Entrepreneurship: The Art, Science,

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Charles Bamford
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Page i

entrepreneurship
THE ART, SCIENCE, AND PROCESS FOR SUCCESS

fourth edition

Charles E. Bamford

Duke University

Garry D. Bruton

Texas Christian University

Page ii

ENTREPRENEURSHIP: THE ART, SCIENCE, AND PROCESS FOR

SUCCESS, FOURTH EDITION

Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York,
NY 10121. Copyright ©2022 by McGraw Hill LLC. All rights reserved.
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Library of Congress Cataloging-in-Publication Data

Names: Bamford, Charles E., author. | Bruton, Garry D, author.Title:

Entrepreneurship: the art, science, and process for success/ Charles E.
Bamford, University of Notre Dame & Duke University, Garry D Bruton,
Texas Christian University.Description: Fourth Edition. | Dubuque:
McGraw-Hill, 2022. | Revised edition of the authors’ Entrepreneurship,
[2019]Identifiers: LCCN 2020041818 (print) | LCCN 2020041819 (ebook) |
ISBN 9781260682427 (hardcover) | ISBN 9781260786125
(ebook)Subjects: LCSH: New business enterprises. | Small business. |
Success in business.Classification: LCC HD62.5 .B36 2021 (print) | LCC
HD62.5 (ebook) | DDC 658.1/1—dc23LC record available at
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https://lccn.loc.gov/2020041819

The Internet addresses listed in the text were accurate at the time of
publication. The inclusion of a website does not indicate an endorsement by
the authors or McGraw Hill LLC, and McGraw Hill LLC does not
guarantee the accuracy of the information presented at these sites.

mheducation.com/highered
Page iii

dedication
To my family, Yvonne, Moretha, Rob, Sean, Jane, Clara, James, Ada,
Andrew, Silas, and Isaac with whom I get to enjoy so much in this life. To
my great friend and colleague Garry Bruton who has been my writing
partner for over 15 years. To the folks at McGraw-Hill, who still
understand that it is good content that students and faculty are looking for
in a text.

Charles E. Bamford

To my parents, John C. and Ruth W. Bruton, who empowered me with their

love, encouragement, and support throughout their lives. They always
taught me to do what is right more than what is easy or even profitable. To
my wife whose support is constant. And finally, to my oldest friend and co-
author, Chuck Bamford, always one of the great constants of joy in my life.

Garry D. Bruton
Page iv

about the authors

Courtesy of Chuck Bamford

CHARLES E. BAMFORD is the managing partner at Bamford
Associates, LLC, a strategy consulting firm founded in 2013. It focuses on
the processes for both the design and implementation necessary for truly
separating an organization from its competitors.
(www.bamfordassociates.com).

He is an adjunct professor of strategy at Duke University (Fuqua), where he

teaches in both the MBA and Executive MBA programs. Dr. Bamford
worked in M&A/Business Analysis for 12 years prior to pursuing his PhD.

A regular speaker at conferences, trade shows, and conventions, he is the

author of five textbooks used by businesses and universities throughout the
globe. His writings include regular contributions to news organizations, a
popular press book on strategy, The Strategy Mindset 2.0, and a fiction
novel Some Things Are Never Forgiven.

Chuck’s research has been published in the Strategic Management Journal,

Journal of Business Venturing, Entrepreneurship Theory & Practice,
Journal of Business Research, Journal of Business Strategies, Journal of
Managerial Issues, Journal of Technology Transfer, and Journal of Small
Business Management, among others.

Chuck has taught courses in strategy and entrepreneurship at the

undergraduate, graduate, and executive levels. He has worked with
organizations in more than 20 countries. He was previously a professor at
the University of Notre Dame, University of Richmond, Texas Christian
University, and Tulane University, among others. Over the past 25 years, he
has been honored with 22 Professor of the Year awards including 12
Executive MBA Professor of the Year Awards. He has been recognized as a
Noble Foundation Fellow in Teaching Excellence and a Poets & Quants
EMBA Favorite Professor.

Chuck earned his AS degree at Northern Virginia Community College, BS

degree at the University of Virginia (McIntire School of Commerce), MBA
at Virginia Tech, and PhD in strategy and entrepreneurship at the University
of Tennessee.
 Courtesy of the Texas Christian University—Neeley School of
Business

GARRY D. BRUTON is a professor of strategy at the M. J. Neeley School

of Business at Texas Christian University in Fort Worth, Texas. He received
his BA with Honors from the University of Oklahoma, MBA from George
Washington University, and PhD from Oklahoma State University. Garry
worked as a bank economist for one of the leading commercial banks in the
southwest United States prior to pursuing his doctorate.

Dr. Bruton has published or has forthcoming over 100 academic articles in
some of the leading academic publications, including the Academy of
Management Journal, Strategic Management Journal, Journal of
International Business, Journal of Business Venturing, Entrepreneurship
Theory & Practice, and Strategic Entrepreneurship Journal.

Page v

Garry is currently an associate editor of the Strategic Entrepreneurship

Journal. Previously, he was president of the Asia Academy of Management
and former general editor of the Academy of Management Perspectives and
Journal of Management Studies. He is the only person to hold the Hall
Fulbright Chair in Entrepreneurship twice. In 2018, Clarivate Analytics
identified Professor Bruton as one of the 96 most cited faculty in the world
in all business and economic disciplines for research published between
2006 and 2016. In 2019, he was identified using web of science data, as
among the 0.1 percent of the world’s faculty for citations in all disciplines
in all universities in the world for research published between 2008 to 2018.
Page vii

brief table of contents

Preface ix

1. PART 1 Laying the Groundwork for Your Business

1. Chapter 1 THE TWENTY-FIRST-CENTURY

ENTREPRENEUR 2

2. Chapter 2 INDIVIDUAL LEADERSHIP AND

ENTREPRENEURIAL START-UPS 20

3. Chapter 3 BUSINESS IDEA GENERATION AND INITIAL

EVALUATION 40

1. PART 2 Due Diligence on the Business Idea

1. Chapter 4 EXTERNAL ANALYSIS 60

2. Chapter 5 BUSINESS MISSION AND STRATEGY 80

1. PART 3 Establishing a Financial Foundation

1. Chapter 6 ANALYZING CASH FLOW AND OTHER

FINANCIAL INFORMATION 100

2. Chapter 7 FINANCING AND ACCOUNTING 122

3. Chapter 8 BUSINESS AND FINANCIAL ANALYSIS 140

1. PART 4 Building the Business

1. Chapter 9 LEGAL ISSUES WITH A NEW BUSINESS 162

2. Chapter 10 HUMAN RESOURCES MANAGEMENT 182

 3. Chapter 11 MARKETING 202

4. Chapter 12 ESTABLISHING OPERATIONS 222

1. PART 5 Important Issues for Entrepreneurs

1. Chapter 13 EXIT/HARVEST/TURNAROUND 242

2. Chapter 14 FRANCHISING AND PURCHASING AN

EXISTING BUSINESS 262

1. PART 6 Minicases

Appendix 309

Glossary 325

Case Index 329

Subject Index 331

Page ix

preface
We developed the fourth edition of this book with the aim of focusing on
three core tenets to starting an entrepreneurial venture:

1. Science of practice as the heart of starting and running a successful

entrepreneurial venture.

2. Art of turning an entrepreneurial venture into a success.

3. Processes that tie these two areas together into a coherent and
organized business.

The first tenet is that the science of practice is central to your success as an
entrepreneur. There is an inherent belief by many potential entrepreneurs
that they know what needs to be done. However, extensive research
suggests that one of the biggest causes of entrepreneurial failure is a lack of
knowledge about how to design and build a business. The business that
seems so clear to the entrepreneur at founding turns out quite differently.
The result is that a lack of knowledge leads to the entrepreneurial venture
running out of cash and time.

This book presents a systematic and thorough means for students and
potential entrepreneurs to think through their venture and the rich range of
concerns around it. Extensive research has been going on in this area for
decades, and we know much about what works and what does not work.
One of the significant goals of this text is to provide you with information
about what really works. Without trying to overwhelm the reader with
research citations, we ensure that students have well-researched
information, this text is grounded in the academic research with a
practitioner view to everything that is done.

