navigating through the website. II. Strategies for E-success Focus on niche markets. Give away freebies. Make website say credibility. Go mobile. Successful Strategies to Promote website online & offline. Follow Search Engine Optimization. Design killer website. Design simple website. Select simple domain name. Search SEO is the method used to increase the number of visitors to a website or a specific page within a Engine website. Optimization DEFINITION 3|Page www.MoussaAcademy.com 00201007153601  Natural powerful programs that crawl the Web, looking at key words, links, and other data (Organic) Listings DEFINITION Paid Short ads that show up next to search engine results and link back to the website of the company paying for them. (Sponsored) Listings DEFINITION III. Tracking Web Results and Ensuring Web Privacy and Security 444 III.A Tracking Web Results Web tools that measure a website’s ability to attract customers, generate sales, and keep customers Analytics coming back. DEFINITION Click- the number of people who see an online ad for a business and click on it to go to the business's Through Rate website. (CTR) DEFINITION Conversion to the number of people who visit a site who actually buy something Browse-to- Buy Rate DEFINITION how much it costs a business to make a sale (or sign up a new customer). Cost per Acquisition (CPA) DEFINITION III.B Ensuring Web Privacy & Security Use tools such as: Virus detection software To Minimize Intrusion detection software Cybercrime Firewall Secure sockets layer (SSL) technology 4|Page www.MoussaAcademy.com 00201007153601  IV. Definitions Search Engine SEO is the method used to increase the number of visitors to a website or a specific page Optimization within a website. Natural powerful programs that crawl the Web, looking at key words, links, and other data (Organic) Listings Short ads that show up next to search engine results and link back to the website of the Paid company paying for them. (Sponsored) Listings tools that measure a website’s ability to attract customers, generate sales, and keep customers Web Analytics coming back. DEFINITION the number of people who see an online ad for a business and click on it to go to the business's Click-Through website. Rate (CTR) Conversion to the number of people who visit a site who actually buy something Browse-to-Buy Rate Cost per how much it costs a business to make a sale (or sign up a new customer). Acquisition (CPA) 5|Page www.MoussaAcademy.com 00201007153601  IT364 Week 11: Managing People: A Company Most Valuable Resource IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. Staffing & Leading a Growing Company...................................................................................................... 2 I.A Leadership........................................................................................................................................... 2 II. The Entrepreneur’s Role as Leader Hiring the Right Employees: The Company’s Future Depends on It... 3 III. Building the Right Culture and Organizational Structure Communicating Effectively the Challenge of Motivating Worker.............................................................................................................................................. 4 III.A Building the right Culture.................................................................................................................... 4 III.B A Self-Directed Work Team................................................................................................................. 4 III.C Barriers to Effective Communication.................................................................................................. 5 III.D Empowerment & Job design............................................................................................................... 5 IV. Definitions................................................................................................................................................... 6 1|Page www.MoussaAcademy.com 00201007153601  I. Staffing & Leading a Growing Company I.A Leadership Leadership is the process of influencing & inspiring others to work to achieve DEFINITION Innovative Business Passionate Leaders Willing to take risks. Adoptable Create & pursue employee values. Leaders create an ethical company culture. Define & reinforce their company vision. Leader Traits Respect & support employees. Create a climate of trust. Set the example for employees. Involve others in the interview process. Solo interviews are prone to errors. Ask open-ended questions. Plan an Ask all candidates a set of core questions. Effective Interview (Standardizes the screening process but customizes each interview) Present hypothetical situations. Find examples of the candidate's traits and characteristics in their past work. Inquire about recent successes and failures. 2|Page www.MoussaAcademy.com 00201007153601  II. The Entrepreneur’s Role as Leader Hiring the Right Employees: The Company’s Future Depends on It 1. Hire the right employees & constantly improve their skills. 2. Build an organizational culture that allows one to reach potential. 4 Vital Tasks 3. Communicate the values & vision of the company & create an environment of trust. 