CHAPTER 01

CHAPTER 02
2-22. Justin plans to write an e-mail message to his dad asking for a loan. The purpose of the
loan will be to start a company to sell an environmentally friendly line of cleaning
supplies that are suitable for light manufacturing facilities. Justin has spent the past two
years developing the products in his spare time, and wants to convince his dad that the
idea represents an attractive business opportunity. In your opinion, what information
and insights about the company he wants to start should Justin include in the e-mail
message?

Answer: Justin should try to convince his dad that (1) the idea meets the four tests of
an opportunity, (2) the idea either takes advantage of an environmental trend, solves
a problem, or fills a gap in the marketplace, and (3) he has done sufficient research,
either through brainstorming, focus groups, and/or library and Internet research, to
assure himself that the idea is attractive.

2-23. Identify three start-ups, other than those discussed in the chapter and listed in Table
2.2, which were started to solve a problem. Briefly describe the problems the three
start-ups are solving and how they are going about doing so.

Answer: There are countless examples that students might suggest. Urge your students
to browse through magazines such as Inc. and Entrepreneur for suggestions if they are
having a hard time coming up with ideas. The Springwise blog (www.springwise.com)
also provides fresh examples of new products and services on a near daily basis.

2-24. Marshall Hanson, the founder of Santa Fe Hitching Rail, a chain of nine steak
restaurants in New Mexico, is considering expanding his menu, which is currently
restricted to steak, hamburger, potatoes, and fries. He has just read a book about
entrepreneurship and learned that entrepreneurs should study social trends to help
identify new product opportunities. What are some current social trends that might
help Marshall choose items to add to his menu? Given the trends you list, what items
do you suggest Marshall add to expand his restaurant’s menu?

Answer: This is a good thought question for students. The obvious social trend that
Marshall should pay attention to is the increasing emphasis that American’s are paying
to health and fitness. Marshall’s menu features food that is high in fat and cholesterol.
Although that menu may appeal to a certain clientele, Marshall might think about
broadening his menu to include lower fat foods, such as chicken, fish, and salads.

2-25. Tiffany Jones owns a small chain of fast-casual restaurants in Denver that sell
sandwiches, soups, wraps, and desserts. In general, her restaurants are successful,
but she feels they are getting “stale” and could benefit from new

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 ideas. Suggest to Tiffany some ways she could generate new ideas for her
restaurants?

Answer: Brainstorming, focus groups, and Internet and library research.

2-26. As mentioned in the chapter, “prior experience” in an industry helps entrepreneurs

recognize business opportunities. This concept of “help” extends to prior experience in
any aspect of life—whether it is sports, music, or a volunteer activity. In what areas do
you have a good amount of prior experience? How could this prior experience position
you to start a business?

Answer: This is a good question for an individual assignment. Make sure your students
directly tie their prior experience to a potential business opportunity. Some students will
argue that they really don’t have any prior experience that would lend itself to a
business opportunity. In these cases, challenge your students to think harder. All of us
have unique experiences that might lend themselves to business opportunities. Alice
Brooks and Bettina Chen, the student entrepreneurs featured at the beginning of
Chapter 11, used their prior experience of enjoying building things as children to start a
very successful company, Roominate, which makes toys that encourage girls and young
women to become interested in engineering.

2-27. Make a list of your strong-tie and weak-tie relationships. Include at least five names on
each list. Select two names from your list of weak-tie relationships, and speculate on
the types of new business ideas that you think these individuals would be uniquely
qualified to assist you with.

Answer: This is a good question for an individual assignment.

2-28. Imagine that you’ve been hired by Fitbit, the wearable activity tracker, to conduct
focus groups on your campus to get a better sense of how Fitbit can be as relevant and
useful to college students as possible. How would you go about setting up the focus
groups? What are the primary issues on which you would concentrate with the focus
groups?

Answer: Most students will repeat the material in the chapter in regard to how to set up
a focus group to get a better sense of how Fitbit can be as relevant and useful to college
students as possible. Challenge your students to be as
thoughtful and creative as possible in regard to the primary issues they’d zero in on in
the focus group.

2-29. How could AJ Forsythe and Anthony Martin, the co-founders of iCracked, the subject
of the opening feature for this chapter, have utilized library and Internet research to
flesh out their business idea?

Answer: There is undoubtedly much that AJ Forsythe and Anthony Martin could
 have learned about the smartphone industry via library and Internet research,
regarding whether the industry is growing or shrinking, the percentage of
people who buy high-end smartphones vs low-end smartphones, how often
smartphones need repair, and so forth.

CHAPTER 03
3-20. Jackson Reed, a friend of yours, just told you an interesting story. He was at his parents’ house over
the weekend. While there, his father saw your entrepreneurship book laying to the side of your backpack.
He looked through the book and spent a bit of time studying Chapter 3. After doing so, he said to Jackson,
“When you were growing up, I launched and sold three successful businesses and never once completed a
feasibility analysis. What do you think the authors of your text would say about that?” What would you
suggest that Jackson say in response to his father’s question?