The second tenet is that there is a lot of art to the concept, design, and
implementation effort required to start a new business. To teach the art, we
present what other entrepreneurs have done in the past, so students can
consider what they would like to have as their own approach. In this text,
we provide a great variety of real-world examples.

To fulfill this real worldview of entrepreneurship as an art, each chapter

starts with a story about a successful entrepreneur and how he or she grew
the business. Additionally, you will find throughout the text two running
cases that provide direct, applicable context to the chapter contents. The
first running case is John and Bob’s Barbershop, which was created by two
friends who wanted to practice their craft and be rewarded for their own
efforts. The second running case is a business called Hatchboards. This
running case follows the development, design, and start-up of a business
that combines a virtual selling model with a manufacturing focus. Finally,
we have included 14 MiniCases at the end of the book where we personally
interviewed entrepreneurs about their story. Each MiniCase finishes with
advice from the entrepreneur.

The third tenet of our approach involves the processes of conceptualizing,

designing, starting, and running a new business. Hundreds of things must be
considered, analyzed, and completed to take an idea to a successful
business. We firmly believe that these processes are crucial steps along the
way and have built this book in a manner that allows the reader to build on
each concept by developing a process that results in a fully crafted plan by
the time you finish the book. Our belief is that learning these processes by
doing will ultimately lay the foundation for students to replicate them to
build their own business plan in the future.

The ability to apply the science, art, and process of entrepreneurship

developed in this text will lay the foundation for succeeding in
entrepreneurship. We say proudly that the overarching desire of this book,
Entrepreneurship: The Art, Science, and Process for Success, is that
students establish highly successful and very profitable businesses. We
believe that following and acting on the issues we lay out here will establish
the foundation for that success.

Page x
Entrepreneurship Is Not a Scary Word
If you are taking this course, you have at least some level of desire to be
your own boss one day by establishing an entrepreneurial venture. You have
a plan to start (and succeed) at your own business venture, and you see this
course as groundwork for that plan. Beyond a personal desire to be an
entrepreneur, there are real, applicable reasons to take this course. Today, 50
percent of all U.S. employees work for entrepreneurial businesses. Even if
you do not ultimately start an entrepreneurial venture, the odds are that at
some point in your career, you will work for one. Entrepreneurial
businesses are everywhere. They include a wide range of visible firms on
the Internet. These firms are the makers and sellers of a myriad of other
goods and providers of services that impact our daily lives. Understanding
the components of success and failure for your future employer makes you
a better employee.

Book Outline
To develop the understanding necessary to design, start, and manage an
entrepreneurial business, we have organized the book into 14 chapters that
are, in turn, organized into five major parts. The first part lays the
groundwork needed prior to developing a new business idea. Many
individuals have considered starting a new business when an opportunity
was presented to them or when they were frustrated by their current
positions. However, prior to this step, there are several areas that demand
examination. Chapter 1 introduces students to the text with a fun and
engaging look at the twenty-first-century entrepreneur. Chapter 2 examines
the potential entrepreneur’s personal propensities or willingness to take on
risk, a core aspect of entrepreneurship. Chapter 3 focuses on how to
generate ideas and perform an initial evaluation for a new business.

The second part of the text is entitled “Due Diligence on the Business
Idea.” In the last chapter of Part 1, the potential entrepreneur has generated
a business idea. In this part there is due diligence on that idea. Due
diligence is a process of examining the environment around the new venture
to establish the opportunity for the new business and then using that
knowledge to craft the approach. Chapter 4 launches the first step in the due
diligence process by developing a set of methods for examining the external
environment in which the new business might operate to understand if there
is an opportunity for such a business. Chapter 5 develops the crucial steps
necessary for the development of a strategy, including the firm’s mission.

A key element in the success of the entrepreneurial venture is its financial

foundation; no matter how good the idea, without a solid financial
foundation, the business will likely fail. Accordingly, Part 3 is titled
“Establishing a Financial Foundation.” The chapters in this part include
Chapter 6, which establishes how to analyze the cash flow of the firm.
Chapter 7 discusses methods that the entrepreneur can use to analyze the
financial health of the new business.

The fourth part of the text is titled “Building the Business” and focuses on
putting the new venture in operation. Chapter 9 discusses marketing the
business. Chapter 10 reviews the legal frameworks for a new business,
including the many approaches that are available to protect the business.
Chapter 11 details human resource management. Chapter 12 rounds out this
important part of the book by discussing the business operations design.

Page xi

The last part of the book is titled “Important Issues for Entrepreneurs” and
examines two other issues critical for an entrepreneur to consider as the
entrepreneur starts a business. Chapter 13 examines both exiting the
business and the need to turn the firm around if performance is not as great
as desired. Chapter 14 examines two means to buy into a business rather
than starting it from scratch. They are buying an existing business and
franchising.

Features New to This Fourth Edition

The opening vignettes to each chapter have been changed from the
prior edition to include cutting-edge entrepreneurial companies
including Ancestry, Dannijo, Solidia, Puzzle Break, SparkVision, and
Dyson.
 Two new running cases are in each chapter in the revised text. Each
chapter follows John and Bob’s Barbershop and Hatchboards as they
moved from idea to successful businesses. Each running case is tied to
the chapter material.

In addition to Review Questions in the end-of-chapter material, every

chapter also includes a section called Business Plan Development
Questions. The goal of these questions is to turn the material in the
chapter into actions for the business plans being developed by
students. Also, both Individual and Group Exercises have been added
to help students develop their entrepreneurial skills individually as
well as within a group.

Fourteen MiniCases are included at the end of the text. Each case is
based on interviews by the authors and provides context and
entrepreneurial advice simply not available in any other text. These
include AddLibra; Aventino’s Restaurant; TechnikOne; Lawn
Enforcement, Inc.; Evry Health; and Bark Pet Grooming.

A Business Plan (The Fraudian Slip) has been carried forward from the
previous edition and annotated by the authors as an example of how a
business idea is all pulled together by students in a course.

Additional Changes by Chapter

Chapter 1 The Twenty-First-Century Entrepreneur

New Opening Vignette: Ancestry.com.

Updated to provide a more engaging and fun introduction to the text.

Every statistic brought forward to 2020.

Updated examples of entrepreneurs and entrepreneurial firms to some

of the newest firms in popular press.

Chapter 2 Individual Leadership and Entrepreneurial Start-Ups

 New Opening Vignette: Smathers & Branson.

John and Bob’s Barbershop running case is introduced. This case

develops in each chapter through the rest of the text. It follows the
design, start-up, and running of a business with friends as business
partners.

Page xii

Hatchboards running case is introduced. This case develops in each

chapter throughout the text. It follows the design, start-up, and running
of a business by three friends that combines a virtual selling model and
a manufacturing base.

The two running cases provide contrast for students on a

traditional service business start-up and an Internet start-up so
that students can see elements of both types of businesses.

New Ethical Dilemma concerning when people leave their current

employer and what they can take with them to their new business.

Chapter 3 Business Idea Generation and Initial Evaluation

Updated Vignette: Dannijo (the wildly popular fashion brand).

Updated and changed the Example of Entrepreneur’s Personal Deficit

Analysis.

Chapter 4 External Analysis

New Opening Vignette: Uncharted Power and how a small idea is

changing the world for millions.

Introduced the concept of applications and its definition and nature in

the industry.

Chapter 5 Business Mission and Strategy

 New Opening Vignette: Solidia (engineered cement that could
significantly reduce CO2 emissions).

Updated examples in the chapter include Toys R Us, Yahoo! and

STEAM as well as updated key terms strategy and sustainable
competitive advantage.

Chapter 6 Analyzing Cash Flow and Other Financial Information

New Opening Vignette: EONE (the watch for those with sight
impairment).

Updated financial data in examples.

Chapter 7 Financing and Accounting

New Opening Vignette: IDRESE (custom shoes without the custom

price or wait).

Expanded the discussion of bank lending and SBA loans.

Chapter 8 Business and Financial Analysis

New Opening Vignette: Halfaker & Associates (veteran-owned

business).

Updated financial data in examples.

Page xiii

Chapter 9 Legal Issues with a New Business

New Opening Vignette: Puzzle Break (Escape Room Business).

