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Entrepreneu rship
Successfully Launching
ilew Uentures
Fifth Edition

3
-

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it\s:.

n'

Bruce R. Barringer
R. Iluane lreland
fEi
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T:r-:--

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Brief Contents
Preface

xi

CFAPTER

Introduction to Entrepreneurshtp

Recogni zing Opportunities and Generating

Ideas 4L
Feasibility AnaLusrs 75

CHAPTER 2
CFIAPTER 3

Developing an Elfectiue Business Model 111

Industry and Competitor Analgsts L49
Writing a Business Plan 181

CHAPTER 4
CHAPTER 5
CHAPTER 6

PART

3 Moving from an ldea to an Entrepreneurial

CHAPTER

CHAPTER

CFAPTER IO

g and Growing an Entrepreneurial

MA

Firm

217

Preparing the Proper Ethtcal and l-egal"

Foundation 219
Assessing a New Venture's Ftnanctal Strengthand
Viability 259
Building a Neu-Venture Team 295
Getting Ftnanclng or Funding 327

CHAPTER 9

PART

Firm

363

Unique Markettng Issues 365

CHAPTER 12 The Importance of lnteLlectuaL Property 403
CHAPTER 13 Preparin$ for and Eualtnting the Challenges of
Growth 441
CHAPTER 14 Strategies for FtrmGrouth 473

CFAPTER I

CHAPTER

15 Franchising

Glossary 548

lndex 558
Company lndex 560
Name

Subiect

IV

lndex

564

5O7

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coNTENTS

Encouraging the Development of New

ldeas 62
at the Firm Level

Ideas

62

Establishing a Focal Point for

Encouraging Creativity

62

PARTNERING fOR SUCCESS: Want Help Fine-Tuning

a Business Idea? Find a Mentor 63

Chapter Summary 64
Review Quesfions 65

Terms 65
ApplicationQuesfions 66
Key

You Be the VC 2.2

2.1 67
2.1 68 | CASE 2.2 70
Endnotes 72

67

You Be the VC

3ASE

CHAPTER

78

ProducVService Demand 83

Industry/Target Market FeasibilityAnalysis 85

SAIIYY HNTREPH.HNEURIAI, FIRM: How Learning
from Customers Caused a Successful Firm to
Make a 18O-Degree Turn on the Positioning of
a Product 86

lndustryAttractiveness 87
Target Market Attractiveness 88

WHATWEIII 1fiIRONG? How Feasible Was Standout

Jobs from the Beginning? 90
pAftTr"TffiKING FilR SUCCHSS: Finding the Right
gz

Total Start-Up Cash Needed 92

Financial Performance of Similar Businesses 93
Overall Financial Attractiveness of the Proposed
Venture 94

3.1
9ASE 3.1 100 |
Appendix 3.1 105
Appendix 3.2 107
Endnotes f 09
CHAPTER

Business

You Be the VC
102
CASE

99

s.2

3.2

99

Guru: Plafforms That Facilitate the Forming of

Partnerships with Freelancers 132
KeY Terms 134
Chapter Summary 133
Review Questions 134
You Be the VC 4.1 136
3ASE 4.1 137 | CASE

145

Endnotes

146

Appendix

ApplicationQuesfions 135
You Be the VC

4.2

136

Industry Analysis 151

Studying lndustry Trends 152

The Five Forces Model I54

Threat of Substitutes 155

Entrants

Rivalry Among Existing

156

Firms

157

Bargaining Power of Suppliers 158

Bargaining Power of

Buyers

The Value of the Five Forces

159

Model

162

Emerging

lndustries

163

Fragmented lndustries 163

111

t 11

Business Models and Their

4.2

141

Opening Profile-GBEENVELOPH: Occupying a Unique

Position in an Evolving lndustry-and Thriving 149

Offer

Opening Profile-HER CAMPUS MEDIA: Executing on

an Established Business Model and Preparing for the

Future

12O

Importance

60

Industry TYpes and the Opportunities They

Developing an Effectiue

Model

Strategy

Resources 124
Financials 126
Operations 129

Threat of New

A Feasibility Analysis Template 94

Chapter Summary 95 I Key Terms 96
ApplicationQuesfions 97
Review Questions 97
You Be the VC