3-21. Jennifer Pisano just applied for a bank loan to finance an Italian restaurant she wants to launch.
When visiting with the banker about the loan application, she was asked if she had conducted any primary
research to assess the feasibility of her proposed business. Jennifer replied that she had spent many, many
evenings and weekends in the library and on the Internet collecting information about restaurants in
general and Italian restaurants in particular. She further noted that the information she had collected
through these efforts increased her confidence that she could open and operate a successful restaurant.
One reason for her confidence, Jennifer noted to the banker, was that her library and Internet searches
were carefully conducted in ways that allowed her to verify that Italian restaurants did well in
demographic areas that are similar to the one in which she wants to open her business. If you were the
banker, what would you say to Jennifer in response to her comments?

3-22. If you were one of the recipients of New Venture Fitness Drink’s concept statement, as presented
earlier in the chapter, what type of feedback would you have given the company about the viability of its
product idea?

3-23. Linda Toombs, who has considerable experience in the home security industry, is planning to
launch a new line of home security alarms that she believes would be superior to other products in the
market. Developing SUCCESSFUL BUSINESS IDEAS statement and administer a buying intentions
survey but is less clear about the type of library and Internet research that might help her assess the
demand for her product. If Linda asked you about this, what advice would you give to her about how to
conduct successful library and Internet searches?

3-25. If you were interested in opening a musical instruments store near the college or university you are
attending in order to sell guitars, drums, and other types of musical instruments, what online resources
would you draw on to conduct secondary research regarding the industry/target market feasibility of your
business idea?

3-26. Keith Ambrose, who is a physical therapist, is thinking about starting a firm to provide in-home
therapy services for people suffering from sports-related injuries. Keith lives in Columbus, Ohio. He
doesn’t know if Columbus is large enough to support his proposed business or if people would pay a
premium to receive treatment in their homes for their sports-related injuries. What suggestions do you
have for Keith about primary and secondary research he might conduct to learn more about the potential
target market for his proposed business?
3-27. If you were considering the possibility of launching a website that you’ve developed in order to sell
sports apparel for petite women, what are some specific actions you could take to collect feedback
regarding the usability of your website?

3-28. What are some of the red flags that would suggest that the overall financial attractiveness of a
proposed new venture is poor? Which of the red flags you identified would suggest that realistically, a
proposed venture isn’t feasible?

3-29. A friend of yours just completed a First Screen analysis for an e-commerce site that she hopes to
launch to sell horse riding supplies such as saddles, tacks, lead ropes, and feed buckets. She’s
disappointed because she rated 10 of the 25 items included in First Screen as having either low or
moderate potential. After thinking about this, your friend says to you, “Well that’s that. Good thing I
completed a feasibility analysis. I definitely do not want to start the business I was thinking about.” Is
your friend correct in reaching this conclusion? How would you advise her to interpret the results of her
First Screen analysis?

CHAPTER 04
4-21. Naomi Stephenson plans to open a company that will design and manufacture accessories
for smartphones. She has read that having a clearly articulated business model will help “all of
the elements of her business fit together.” Naomi isn’t quite certain she believes this statement. If
Naomi asked for your opinion about this statement, what detailed response would you offer?

4-22. Do you think the business models of daily newspapers are viable in the long run? If you
were the owner of a daily newspaper in a major U.S. city, would you try to maintain the print
edition of the paper, evolve to strictly an online presence, or do something else?

4-27. What are some examples of instances in which location is an important part of a firm’s
business model?

4-25. Debra McGahan, a close friend of yours, mentioned to you that to complete a project in
one of the courses she is taking this semester, she needs to describe a firm that is using an
effective business model. Your immediate response is to recall that you just read this chapter and
learned about Quirky’s successful business model while reading this chapter’s Savvy
Entrepreneurial firm feature. Describe Quirky’s business model to Debra for the purpose of
explaining to her how this particular model allows Quirky

CHAPTER 05
5-27. Linda Henricks is thinking about starting a firm in the home health care provider industry.
When asked by a potential investor if she had studied the industry, Linda replied, “With the
aging of the population and the fact that people are living longer than ever, the home health care
provider industry is so full of potential, it doesn’t require formal analysis.” In what ways will
Linda limit her possibilities with the potential investor if her current attitude about the
importance of industry analysis doesn’t change?
5-29. Eric Andrews has been investigating the possibility of starting a service that will partner
with grocery stores to provide a delivery service for their customers. The idea is that after
purchasing their groceries, customers could go to a kiosk in the store, pay a small fee, and have
their groceries delivered to their homes within 60 minutes. Which of the five forces in Porter’s
five forces model do you anticipate will most strongly affect Eric’s potential business and why?