Updated to reflect changes in the law.

 Table summarizing the different legal forms and what they do and do
not do.

Chapter 10 Human Resource Management

New Opening Vignette: Spark Vision (connecting multi-generational

organizations).

Updated based on changes in labor law and health care laws in the
United States.

Chapter 11 Marketing

New Opening Vignette: Iguana Fix (Argentine business bringing

security and stability to home repairs).

Added new material on social media marketing.

Chapter 12 Establishing Operations

New Opening Vignette: Optime (an international marketing consulting

firm).

Chapter 13 Exit/Harvest/Turnaround

New Opening Vignette: Dyson (inventor who revolutionized the

vacuum, fan, and hair dryer industries).

Updated financial data in examples.

Chapter 14 Franchising and Purchasing an Existing Business

New Opening Vignette: JAE Restaurant Group (owner of hundreds of

franchises).

Updated laws concerning franchising in the United States.

Outcomes
Our ultimate goal is that students will leave this class not only with a much
greater appreciation for what it takes to start a business but also with
knowledge of foundations necessary to actually start that business. The
entrepreneurial businesses that surround you every day did not come into
operation or stay in operation by chance. Instead, it took tremendous effort
and work for these businesses to exist and succeed.

We expect that students will be able to take what we present here as a

foundation for their own business. Entrepreneurs are the economic
backbone of this nation and the central hope for its future.
Page xiv

acknowledgments
We would like to acknowledge the dedicated instructors who have
graciously provided their insights for this fourth edition. Their input has
been extremely helpful in pointing out corrections to be made, suggesting
areas that needed further development, and topics that needed to be
included in the text.

Lisa C. Banks

Mott Community College

George Bernard

Seminole State College of Florida

Nancy Brown

Lakeland Community College

Allison Morgan Bryant

Howard University

Carlene Cassidy

Anne Arundel Community College

Raven Davenport

Houston Community College

Bethany A. Davidson

Western Carolina University

Debbie Gahr

Waukesha County Technical College

Kimberly Ann Goudy

Central Ohio Technical College

Kurt Heppard

United States Air Force Academy

R. Michael Holmes

Florida State University

Andreea N. Kiss

Iowa State University

Jonathan Krabill

Columbus State Community College

Ted W. Legatski

Texas Christian University

David Lucero

Greenville Technical College

Tim McCabe

Tompkins Cortland Community College

Jeffrey E. McGee

The University of Texas at Arlington

Michelle Neujahr

Southern Maine Community College

Michelle Roach

Atlanta Technical College

Ric Rohm

Southeastern University

Diane R. Sabato

Springfield Technical Community College

Eric B. Terry

Miami Dade College

Kristin Trask

Butler Community College

Leo Trudel

University of Maine at Fort Kent

Cassmer Ward

Queens University of Charlotte

Mark Zarycki

Hillsborough Community College

Zhe Zhang

Eastern Kentucky University

Page xv

Key Text Features

Each chapter includes key features that help illuminate important ideas in
interesting and applied ways.

Chapter-Opening Vignettes
Every chapter begins with a profile of a real entrepreneurial business. These
portraits provide an overview of both the everyday successes and the
failures associated with business ownership. Each of these vignettes ends
with thought-provoking questions for discussion.

Running Cases
John and Bob’s Barbershop
Beginning with Chapter 2 and running throughout the rest of the book, this
case looks at chapter topics within the context of a barbershop start-up.
Each chapter provides a new aspect of this business to consider, ultimately
giving students a fully realized look at how a business must work through a
series of issues as it moves from idea to reality. Each chapter’s case
concludes with questions designed to help students think through issues
related to the business they wish to start. The barbershop case highlights a
firm that provides a service whose demand grows as the population does.
Page xvi

Hatchboards
A second running case throughout the book focuses on an Internet start-up
that sells hatches and doors to owners of small sailboats. The specialized
nature of the combination of manufacturing and Internet sales provides a
look at a business from multiple angles. The case discusses how a small
start-up can survive in a highly competitive industry and prosper by using
the Internet. The case also ends with questions or exercises designed to help
students to think through issues related to the business.
Ethical Challenge Boxes
These dilemma-based scenarios and questions look at ethical realities
within the successful creation of a business and challenge students to
examine the moral complexities of starting a business. Each challenge ends
with questions designed to encourage the students to think how such ethical
challenges will apply to their potential business.

Exercises
Extensive exercises in every chapter include open-ended questions for
students to ask themselves as potential entrepreneurs. These exercises not
only provide general exercises for discussion in class but also help guide
students so that by the last chapter, students will have developed a full
business plan that can be used to launch a new business.
Page xvii

End-of-Chapter Material
Each chapter concludes with the following:

Summary

Key Terms

Review Questions

Business Plan Development Questions

Individual Exercises

Group Exercises
MiniCases
MiniCases are now included at the end of the text. These longer cases look
at real businesses. They examine a real entrepreneur and how that owner
approached the business and the struggles associated with success. These
offer practical, real-world examples of core concepts within the
entrepreneurial framework discussed in the book.
Page xviii

Page xix
Page xx

Connect Instructor Library

Connect’s instructor library serves as a one-stop, secure site for essential
course materials, allowing you to save prep time before class. The instructor
resources found in the library include:

Test Bank: Every chapter provides a series of true/false, multiple choice,

and short-answer test questions available in our Test Bank. Questions can
be organized by learning objective, topic, level of difficulty, Bloom’s
Taxonomy, and AACSB.

Instructor’s Manual: The IM outlines course materials, additional in-class

activities, and support for classroom use of the text. It has been organized
by learning objective to both give instructors a basic outline of the chapter
and assist in all facets of instruction. For every question posed in the text,
the IM provides a viable answer. Ultimately, this will be to an instructor’s
greatest advantage in using all materials to reach all learners. There are
questions to all minicases in the text to help instructors organize their
discussion of the cases with students. Detailed teaching notes for each case
have been added for this edition.

PowerPoint Slides: PowerPoint slides include important chapter content

and teaching notes tied directly to learning objectives. They are designed to
engage students in classroom discussions about the text.

Videos: The video collection illustrates various key concepts from the book
and explores current trends in business and entrepreneurship.

www.mheducation.com/connect
Page xxi

Course Design and Delivery

Create

Instructors can now tailor their teaching resources to match the way they
teach! With McGraw-Hill Create, www.mcgrawhillcreate.com, instructors
can easily rearrange chapters, combine material from other content sources,
and quickly upload and integrate their own content such as course syllabi or
teaching notes. Find the right content in Create by searching through
thousands of leading McGraw-Hill textbooks. Arrange the material to fit
your teaching style. Order a Create book and receive a complimentary print
review copy in three to five business days or a complimentary electronic
review copy via e-mail within one hour. Go to www.mcgrawhillcreate.com
today and register.
Page xxiii

table of contents
Preface ix

1. PART 1 Laying the Groundwork for Your Business

1. chapter 1 THE TWENTY-FIRST-CENTURY ENTREPRENEUR

2

Why Start a Business? 4

A Brief History of Entrepreneurial Businesses in the United States 6

Who Are Entrepreneurial Business Owners Today? 7

How Does Society Benefit? 9

Entrepreneurship Around the World 11

What Is an Entrepreneurial Business? 11

Summary 17

Key Terms 17

Review Questions 17

Individual Exercises 17

Group Exercises 17

Endnotes 18

1. chapter 2 INDIVIDUAL LEADERSHIP AND

ENTREPRENEURIAL START-UPS 20
 Founders Are the Reason Why Entrepreneurial Businesses Work So
Well 23