Core

PAETIffiRING fOR SUCCESS: Three Ts That Are

lmportant for Becoming Active in an lndustry: Trade
Associations, Trade Shows, and Trade Journals 153

91

Analysis

18

5 Industry and ComPetitor

Ano,lgsis L49

ResourceSufficiency 89

Financial Feasibility

WHAT WEnff WRONG? Peer-to-Peer Business

Models: Good for Some, Not So Good for
Others 117

CFIAPTER

Bg

Management Prowess 89

Business Partner

I15

PARTNERING FOR SUCCESS: Odesk, Elance, and

ProducVService Desirability 78

Organizational FeasibilityAnalysis

Models

Template I19

75

77

Analysis

General Categories of Business

Standard Business Models 1 15

Disruptive Business Models

Feasibitity Analysis

Product/Service Feasibility

Company Greates, Delivers, and Captures Value for

Its Stakeholders 114

The Barringer/Ireland Business Model

Opening Profile*LUMINAID: The Value of Validating

a Business ldea 75

FeasibilityAnalysis

SAV\TY EI\TTREPRHNEUHIAT FIRM: QUjTKY: HOW ONE

I 13

lndustries 163
Declining lndustries 164
Mature

Global lndustries 165

Competitor Analysis t 65
ldentifyingCompetitors 165
Sources of Competitive lntelligence 166

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CONTENTS

Sheet

Pro Forma Balance

Friends and

279

Pro Forma Statement of Cash

Flows 280

Bootstrapping 333

Analysis 283
Chapter Summary 284

Key Terms 285

Review Questrons 285

ApplicationQuesfions 286

Ratio

You Be the VC

2ASE

8.1

8.1 288 |

287

You Be the VC

CASE

8.2

8.2 287

290

Endnotes 292

Preparing to Raise Debt or Equity

Sources of Equity Funding 337
Business Angels 337
Venture Capital 338
lnitial Public Offering 340

Financing

334

HtrTIAf WHhITWRONG? How One Start-up Caught

the Attention of VCs, Gained 25,000 Daily Users,

and Still Failed 341

CHAPTERg Building a lveut-Venture

Team 295

Opening Profile-NEXT BIG SOt!ND: Hitting the Ground

Running 295
Liability of Newness as a Challenge 297
Creating a New-Venture Team 297
P,q-eY3i.HF{I}dffi Fffi

Family 332

ffi. IBIJ#

tr

$S :

ffi

Sources of Debt

Financing 343

Commercial Banks 343

SBA Guaranteed

Loans 344

Other Sources of Debt Financing 345

Creative Sources of Financing and

To Overcom e th e

Funding

345

Liabilities of Newness, Consider Joining a Start-up

Accelerator 298

Crowdfunding 345

The Founder or Founders 299

SBIR and STTR Grant Programs 347

WFLIff UfEI\ff WRONG? Dewer: How Miscues in

Other Grant Programs 348

Regard to the Composition and Management of a

New-Venture Team Can Kill a Start-up 302

SAVIIY HNTRHFRENHUH.IAI", FIR}# : Worki n g Together:

How Biotech Firms and Large Drug Companies

Bring Pharmaceutical Products to Market 349

The Management Team and Key Employees 303

SAIflVY HNTRHFRENHURIJLT FIRM: Overcoming a

Lack of Business Experience 304

The Roles of the Board of Directors 307

Rounding Out the Team: The Role of Professional

Advisers 3I0
Board of

Advisors

Managing and Growing an

PART
Entrepreneurial Firm 363

Consultants 313
Key

Chapter Summary 314

Review Questions 315

9.1 318

Terms 315

Application Quesfions 315

You Be the VC 9.2 317

317

CASE 9.2 321

10 Getting
Funding 327

Position

Selecting a Target Market 368

Crafting a Unique Market Position 369

Branding

329

Why Most NewVentures Need

Funding

FCIH.,q'{"f

# ff

H:Sffi

Funds 332

373

f*R Si-rtr#iISS: How Co-Branding ls

Combining the Strengths of Two Already Successful
Brands 374

F&RTffiHRING

Cycles
: Start

330

p Wee

ke

Fertile Place to Meet Business Cofounders

Sources of Personal Financing 332
Personal

NewVentures

Product 373

Capital lnvestments 330

Lengthy Product Development

370

The 4Ps of Marketing for

329

Cash Flow Challenges 329

HHII{#

367

Segmenting the Market 367

The Importance of Getting Financing or

P,.qffi Yffi

11 Unique Marketing

Selecting a Market and Establishing a

^Financing or

Opening Frcfile* mCIOM'f{AI'E: Raising lVioney

earefully and ffieliberately 327

Funding

CFI.APTER

Issues 365

Opening Profile*WlhlK NATUFIAL COSMETIC$:

Creating a frlew Brand in the Cosnnetics tndustry 365

Endnotes 324
CHAPTER

361

Lenders and lnvestors 311

3ASE

Strategic Partners 349

Chapter Summary 350 I Key Terms 351
Review Quesfions 351 | Application Questions 352
You Be the VC 10.1 354 | You Be the VC 10.2 354
2ASE 10.1 s55 | CASE 10.2 358

Endnotes

310

OtherProfessionals 313

You Be the VC 9.1

Leasing 346

nd

:A

331

Price

376

Promotion 377
WHATWHI\II IRIRONG? What Start-ups Can Learn
About Marketing from Missteps at JCPenney 378

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SINSINOC

CONTENTS

Additional Internal Product-Growth

Strategies

479

lmproving an Existing Product or Service 479

lncreasing the Market Penetration of an Existing Product
or Service 479

Extending Product

Lines

480

GeographicExpansion 480
lilIHAT WHI\ff \fiIRCING? Lessons for Growth-Minded

Failure 482

Assessing a Firm's Suitability for Growth Through

lnternational Markets 483
Foreign Market Entry Strategies 484
Selling Overseas 484

External Growth Strategies 485

Mergers and Acquisitions 485

Licensing 489
Strategic Alliances and Joint Ventures 490
pfiRTffiHHIffi# f(}m. SIJ##ES$; Three Steps to Alliance

Success 492
Chapter Summary 494 I KeY Terms 495
Review Questions 495 | Application Questions 496
You Be the VC 14.1 498 | You Be the VC 14.2 498
cAsE 14.1 499 | CASE 14.2 502

Endnotes

Selecting and Developing Effective Franchisees 517

Advantages and Disadvantagres of Establishing a

Franchise System 5I8
Buying a Franchise 520
ls Franchising Right for

InternationalExpansion 48I
Start-ups from Crumbs Bake Shop's

SAIIVY EMIREPRENEURIAL FIRM: Wahoo's Fish

Taco: A Moderate-Growth Yet Highly Successful
FranchiseOrganization 515

S04

I5

Franchising 5,OZ
CFIAPTER
UPTOWN CHEAPSKATE: Franchising
ProfileOpening
as a Form of Business Ownership and Growth 507
What Is Franchising and How Does
ItWork? 5I0
What ls Franchising? 510

lnternational

521

The Cost of a Franchise 523

Finding a Franchise 524
PARTT\IHRIIIG fOR SUCCESS: Using Co-Branding to

Reduce Costs and Boost

Sales

525

Advantages and Disadvantages of Buying a

Franchise 526

Steps in Purchasing a Franchise 528

Watch Out! Common Misconceptions About

Franchising 529

Legal Aspects of the Franchise Relationship 530

Federal Rules and Regulations 530

State Rules and Regulations 531

More About Franchising 533

Franchise Ethics 533
lnternational Franchising 534
The Future of Franchising 535

536 I KeY Terms 537

537 | Application Questions
You Be the VC 15.1 540 | You Be the VC 15.2
?ASE 15.1 541 | CASE 15.2 543
Endnotes 546

Chapter Summary
Review Questions

When to Franchise 514

Steps to Franchising a Business 514

Subject

Establishing a Franchise System 5I3

520

WIIATWElflf IAIRCING? Trouble at Curves

Glossary 548
Name lndex 558
Company lndex 560

How Does Franchising Work? 510

You?

lndex

56,4

538
540