5-32. Karen Sharp lives in a town of approximately 10,000 in Western Kentucky. There isn’t a
furniture store in the town; Karen is thinking about opening one. She has good business and
marketing skills based on previous work experience and is confident she can operate the store
successfully. But, she isn’t certain that a retail furniture store is an attractive industry. What
would you recommend to Karen that she do to consider this matter?

5-34. Your friend has developed what he believes is a novel floor cleaning product. The
advantage to this product, he tells you, is that because of the unique chemicals used to create the
cleaning fluid, people are able to use a fraction of the amount of fluid to clean floors compared to
the amount of fluid that is necessary when using traditional, well-established products. Your
friend is convinced that even Walmart will be willing to pay a handsome amount to him in order
to stock and sell his product. Use your knowledge about the power of buyers to offer your friend
a different perspective as to how Walmart might deal with him as he tries to sell his product to
this giant firm.

5-35. Your friend, Lisa Ryan, is opening a smoothie shop that will sell a variety of smoothie
drinks in the $5 to $7 price range. When you ask her if she is worried that the steep price of her
smoothies might encourage prospective customers to buy a soft drink or a sports drink instead of
buying her product, Lisa says: “You are right. This is a real concern I have. Is there anything I
can do to discourage potential customers from making such a choice?” What information would
you provide to Lisa in response to her question?

CHAPTER 06
6-21. Travis Ryan is one of four cofounders of a skateboard company. The cofounders have
decided to write a business plan to obtain funding for their venture. During a recent meeting,
Travis said, “I know that we’re all really busy, so I’d like to volunteer to write our business plan.
A friend of mine has a house on a lake near where we are going to school. If the three of you
agree, I’ll take my laptop to my friend’s house for a couple of days and knock out our business
plan. Any objections?” If you were one of Travis’s co-founders, what would you say? What
alternative approaches to writing a business plan would you propose and why?

6-22. A good friend of yours, Andrew Waters, has decided to leave his corporate job in order to
launch a private SEO (search engine optimization) consulting firm. He is putting together a
business plan for this venture and says the following to you: “I’ve read several books and articles
about how to write a business plan, and there is a point about which I am still a bit confused. Is a
business plan written more for learning and discovering or is it written more for pitching and
selling?” What would you say to Andrew in response to his question?

6-25. The entrepreneurship class you are taking meets for four hours once per week. A break of
10 minutes or so takes place after the first two hours of each class. During a recent break, you
overhead one of your classmates say to another person that in her opinion, the teacher is
overselling the importance to potential investors of a start-up’s management team. “After all,”
the classmate says, “A good product outweighs any deficiency a firm may have in terms of
managers and their abilities.” Given what you have learned about business plans, what would
you say to your classmate to convince her that she needs to rethink her view about potential
investors’ views about the quality of a proposed venture’s management team?

6-23. Kevin Andrews and Karen Platt are college seniors. They’re in the process of launching an
unsweetened, fruit-flavored bottle water start-up named Compete H2O. The start-up will be
unique in that Compete H2O will be sold via small kisoks located in fitness centers. The
university that Kevin and Karen attend hosts an annual business plan competition. Kevin is in
favor of entering the compeition. Karen is opposed to the idea, arguing that Compete H2O’s
business plan is complete and it is time to move forward. What advantages might Kevin and
Karen gain by participating in the university’s business plan competition?

6-24. Imagine you just received an e-mail message from a friend. The message reads: “Want to
let you know that I just finished writing the business plan for my new venture. I’m very proud of
what I’ve written. The plan is comprehensive and just a bit over 100 pages in length. The
executive summary itself is 9 pages long. I intend to send my plan to investors beginning next
week. Do you have any words of advice for me before I do this? Be honest. I really want to get
funding!” How would you respond to your friend’s request for feedback?

6-28. Recently, Megan, Jennifer, and Mark, the cofounders of a medical products company,
presented their business plan to a group of investors in the hopes of receiving funding for their
venture. One of the investors asked the three, “How much of your personal money do each of
you have invested in this firm?” Is this a legitimate question for the potential investor to ask?
Why would an investor want to know how much of their own money each cofounder has
committed to the proposed new venture?

Patty Carroll is thinking about opening a high-end fashion boutique in an affluent suburb of
Minneapolis. She contacts an angel investor she knows has previously invested in this type of
firm and asked if he would read her business plan. She received the following response from the
angel investor: “I would be glad to read your plan. But you should know that when examining
business plans for high-end fashion boutiques, the section I concentrate on with great intensity is
called “The Economics of the Business.” Why do you think the angel investor concentrates on
this particular section of a business plan when studying proposals to launch a highend fashion
boutique? What specifically do you think the angel investor is interested in understanding when
concentrating on this section?