Evaluating Your Entrepreneurial Orientation 25

Triggers for Starting a Business 29

Supports 31

Form a Business Doing What You Like 36

Summary 37

Key Terms 37

Review Questions 37

Business Plan Development Questions 37

Individual Exercises 38

Group Exercises 38

Endnotes 38

1. chapter 3 BUSINESS IDEA GENERATION AND INITIAL

EVALUATION 40

Generating Business Ideas 43

Opportunity Identification 48

Choosing a Business 49

Summary 57

Key Terms 57

Review Questions 57
 Business Plan Development Questions 57

Individual Exercises 58

Group Exercises 58

Endnotes 58

1. PART 2 Due Diligence on the Business Idea

1. chapter 4 EXTERNAL ANALYSIS 60

Defining Your Industry 62

Defining Your Customers 64

Developing the Information for the External Analysis of Competitors

66

Developing a Competitive Map 68

Additional Issues for External Analysis 72

Competitive Advantage 74

Summary 77

Key Terms 77

Review Questions 77

Business Plan Development Questions 77

Individual Exercises 78

Group Exercises 78

Endnotes 78

Page xxiv
1. chapter 5 BUSINESS MISSION AND STRATEGY 80

Mission Statements 82

Sustainable Competitive Advantage 88

Step 1: Develop a List of Your Business’s Assets and Capabilities 89

Step 2: Split the List into Standard Expectations and Potential

Competitive Advantages 89

Step 3: Evaluate the Competitiveness of Unique Resources or

Capabilities 91

Strategy 94

Summary 98

Key Terms 98

Review Questions 98

Business Plan Development Questions 98

Individual Exercises 99

Group Exercises 99

Endnotes 99

1. PART 3 Establishing a Financial Foundation

1. chapter 6 ANALYZING CASH FLOW AND OTHER

FINANCIAL INFORMATION 100

Importance of Cash Flow Analysis 102

Developing Cash Flow Statements and Budgets 110

 Other Financial Tools 114

Summary 120

Key Terms 120

Review Questions 120

Business Plan Development Questions 121

Individual Exercises 121

Group Exercises 121

Endnotes 121

1. chapter 7 FINANCING AND ACCOUNTING 122

Key Financial Issues Involved with Starting a Business 124

Basics of Funding a Business 124

Importance of Proper Accounting When Starting a Business 131

Summary 137

Key Terms 137

Review Questions 137

Business Plan Development Questions 137

Individual Exercises 138

Group Exercises 138

Endnotes 138

1. chapter 8 BUSINESS AND FINANCIAL ANALYSIS 140

 Hypothesis-Driven Analysis 142

Importance of a Solid Financial Foundation in an Entrepreneurial

Business 143

Techniques for Measuring Performance 143

Ratio Analysis 144

Deviation Analysis 152

Sensitivity Analysis 153

Use of Short Surveys in Business 155

Importance of Having a Measurement Focus 158

Summary 160

Key Terms 160

Review Questions 160

Business Plan Development Questions 160

Individual Exercises 160

Group Exercises 160

Endnotes 161

1. PART 4 Building the Business

1. chapter 9 LEGAL ISSUES WITH A NEW BUSINESS 162

Various Legal Forms of Business to Determine the Best Design for a

Proposed New Business 166

Basics of Contracts 173

 Role of Leases in the Legal Formation of the New Business 173

How Laws, Rules, and Regulations Benefit New Businesses 175

Importance of Copyrights, Trademarks, and Patents to a New Business

177

Role That Insurance Plays in the Risk Portfolio of the New Business
177

How to Develop an Effective Board of Advisors and Board of

Directors 179

Page xxv

Summary 180

Key Terms 180

Review Questions 180

Business Plan Development Questions 180

Individual Exercises 181

Group Exercises 181

Endnotes 181

1. chapter 10 HUMAN RESOURCES MANAGEMENT 182

The Elements of Human Resources 185

The Process of Hiring Employees 185

The Means for Retaining Employees 191

The Pertinent Aspects of Employee Performance Management and

Termination 195
 Broad Coverage Regulations and Laws 196

The Unique Aspects of Human Resources Within a Family Business

198

Summary 199

Key Terms 199

Review Questions 200

Business Plan Development Questions 200

Individual Exercises 200

Group Exercises 200

Endnotes 200

1. chapter 11 MARKETING 202

Basics of a Marketing Plan 204

How to Develop a Pricing Model 208

The Various Types of Promotion Available to a New Business 209

The Methods for Sales Management 213

Summary 218

Key Terms 218

Review Questions 219

Business Plan Development Questions 219

Individual Exercises 219

Group Exercises 219

 Endnotes 219

1. chapter 12 ESTABLISHING OPERATIONS 222

The Use of a Critical Path Chart 225

How Location Can Be Used as a Competitive Advantage 228

Important Issues in the Financing Considerations of New Firms 230

Various Methods with Which a New Firm Establishes Legitimacy in

the Market 231

The Importance of Production Management in Start-Up Ventures 232

How Production Charting Is Accomplished 233

The Importance of Quality as a Competitive Tool 235

The Type and Condition of Equipment Needed at Start-Up 236

How Timing Is a Competitive Advantage 237

Issues Related to Time Management in Starting a New Business 238

Summary 239

Key Terms 239

Review Questions 239

Business Plan Development Questions 239

Individual Exercises 239

Group Exercises 239

Endnotes 240

1. PART 5 Important Issues for Entrepreneurs

 1. chapter 13 EXIT/HARVEST/TURNAROUND 242

Need for Developing an Exit or Harvest Plan and the Ideal Timing for
That Plan 244

Steps for Selling a Business 246

Turnaround and Business in Decline 257

Implications and Issues Involved in Closing a Business 259

Summary 260

Key Terms 260

Review Questions 260

Business Plan Development Questions 261

Individual Exercises 261

Group Exercises 261

Endnotes 261

Page xxvi

1. chapter 14 FRANCHISING AND PURCHASING AN EXISTING

BUSINESS 262

The Elements of Franchising 264

The Process of Buying a Franchise 266

The Process for Buying an Existing Business 273

Summary 276

Key Terms 276

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 Fig. 112.—Apsilidae: A, Apsilus lentiformis, ♀ , dorsal view (after
Metschnikoff); the square brain is seen with nerves to the lateral
antennae; B, larva of A. lentiformis (?), showing the paired eyes
and ciliated cupped foot; C, adult of Atrochus appendiculatus, ♂
(after Wierzejski). al, Lateral antennae; am, median antenna (just
in front is seen the renal commissure); an, anus; br, brain, below
which the paired eyes are seen; c, cloaca; em, embryo; em', em',
em''', three successive stages of embryos in the uterus of C; k,
kidney. The coarser muscles are striated.

This bladder may reach when expanded one-third the diameter of

the whole animal, and contract as often as three times per minute;
so that in a period of nine minutes a bulk of water equal to that of the
animal must have diffused through the body-wall, to be removed by
the kidneys. It is obvious that while the function of the kidneys is
primitively excretory, the passage of the water through the body must
bring in the oxygen dissolved in the external medium, and carry off
the carbonic acid formed in the tissues, and so fulfil the act of
respiration. This mechanism is physiologically comparable with that
of the contractile vacuole of fresh-water Protozoa. In a few genera
(Conochilus, Lacinularia, Pterodina) the kidneys open separately
after a slight dilatation into the cloaca.

Nervous System.—The nervous centre of the Rotifera is the brain

(Fig. 112, C, br), a ganglion lying dorsal to the pharynx; and when
this is short it may be immediately below the surface of the disc
(Microcodon). In Bdelloida a second ganglion is present below the
pharynx, and is connected with the former by lateral cords which
contain ganglion cells. From the brain, nerves are given off to the
disc, to the muscles, and to the integument of the body, as well as to
the sense organs. The largest nerves are two given off from the
sides of the brain, each of which divides into a lateral and a ventral
trunk, which run nearly the whole length of the animal.

The brain of several Notommatidae has a curious appendage, white

by reflected light and very opaque; it is a sac full of chalky mineral
matter, which dissolves readily in dilute acids.