4. Motivate workers Trusting candidates' self-descriptions rather than testing them. Reasons for Inconsistent, evidence-based selection process. Poor Hiring Not explaining the jobs they're hiring for. Send recruiters to college students. Creative Sponsoring a "job shadowing" program for students Recruiting Techniques Invite college seniors to a company tailgate at a sports event. Host job fairs. Does the question Omit references to race, religion, color, sex, or national origin? Creative Does the question Unfairly screen out a particular class of people? Recruiting Techniques Can you Consistently apply the question to every applicant? Does the question Have job-relatedness and business necessity? Valid Test is one that measures what it is intended to measure. DEFINITION Reliable Test is one that measures consistently over time. DEFINITION 3|Page www.MoussaAcademy.com 00201007153601  III. Building the Right Culture and Organizational Structure Communicating Effectively the Challenge of Motivating Worker III.A Building the right Culture Company is an organization's unwritten code of behavior, attitudes, relationships, and style. Culture It defines "the way we do things around here." DEFINITION 1. Respect for the quality of work and a balance between work life and home life. address work–life balance issues 2. A sense of purpose. connect employees to their mission through a strong sense of purpose. 3. Diversity that cultural diversity boosts talent, skills, and abilities. Principles of 4. Integrity Organizational Culture Many employees are proud to work for an ethical, socially responsible company. 5. Participative management Entrepreneurs must trust and empower employees at all levels to make decisions and take actions. 6. Learning environment 7. A sense of fun 8. Engagement Engaged workers are essential to business success. III.B A Self-Directed Work Team Self-Directed A team that makes decisions and does tasks managers used to do without supervision. Work Team DEFINITION Make sure teams fit the company and work. Form teams around natural workflow and assign tasks. Ensure Team Managers must give teams measurable goals to succeed. Success Support and train leaders and team members. Make some team members' pay performance based. 4|Page www.MoussaAcademy.com 00201007153601  1. Start up. 2. Realization The Stages of Team 3. Realignment Development 4. Performance 5. An Effective Team Developing a Work Unit III.C Barriers to Effective Communication Clarify your message. Use face-to-face communication. Be empathetic. Overcoming Be organized. Barriers Encourage feedback. Tell the truth. Get out of the office and talk to employees Motivation is an employee's enthusiasm for work and effort to complete a task. DEFINITION III.D Empowerment & Job design Empowerment giving employees at all levels the power, and control to their work to meet company goals. DEFINITION Job enlargements increase employee motivation. Job Design Money drives many workers, but not all. Performance appraisals can motivate workers by providing timely, relevant feedback. 5|Page www.MoussaAcademy.com 00201007153601  IV. Definitions Leadership is the process of influencing & inspiring others to work to achieve Valid Test is one that measures what it is intended to measure. Reliable Test is one that measures consistently over time. Company is an organization's unwritten code of behavior, attitudes, relationships, and style. Culture It defines "the way we do things around here." Self-Directed A team that makes decisions and does tasks managers used to do without supervision. Work Team Motivation is an employee's enthusiasm for work and effort to complete a task. Empowerment giving employees at all levels the power, and control to their work to meet company goals. 6|Page www.MoussaAcademy.com 00201007153601  IT364 Week 12: The Importance of Startups IT ENTREPRENEURSHIP & Innovation Moussa Academy 00201007153601 WWW.MOUSSAACADEMY.COM  Contents Contents.............................................................................................................................................................. 1 I. What is a Tech Startup?............................................................................................................................... 2 II. Why Should You Work at a Startup?........................................................................................................... 2 III. Why Should You Not Work at a Startup?.................................................................................................... 2 IV. Joining vs Founding a Startup...................................................................................................................... 2 V. Where Ideas Come From?........................................................................................................................... 2 VI. Stealth Mode............................................................................................................................................... 3 VII. Idea vs Execution......................................................................................................................................... 3 VIII. Definitions................................................................................................................................................... 3 1|Page www.MoussaAcademy.com 00201007153601  I. What is a Tech Startup? Tech Startup is an organization designed for massive growth that is searching for a repeatable business model and building technology in an uncertain environment. DEFINITION II. Why Should You Work at a Startup? 1. More opportunity. Availability of smartphones makes everything possible. Easy distribution Open-source codes Services minimize effort. 3 Reasons 2. More ownership. Autonomy Mastery Purpose 3. More fun. III. Why Should You Not Work at a Startup? 1. It is not glamorous. 3 Reasons 2. It is a sacrifice. 3. Probably won’t get rich. IV. Joining vs Founding a Startup High risk Founding a High reward Company Success takes a very long time. V. Where Ideas Come From? Creativity can be learned. Ideas do not appear magically; they are materialized from information. New ideas can be developed from same materials (remix & mashups) Source of NOTE Ideas Good ideas need a lot of knowledge. Experts focus on specific topics. Generalists look for new ideas regularly. 2|Page www.MoussaAcademy.com 00201007153601  1. Copy 3 Stage Process of 2. Transform Creativity 3. Combine 1. Have plenty of time. 2. Keep an idea journal (Write ideas don’t analyze it). Environment 3. Get away from work. for Creativity