Sense Organs.—The most widely diffused sense organs are the

antennae or feelers, which may serve for touch or smell, or possibly
both. Each antenna is a conical or tubular outgrowth of the skin; from
its apex projects a fine pencil of sense hairs borne on a protoplasmic
cushion, which receives a nerve. Often the antenna is elongated,
and may then contain a muscle by which it is retractile (lateral
antennae of Melicerta); sometimes it is reduced to a slight
prominence bearing the setae (dorsal antenna of this genus). There
are usually three antennae—a median dorsal (Figs. 109, B, a, and
112, C, am) and two lateral (Figs. 106, 112, C, and 115, A, al), often
approximated towards the ventral surface, and sometimes all but
fused on the middle line, or completely united (Conochilus
dossuarius, Copeus caudatus).[259]

Most Rotifers possess an organ of sight. This in its simplest form is a

refractive globule seated in a red pigmented cup through which the
nerve passes; in other cases it lies directly on the brain. Very
frequently the eye is paired (Figs. 112, B, and 115, A); and these
paired eyes may lie on the brain, and then are so close together that
the pigment-cups have the shape of an x, or else they are seated in
the dorsal region of the head behind the disc. In some cases they lie
just under the ciliary wreath, or even within the region of the disc,
and pass towards its ventral side in Pedalion (Fig. 117, A, e). In
Rotifer they lie just under the dorsal side of the proboscis just below
its apex. The median and two lateral eyes often exist together, as in
Eosphora; and sometimes additional paired eyes exist. In Furcularia
longiseta, var. grandis a pair of pigment spots (eyes?) occurs at the
hinder end of the body just in front of the foot.

The active Ploima show a spontaneity of movement and marked

power of avoiding obstacles, etc. This is still more marked in the very
active Pedalion, which, as Rousselet notes, clearly avoids capture by
the dropping tube, aided by its sense of sight, as he suggests, or by
the tactile or olfactory powers of the antennae. They must rank as
psychically high in the scale of creatures of simple organisation.

Reproductive Organs and Reproduction.—The most conspicuous

organ in the female is the large yolk-gland or vitellarium (Figs. 106
and 109, A, vm), which was regarded as the ovary by all the older
observers. It consists usually of eight cells, with conspicuous nuclei,
lying on the ventral side of the stomach, and frequently displaced to
one side; but in most Asplanchnidae it forms a broad transverse
band of numerous cells. In Pterodina it is horseshoe-shaped, while in
Seisonaceae and Bdelloida it is paired, either gland containing four
or eight cells. The true ovary or germarium (Fig. 106, gm) lies more
or less hidden between the yolk-gland and the stomach; it is
composed of numerous minute rounded cells, of which the hindmost
for the time being enlarges by nutrition from the yolk-gland, and
finally receives a membranous shell. This true ovary is somewhat
lateral in most Rotifers, but is median in Asplanchnidae, and paired
in Pterodina, Bdelloida, and Seisonaceae. A membranous covering
is common to the ovary and yolk-gland (paired when these are
paired); it is continued into a thin-walled tube or oviduct, which opens
into the cloaca on its ventral side beyond the bladder or common
renal duct. In the viviparous species the mature ovum (Fig. 112, em)
usually lies in the oviduct, dilating it into a sort of "uterus" until the
birth of the young. The ordinary eggs or "summer eggs" are formed
without any fertilisation, and develop immediately; they are often
hatched within the tube of the tubicolous species.
Under certain conditions the unfertilised females produce exclusively
smaller eggs, which develop into males. Maupas[260] has
demonstrated that a rise in temperature to a minimum of 26° C. (79°
F.) is the efficient factor. But as Bergendal points out,[261] the critical
temperature probably varies with the antecedent conditions of the
race, since males occur in Greenland at a very much lower
temperature; and it would seem probable that a temperature
approaching that at which the pools habitually dry up is what is
necessary for the production of males, as a provision for those
fertilised eggs, which, having a hard shell often adorned with prickly
prominences, and usually remaining for some time before
development, are capable of withstanding drought; such eggs are
termed "winter eggs," but a better term would be "resting eggs"
(German, "Dauereier").[262]

Fig. 113.—Diglena catellina. (After Weber.) A, Male; B, the pair in

copula; C, female, p, Penis; te, testis.

The male organs consist of a testis (Fig. 113, A, te) with accessory
glands, a large seminal vesicle, and a protrusible or projecting penis
(p). In Notommata and Diglena true intromission at the cloaca (B)
has been seen by many observers; but it appears equally certain
that in many cases the male bores into the body-wall of the female at
any point, and deposits the spermatozoa in the body-cavity, so that
they must pass through the wall of the oviduct to effect fertilisation.
Maupas finds that the process of fertilisation is ineffective except
upon such newly-hatched females as would otherwise be the
parents of small male eggs; that fertilisation is inoperative even for
these at a later age when their eggs have begun to mature; and that
it is wholly useless for those that lay ordinary summer eggs. The
parent of male or winter eggs would thus be comparable to the
queen bee, which if not fertilised produces drones. These sexual
relations find a close parallel in the Ostracod and Phyllopod
Crustacea, as well as in many plant-lice (Homoptera).

Development.—This has only been fully studied in the summer egg;

in Brachionus by Salensky,[263] in Melicerta by Joliet[264]; in
Eosphora digitata and several other species by Tessin[265]; in
Callidina and Melicerta by Zelinka,[266] the last two observers having
utilised modern methods of research.[267] We shall base our account
on Zelinka's observations. As in the case of most "parthenogenetic"
eggs, the ovarian egg begins by a very uneven division to form two
cells: the minute "first polar body" which undergoes no further
development; and the definitive egg, which by its repeated divisions
gives rise to the tissues and organs.

Segmentation is very unequal, and recalls that of Molluscs in several

respects. The first division gives rise to a smaller and a larger cell.
Both of these divide again, the latter unequally, so that now there are
three smaller cells and one large one; and after repeated divisions of
the small cells and unequal divisions of the larger one, a stage is
reached where there are a number of small cells and one large one,
which sinks in and is overgrown by the small ones. Just prior to this
the large cell undergoes equal divisions; its cells are the "hypoblast"
cells (Fig. 114, hyp), and give rise to the gullet, stomach, and
intestine, with their appendages, and the generative organs; while
the smaller cells constitute the "epiblast" (ep), which gives rise to the
body-wall and muscles, to the cement glands, nervous system,
pharynx and mastax, and probably to the kidneys.
 Fig. 114.—Development of Callidina. (After Zelinka.) A, Early stage
showing involution of granular cells (g), to form the mastax or
gizzard. B, Involution complete. C, Second involution of epiblast
cells to form pharynx. D, The embryo bent on itself at ventral fold
(vf). E, Showing ingrowth of epiblast to form brain (br): an,
involution of epiblast to form cloaca; br, brain; ep, epiblast; fg,
involution to form cement glands of foot; g, granular cells; gi,
gizzard; hyp, hypoblast; m, mouth; o, ovary; sp, salivary glands;
vf, limiting body from foot.

Owing to the elongation of the body within the narrow space of the
egg the hinder part is bent up on the ventral surface (D, E); and this
part, narrower than the rest, forms the foot, the centre of which is at
first occupied by a column of hypoblast. The cloaca is now formed by
a dorsal ingrowth of epiblast (the "proctodaeum") at the junction of
the foot and the body (an). The hypoblast in the body anterior to the
cloacal ingrowth forms the digestive apparatus; the part immediately
behind forms the reproductive organs (o); and the hindmost part
apparently disappears. An ingrowth of epiblast at the extreme tip of
the foot gives rise to the cement glands (fg). The muscles arise from
the epiblast cells. The disc arises from the modification of epiblast
cells lateral to and behind the mouth, enclosing a so-called "polar
area"; it is completed by the transformation of cells on the ventral
side of the mouth. The brain (br) is formed by the multiplication of
epiblast cells; and in Bdelloida a ventral ingrowth below the mouth
forms the sub-oesophageal ganglion. The ciliated cup in Melicerta is
formed as a ventral hollow, only later on united with the ciliated
furrow of the wreath by the lateral grooves.[268] In Melicerta the two
eyes are formed in the polar area. The young as hatched differs from
the adult in the greater simplicity of its ciliary wreath; and in the
tubicolous forms the cupped end of the foot-gland is ciliated, and two
eyes are present on the polar area, which later sink in, and often
disappear more or less completely. It is stated that the young
hatched from winter eggs do not pass through this larval state.

Fig. 115.—Stephanoceros eichhornii. (After Cubitt.) A, Dorsal view of

the upper part in its tube: al, lateral antenna; e, eye; em,
developing embryo in uterus; g, gizzard; s.g, median salivary
gland. B, Extremity of foot. C, Lateral view of base of disc: am,
median antenna; of, oral funnel; s.g, median salivary gland; tf, in
the crop, indicates the ciliated tube prolonging the funnel; tr,
horseshoe-shaped trochus.

Classification.[269]

Order I. Flosculariaceae.—Females mostly tubicolous, attached by

a long contractile foot. Disc produced into a wide funnel-shaped
contractile cup, produced into lobes with long setae (Floscularia) or
coarse cilia (Stephanoceros), or entire (Apsilidae); an outer row of
fine cilia rarely present; trochus a horseshoe, open behind. Oral
funnel a slender tube hanging freely into a large pharyngeal crop;
trophi uncinate projecting freely into the crop. Kidneys often united
by an anterior cross-piece. Body-wall often containing a definite
system of canals, filled with refractive granules, and serving by their
contraction to dilate the disc. Males (Fig. 107, 1) and larvae
vermiform with a ciliated pedal cup, and a simple wreath, with two
eyes on the disc.
 Fam. 1. Flosculariidae: Floscularia Oken, Stephanoceros E. (Fig.
115).

Fam. 2. Apsilidae: Apsilus Metschnikoff (Fig. 112, A), Acyclus

Leidy, Atrochus Wierzejski (Fig. 112, C).

The family Flosculariidae contains some most exquisite forms;

Stephanoceros, the "Crown Animalcule," being probably the most
lovely of the Class, and many of the Floscules coming not far behind.
The Apsilidae are mostly mud-dwellers.

Order II. Melicertaceae.—Females (except in Trochosphaera)

attached or tubicolous; tube variable. Disc with a dorsal gap (except
Conochilus) often two-lobed or corolla-like; a ventral lip often
separating off a ventral ciliated cup continuous by a pair of gutters
with the ciliated groove; trochus of stronger cilia than the cingulum.
Trophi malleoramate in a distinct mastax. Intestine much curved
dorsally, cloaca long eversible (except Trochosphaera). Males and
larvae as in Order I.

Fig. 116.—Melicerta ringens. (After Joliet). A, Side view; B, dorsal view.

al, Lateral antennae; ci, cingulum seen by transparency; g,
gizzard; p, pellet in ciliated cup, about to be deposited on edge of
tube; tr, trochus.

Fam. 3. Melicertidae: Melicerta E. (Fig. 116), Limnias Schrank,

Cephalosiphon E., Oecistes E., Lacinularia E., Megalotrocha E.,
Conochilus E., Octotrocha Thorpe.
 Fam. 4. Trochosphaeridae: Trochosphaera Semper (Fig. 118,
D).

The Melicertidae embrace a large number of tubicolous forms, many

of which are social. This habit is especially noticeable in Lacinularia
socialis, which forms a gelatinous incrustation easily seen by the
naked eye; and in Conochilus volvox, which forms free-swimming
globular aggregates, the young attaching themselves when hatched
to the centre of the ball, and the ball splitting up into two as soon as
undue pressure is exerted at the periphery by overcrowding. In this
genus the eyes are very conspicuous in the adult, as they are in the
similar free-swimming aggregates of Lacinularia racemovata.

Trochosphaera (Fig. 118, D) is remarkable for its peculiar spherical

shape, the absence of a foot, the limitation of the viscera to the lower
hemisphere, and the dorsal position of the ovary. But a reference to
the figure will show that the outgrowth of a foot in the quadrant
between the mouth and anus and the flattening of the upper
hemisphere would bring its organs on the whole into close
correspondence with those of the rest of the Order. It is recorded
from South China, the Philippines, and North-East Australia, and has
only been seen by Semper, the founder of the genus, and by Thorpe,
who saw the male of the first species, and described a second.[270]

Order III. Bdelloida.—Females creeping like a leech, as well as

swimming (males unknown), susceptible of desiccation and revival
("anabiotic"). Body telescopic at both ends. Disc (except in Adineta)
chiefly composed of two dorsal lobes like kettle-drums, wholly
retractile; a dorsal proboscis or trunk-like prolongation of the body
ends in a ciliated, sensory, and adhesive cup used in crawling, and
overhung by a pair of membranous flaps. Trophi ramate; brain with a
ventral ganglion, forming a complete ring. Eyes, two on the
proboscis or brain, or absent. Bladder a mere dilatation of the
rectum. Foot often possessing blind spurs, as well as two or three
retractile perforated toes, or forming a terminal disc perforated by
numerous pores of the cement glands, rarely ciliated.[271]
 Fam. 5. Philodinidae: Philodina E. (Fig. 110), Rotifer Schrank,
Actinurus E., Callidina E. (Fig. 109), Adineta H.

This group is remarkable for the great resisting powers of its

members to drought and to heat and cold when dried, a fact which
may explain the absence of males, though Janson records the
occurrence of winter eggs in four species of Callidina and in Adineta
vaga. The body is often strongly pigmented; red in Philodina roseola,
Callidina scarlatina, and C. russeola, yellow in P. citrina, Rotifer
citrinus, and Discopus synaptae. Most of the species are dust- or
moss-dwellers; some, such as Rotifer vulgaris, are equally common
in organic débris in infusions, pools, and ditches. Discopus adheres
to the skin of the Holothurian Synapta.

Order IV. Asplanchnaceae.—Females ovoid, footless except in

Asplanchnopus. Disc often bearing a pair of antennae; circular, often
prolonged at the margin into two rounded lobes, interrupted dorsally,
depressed at the ventral side into a deep ventral funnel. Trophi
incudate (virgate in Ascomorpha), mastax enlarged dorsally into a
wide crop; stomach large, blind. Kidneys large, with a "recurrent
duct" and numerous tags; bladder large. Brain large, with a median
eye, and frequently paired smaller eyes at the base of the marginal
processes of the disc; anterior antennae paired, relatively far back
on dorsal surface. Males (Fig. 107, 5) relatively large, frequently
found.

Fam. 6. Asplanchnidae: Asplanchna G., Asplanchnopus De

Guerne, (?) Ascomorpha, Perty, (?) Dinops Western.

Order V. Scirtopoda.—Females of conical shape, with the body

prolonged into hollow limb-like expansions (see p. 201) moved by
strong muscles, and ending in branched setose fins like the limbs of
Crustacea. Disc as in Bdelloids, but not retractile. Foot represented
by two subventral toes, ciliated, inconstant or absent. Trophi
malleoramate. Eyes two, latero-ventral, on the disc. Male (Fig. 107,
8) conical, with simple setae.
 Fam. 7. Pedalionidae: Pedalion H. (Fig. 117),[272] Hexarthra
Schmarda.[273]

Order VI. Ploima.—Free-swimming forms, more rarely parasites,

often adherent by their trophi to a host. Disc variable, often bearing
within the cingulum a number of lobes fringed with coarse compound
cilia. Foot rarely absent, marked off by a sharp constriction. Mastax
variable, rarely malleoramate, never incudate or uncinate. Intestine
not blind. Males small.[274]

Sub-Order A. Illoricata.—Ploima with a soft flexible integument;

disc variable; ciliated auricles sometimes present (Synchaetidae,
Notommatidae); foot rarely absent; trophi usually malleate.

Fam. 8. Microcodonidae: Microcodon E., Microcodides

Bergendal.

Fam. 9. Rhinopidae: Rhinops H.

Fam. 10. Hydatinidae: Hydatina E. (Fig. 106), Notops H.,

Hudsonella Zach., Cyrtonia Rouss.

Fam. 11. Synchaetidae: Synchaeta E.

Fam. 12. Notommatidae: Notommata E., Pleurotrocha E.,

Copeus G., Proales G., Furcularia G., Eosphora G.,
Triophthalmus E., Diglena E. (Fig. 113), Distemma E., Triphylus
E., Taphrocampa G., Albertia Duj., Balatro Clap.

Fam. 13. Drilophagidae: Drilophagus Vejdovsky.

Fam. 14. Triarthridae: Triarthra E., Polyarthra E., Pteroessa G.,

Pedetes G.
 Fig. 117.—Pedalion mirum, female. (After Hudson.) A, Ventral view; B,
side view. a, Median antenna; al, antero-lateral limb; an, anus; ci,
cingulum; dl, dorso-median limb; e, eye; f, ciliated pedal
processes; l, lip; m, mouth; pl, postero-lateral limb; tr, trochus; vl,
ventro-median limb.

To this group belongs the eyeless Hydatina, a classical object of

study, common in greenish pools, whose male was the first male
Rotifer to be figured by Ehrenberg (1838), though he did not
recognise its nature, and gave it the name of Enteroploea hydatina.
Rhinops has the back of the corona curiously prolonged forwards
into a sort of proboscis bearing two eyes. Some species of
Notommata and Proales are distinctly annulated; in Taphrocampa
the segmentation is so marked as to give the appearance of
mesenteric septa extending inwards from the body-wall to the
intestine. Microcodon has a wreath which is very peculiar in its
extreme simplicity, with the mouth nearly central, and the eye lying
just dorsal to the mouth. The Triarthridae, which resemble the
Scirtopoda in having strong leaping spines fringed by fine bristles,
should perhaps be placed in the next sub-Order.

Sub-Order B. Loricata.—Ploima with a firm elastic cuticle of definite

form, persistent after death, continuous, or divided by thinner strips
into plates or shields, which again may be areolated. The cuticle may
also be shagreened or embossed in various ways.

Fam. 15. Rattulidae: Rattulus E., Mastigocerca E., Coelopus G.,

Diurella (?) Eyfurth.
 Fam. 16. Dinocharididae: Dinocharis E., Scaridium E.,
Stephanops E.

Fam. 17. Salpinidae: Salpina E., Diaschiza G., Ploesoma

Herrick, Diplax G., Diplois G.

Fam. 18. Euchlanididae: Euchlanis E., Dapidia G., Apodoides

Joseph.

Fam. 19. Cathypnidae: Cathypna G., Distyla Eckstein,

Monostyla E.

Fam. 20. Coluridae: Colurus E., Metopidia E., Monura E., Mytilia
G., Cochleare G., Dispinthera G.

Fam. 21. Pterodinidae: Pterodina E., Pompholyx G.

Fam. 22. Brachionidae: Brachionus E., Noteus E., Schizocerca

Daday.

Fam. 23. Anuraeidae: Anuraea E., Notholca G., Eretmia G.

The group includes a number of very minute forms, besides others

conspicuous both for size and beauty. A soft dorsal flap above the
head occurs in Stephanops; also in Coluridae, a large family of
minute species, where the flap is movable, and looks in profile like a
hook overhanging the forehead. The genus Pterodina, like Pedalion
and Triarthra, combines a Bdelloid disc with malleoramate trophi,
while its exsertile wrinkled foot ends in a ciliated cup like that of a
larval tubicolous species.

Brachionus, a large, often flat, transparent form, with a long wrinkled

foot, is a very common genus, known to the earlier observers, and
repeatedly figured by them. Pompholyx has a sack-like lorica, no
foot, and carries its immense egg suspended by an elastic thread
from the cloaca. The Anuraeidae lack the foot, and often have great
spines or bristles projecting from the lorica, which no doubt facilitate
floating. They are abundant in the "plankton" or floating fauna of
large lakes far from the shore. Many marine species belong to this
family.

Order VII. Seisonaceae.—Marine Rotifers parasitic on the

Crustacean Nebalia; males resembling the females. Body elongated,
with a slender retractile neck, a much reduced disc, an elongated
foot with a terminal perforated disc as in Callidina. Trophi virgate
exsertile. Genito-urinary cloaca opening at the base of the neck in
the male, at the hinder end of the body in the female. Intestine
complete (Seison) or blind (Paraseison).[275]

Fam. 24. Seisonidae: Seison Grube; Paraseison Plate;

Saccobdella Van Beneden and Hesse.

Habits.—The habitat of Rotifers is well known to the student of pond

life. Every dip from a greenish pool will give us a supply, if there be
not an excessive contamination by manure; and such pools give us
some of the largest and most beautiful forms, such as Hydatina and
Brachionus, swimming about among the fibrous Algae and feeding
on the organic débris among them. Almost any organic infusions
freely exposed to the open air will yield Ploima shortly after the
active putrefaction is completed. The finer water-weeds yield most of
the beautiful tubicolous forms. A whole group of species and genera
are quasi-pelagic in fresh and salt water, constituting a large
proportion of the "plankton" or floating life near the surface; and
some of these are found in deep water or in the depths of the lakes.
Among them are the Asplanchnidae, Triarthridae, and Anuraeidae. A
number of Loricates, such as Notholca and Eretmia, are armed with
long spines, which doubtless render floating easier.
Among tubicolous forms Conochilus volvox and Lacinularia
racemovata have this pelagic habit, forming floating globular or ovoid
colonies, and two species of Floscularia also float freely in their
tubes.

The following forms occur in salt or brackish water,[276] those

marked with an asterisk (*) also occurring in fresh water:—

Floscularia campanulata.* Melicerta tubicolaria.* Rotifer citrinus.*

Discopus synaptae. Synchaeta baltica, S. monopus, S. apus, S.
tremula,* S. longipes, S. tavina. Asplanchna girodi.*
Asplanchnopus syringoides. Hexarthra polyptera. Notommata
naias, N. reinhardti. Proales decipiens. Furcularia forficula,* F.
gracilis, F. reinhardti, F. marina, F. neapolitana. Diglena
catellina,* D. suilla, D. putrida. Pleurotrocha leptura. Distemma
raptor, D. marinum, D. platyceps.* Bothriocerca longicauda.
Polyarthra platyptera.* Triarthra longiseta.* Rattulus calyptus.
Diurella marina, D. brevidactylus, D. brevis. Diaschiza fretalis.
Euchlanis luna. Monostyla quadridentata, M. lunaris. Colurus
amblytelus, C. uncinatus,* C. dactylotus, C. coelopinus, C.
pedatus, C. rotundatus, C. truncatus, C. caudatus.* Mytilia
tavina. Pterodina clypeata. Brachionus bakeri,* B. mülleri.
Anuraea valga,* A. biremis,* A. aculeata,* A. tecta,* A.
cochlearis.* Notholca striata,* N. scapha,* N. thalassia, N.
spinifera, N. inermis, N. jugosa, N. rhomboidea. Seison grubei,
S. annulatus. Paraseison asplanchnus, P. nudus, P.
proboscideus, P. ciliatus. Discobdella nebaliae.

Thus about seventy species are recorded as marine. Synchaeta

baltica is truly pelagic, and contributes to the phosphorescence of
the ocean.

Other forms again are parasitic. Proales werneckii is found in

Vaucheria, a coarse, dark green, thread-like Alga found in fresh
water; and the closely allied P. parasita is not uncommon in the
beautiful floating green spheres of Volvox.[277] Albertia, Drilophagus,
and Balatro are parasitic on or in fresh-water Oligochaetes; the
curious Seisonaceae are parasitic on Nebalia, a small Crustacean
easily obtained in masses of whelk's eggs; the aberrant Bdelloid
Discopus attaches itself to the surface of the Holothurian Synapta.
Similarly among this last Order Callidina parasitica attaches itself to
the limbs of the fresh-water Crustacea Gammarus and Asellus.
These are rather commensals than true parasites. The species of
Brachionus often attach themselves temporarily to the common
water-flea Daphnia.

Besides a few Ploima, the vast majority of the Bdelloids live in or

among mosses and their roots. Many Callidina inhabit cup-like
hollows in the leaves of the scale mosses (Jungermanniaceae),
especially of the genus Frullania. Almost all the members of this
Order are susceptible of desiccation and revival; certain species,
such as Rotifer vulgaris, Philodina roseola, Adineta vaga, etc., can
be readily obtained by moistening gutter dust. The mechanism of the
process is as follows: when desiccation is gradual the animals close
up their telescopic bodies and excrete gelatinous plugs at either end,
which effectually seal them against further drying; if, however, they
be dried on a slide without any débris, the process is too rapid for
them to protect themselves, and they therefore die. This was dimly
seen by others, and clearly demonstrated by H. Davis,[278] who
records the following experiment:—The Rev. E. J. Holloway, having
found Philodina roseola in gutters, placed strips of paper there in the
rainy season, and succeeded in obtaining clean gatherings, taking
dry groups of a hundred together, having a varnish-like covering all
over; and being glued to one another, mostly in one plane, and to the
paper, forming a pavement. In the dry condition they resist extremes
of temperature; thus Zelinka found Callidina revive after an exposure
of -20° C. (-4° F. or 36° of frost), and immersion in hot water at 70°
C. (158° F.). They will also resist deprivation of air in a vacuum of an
ordinary air-pump, but not the all but perfect exhaustion of the
Sprengel pump.
A very curious fact in relation to this Class is that often when a new
form is once described from a single locality, fresh and widely distant
stations for it rapidly become known.[279] Thus Pedalion mirum, first
found at Clifton in 1872 by Hudson, was a few years after captured
in a small pool above tide-marks on a rocky islet in Torres Straits.
Since then it has been recorded from many different European
stations, and a second closely allied species has been found in
Finland. So a species of Ehrenberg's[280] was not seen again till
within the last decade or so; but since then it has been
independently found and described by six observers, who have
given it as many distinct generic names. In the case of Pedalion it
may well be that, as Hudson suggests, the species is of southern
origin and has followed the flag, the winter egg being conveyed in
dust by ships or travellers.

The above account of the habits gives the key to the collection of the
various forms. The weed-loving species are collected with the
weeds, and will keep with these in vessels if screened from direct
sunlight and protected against dust. The free-swimming forms may
be collected by sweeping with a net of fine gauze, with a bottle fixed
in the bottom.

Except for their power of resisting desiccation, Rotifera are not very
long-lived, and the males are especially short-lived; the most exact
observations are those of Maupas on Hydatina. He found that the
greatest age of the unfertilised female was thirteen days, during
which it could produce some fifty eggs; the fertilised female lives for
seven or eight days, producing about sixteen eggs; while the male
dies in two or three days.

The preservation of Rotifers has been recently reduced to a fine art

by Rousselet, who uses a solution consisting of cocaine
hydrochlorate, 1 gramme; water, 50 cc.; and methylated spirit, 12 cc.
This will keep without deterioration. When in use it must be diluted in
the proportion of two volumes to three of water. This solution is
added cautiously to the capsule in which the Rotifers lie, and they
are watched till their ciliary motions slacken; when this happens a
drop or two of osmic acid solution (½ to 1 per cent) is added; the
Rotifers are then sucked up by a capillary pipette, and transferred to
fresh water; and then into a solution of "Formaline" diluted to contain
2½ per cent of formic aldehyde. In this solution they are transferred
to shallow cells, ground out of the centre of an ordinary glass slide,
covered with thin glass, and sealed.[281] Other methods of preparing
Rotifers for minute study will be found in the papers of Plate, Tessin,
and Zelinka.

The zoological affinities of the Rotifers have long been a subject of

keen interest. As early as 1851 Huxley[282] suggested that they
represent a primitive form, preserved, with modifications, in the larva
of Molluscs, Annelids and other worms, and Echinoderms. Similar
views were later maintained by Lankester,[283] who termed the larva
of Polychaets, etc., a "trochosphere," for which "trochophore" has
been substituted in order to avoid confusion with the Rotifer
Trochosphaera; Balfour,[284] Hatschek,[285] Kleinenberg,[286] and
others have developed these views. Serious difficulties, however,
arise in the detailed comparison of Rotifers with this type; and the
special students of this Class have found it practically impossible to
agree in the identification of the various parts, a difficulty especially
felt in the case of the Rotiferan genus Trochosphaera, though this is
just the one which presents the closest superficial resemblance to
the Trochophore larva. I have been induced to take a view of the
structure of Rotifers that brings it into close relationship with the
lower Platyhelminthes, and with the more primitive larva of the
Nemertines termed Pilidium (Fig. 60, p. 113). This is hemispherical,
ciliated all over, with the mouth in a ventral funnel lined by fine cilia;
while the edge is fringed with two rows of strong cilia, separated by a
finely ciliated groove, like those of the ciliary wreath of a Rotifer.
 Fig. 118.—Diagram explaining the possible relations of Rotifers. A, Pilidium; B,
hypothetical Rotifer modified from Asplanchnopus; C, a Ploimal Rotifer; D,
Trochosphaera aequatorialis (modified from Semper, the extension of the ovary
into the posterior ventral quadrant being omitted); E, Mollusc larva (Veliger); F,
Trochophore larva of Annelid. a, Anus; ap, apical organ; at, median antenna
(near which, in B, is a black spot, the brain); bl, bladder (receiving the ramified
kidney in B, C, and D); br, brain; f, foot; fg, cement-glands, replacing apical
organ; g, ovary; k, kidney; m, mouth; n, supra-oesophageal ganglion; nap,
nerve of apical organ; nr, nerve-ring in section; pot, praeoral portion of trochus;
s.g, shell-gland; s.n, sub-oesophageal ganglion; t, trochus or ciliary wreath; tt,
posterior ciliated ring; v, velum, or expanded praeoral part of trochus.

The sides are produced on either side into lappets, which we do not take into
account. A cup-shaped depression at the apical pole is lined by sense-cells,
bearing long cilia which are probably sensory. A ring of nerve-cells passes within
the ciliated rim of the hemisphere, and the stomach is a blind sac. If we compare
this organism with a Rotifer, we find that the wreath corresponds in both, the
funnel of the disc in such forms as Flosculariidae and Microcodon leading to the
mouth of Pilidium, while the gut is blind in Asplanchnidae and in some of the highly
developed Seisonidae. The circular nerve-ring of Pilidium is in many Rotifers only
represented by its anterior part, the brain; though in Bdelloids a sub-oesophageal
ganglion completes the ring. This leaves a difficulty with regard to the apical sense
organ; but it is easy to understand that an organ of sensation should become an
organ of fixation. In this case the foot with its glands would correspond to the
sense organ of the Trochophore larva; and it retains its primitive ciliated character
in the larvae and males of many Rotifera, and the adult female of Pterodina and
Callidina tetraodon. Embryology tells us that the anus of Rotifers cannot be
homologous with that of Annelids, etc., for it is formed outside the area of the
blastopore: it is an independent formation, probably due to the coalescence of the
originally blind intestine at its extremity with the earlier genito-urinary cloaca. On
this view we must change the orientation of the Rotifer, and place it, like a
Cuttlefish, mouth downwards: for "anterior and posterior" we must substitute oral
(or basal) and apical; for "dorsal" and "ventral" we must use anterior and posterior;
while "right" and "left" are unchanged. And this correctly expresses the actual
space-relations in those Ploima like Rattulus that swim with their disc in contact
with the organic débris on which they feed, with the foot turned outwards and
backwards. As these views are now published for the first time, I have thought it
wiser to keep to the accepted relations in the general description, a course which
has the advantage of avoiding difficulties in the study of the literature of the Class.

The supposed resemblance of Pedalion to the Crustacea is probably the result of

convergence, not of consanguinity. The Polyzoa are a group of freely-budding
organisms whose structure otherwise recalls in many respects that of the attached
Rotifers; but a close investigation reveals so many differences in structure,
orientation, and development, that we cannot regard the two groups as at all
closely allied.

Thus the Rotifers may be regarded as a group apart, but probably representing an
early offshoot from a free-swimming Platyhelminth, probably a Rhabdocoele; the
modifications being the loss of the general ciliation of the surface, the arching of
the back into an elongated vault, the conversion of the inner half of the pharynx
into a gizzard, the change of position of the genital and urinary apertures to the
antero-dorsal surface, and the opening of the intestine into the genito-urinary
cloaca.

Gastrotricha.

This small and very homogeneous group consists of minute fresh-water

organisms, closely resembling many Ciliate Infusoria in their movements, habit
and habitat. They were first described in detail by Ehrenberg, and placed by him
and Dujardin in the neighbourhood of Rotifers. In recent years A. C. Stokes[287] in
America and C. Zelinka[288] in Germany have contributed, the former a careful
description of a number of new species and their habits, the latter a complete
monograph of everything that is known of the Order.

The Gastrotricha dwell among filamentous Algae and organic débris, and are of
frequent occurrence with Protozoa and Rotifera of similar habit. The largest known
measures only 400 µ (1⁄60 in.) in length, and the smallest run as low as 74 µ
(1⁄300 in.).