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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.
Printed in the United States of America. Previous editions ©2019, 2016,
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Some ancillaries, including electronic and print components, may not be

available to customers outside the United States.

This book is printed on acid-free paper.

1 2 3 4 5 6 7 8 9 LMN 24 23 22 21 20

ISBN 978-1-260-68242-7 (bound edition)MHID 1-260-68242-0 (bound

edition)ISBN 978-1-264-07123-4 (loose-leaf edition) MHID 1-264-07123-
X (loose-leaf edition)
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All credits appearing on page or at the end of the book are considered to be
an extension of the copyright page.

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
https://lccn.loc.gov/2020041818LC ebook record available at
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

Another random document with
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younger brother, and he was the
king and ruler of the land. He
had a net named after himself,
Makalii, in which were kept the
food and fish as well as other
things. Makalii, who was also
educated in all of the arts of the
day, could tell of coming future
events, as well as Moikeha or
Kila. Because of this power as a
fortune-teller he was able to
foresee the arrival of Kila to his
kingdom. So he took up all the
food and placed it in a net and
hung it out of reach, which was
the origin of the old Hawaiian
saying: “Makalii drew in his net
(koko) and hung it up.”
Kanepohihi, on being requested
for food, changed herself into the
form of a rat and climbed up,
nibbled at the net of Makalii,
cutting it and causing the food
and fish to fall out, thus
supplying Kila and his
companions with food.
Shortly after this Kila sailed for
the main island, the canoe going
toward the kapued harbor, where
the kapu stick was standing. This
place was Moikeha’s; no canoe
was allowed to land here; no
no ia, a oia no ke ’lii o ka aina, a
nana ua koko nei o Makalii (no
ka inoa), ilaila ka ai, ka ai, na
mea a pau loa. A he ike no ko
Makalii i ke kilokilo e like me
Moikeha, a me Kila; no kona ike
e hiki aku ana nei kupu (Kila) i
ka aina, nolaila, lawe keia i na
mea ai a pau a paa i ke koko,
kau i luna, oia kela olelo kahiko
o Hawaii nei: “Hului koko a
Makalii kau iluna.” E pii ae ana o
Kanepohihi ma kona kino iole, a
aki i ke koko a Makalii, haule ka
ai a me ka ia i lalo nei, loaa ka ai
a Kila a me na ohua.
Holo aku la o Kila a hiki i ka
aina, holo aku la ka waa o Kila a
ke awa kapu e ku ana ka pahu
kapu, no Moikeha ia wahi; aohe
waa pae malaila, aohe kanaka
hele, hele no make, he kapu mai
person was allowed to pass by it
upon pain of death. The place
had been kapued before
Moikeha left, and ever since his
departure its sacredness had
been maintained. When the
canoe was nearing the landing
place the people on shore were
heard calling: “There is a canoe!
There is a canoe!! That canoe
does not seem to have any fear
for the kapu of the king. Your
superior strength, if any you
have, will be the only salvation
for you this day.”
Before Kila and his people
reached the landing place and
hauled their canoe up on the
sand, he was bundled up and
placed on the platform. Kila, as
we have said, was a very
handsome man and was good to
look upon, so much so that it
could not be hidden by the
covering in which he was
wrapped. After he had been
placed on the platform he
addressed his followers, saying:
“When you see a large man
come to the canoe, it is Mua. He
is a great admirer of women. He
is the man that was the betrayer
ko Moikeha noho ana a hele, oia
mau no ke kapu a me ke kiai ia.
Kahea mai la o uka: “He waa e!
he waa hoi kela!! Makau ole kela
waa i ke kapu o ke ’lii; a nui ko
ikaika i na la, ola oe.” Ia lakou
nei i pae ai ma ia wahi, aole nae
i kau na waa o lakou nei i uka, i
ke kai no kahi i hekau ai. O Kila
hoi, ua opeope ia a paa kau
iluna o ka pola o na waa. He
kanaka maikai loa o Kila, aohe
puu, aohe kee, a he nani ke
nana aku, a ua hele kona maikai
mawaho o ke kapa a me kona
opeope e wahi ana.
Olelo aku o Kila i na kanaka o
luna o ka waa: “Ina nana oukou
a i hele mai kekahi kanaka nui, i
na waa nei, o Mua ia, he kanaka
puni wahine ia, oia ka mea nana
i kumakaia o Moikeha i hele ai. A
owau hoi, mai hai oukou ia’u ke
ninau mai.” A hiki o Mua i na
waa, nana i na kanaka, kukulu
iluna, kukulu ae la i ke kanaka
mamua, nana i ke alo aohe puu,
nana i ke kua, loaa he okakulai,
he puu. Olelo aku o Mua: “Aole e
loaa ia oe o Luukia.” Pela no ka
nana ana a pau na kanaka o na
waa, a koe o Kila. O ko Mua
of Moikeha, and the one that manao ma keia nana ana, i loaa
caused Moikeha to leave his ke kanaka maikai e lilo ai o
own country. Don’t tell him about Luukia, alaila, nonoi aku nana e
me, in case he should ask you.” moe e mamua o Luukia, no ka
mea, aole i loaa o Luukia ia ia
As soon as Mua reached the mamua a hiki ia la.
canoe, he looked over the men
and stood them up. Examining
the first one and finding a
protuberance on his body, he
remarked: “You will never be
able to get Luukia.” He then
examined the next man, and so
on to the last, with the exception
of Kila. The reason why Mua
examined the men was because
he wished to find one who could
command the admiration of
Luukia, and by him get a chance
to approach Luukia, as he had
never been able to please
Luukia even up to this time.

Luukia was a very beautiful He wahine maikai loa o Luukia,

woman and had no equal. She
was the wife of Olopana, and
owing to his being afflicted with
the dropsy they never lived
together. [166]Luukia, however,
had been bound, 4 or netted, by
Olopana with small cord in the
fashion of the lashing of canoes
aohe ona lua ma ia aina a puni,
o ka Olopana wahine ia, aole
nae o laua moe kino, no ka pehu
o Olopana, nolaila, ua paa o
Luukia i ke kamaaha ia e
Olopana (oia kela aha waa, e
hoa ia nei a hiki i keia la), mai ka
hele ana mai o Moikeha a hiki ia
Kila. [167]
ever since the departure of
Moikeha.
Upon seeing the bundle on the
platform, Mua asked the people:
“What is this large bundle on the
platform?” The people replied: “It
is a bundle of clothes.” Mua then
went up to it and felt the bundle.
After feeling it he opened the
bundle and discovered a man.
He then looked all over the man
and found him to be perfect in
every respect. He then
remarked: “You will be admired
by Luukia. If in case you should,
will you ask her to be mine?”
Before Mua boarded the canoe,
Kila had instructed his men as
follows: “If Mua should come and
ask that some one of you ask
Luukia to be his wife, tell him to
lie in the canoe face down, and
not to get up or move about or
speak, but he must lie very
quietly so that he will be able to
get Luukia.”
After inspecting Kila, the people
told Mua to do as they had been
instructed by Kila. When Mua
heard this he was very glad. As
Nolaila, ninau aku la o Mua: “A
heaha hoi keia opeope nui e kau
nei i ka pola?” Olelo mai na
kanaka: “He opeope kapa.” Hele
aku la keia haha, a ike iho la he
kanaka. Haha iho la o Mua,
wehe ae la i ke kapa, nana iho la
ma ke kua, a me ke alo, aohe
puu, aohe kee, olelo iho la:
“Loaa ia oe o Luukia. Ea, a i loaa
o Luukia ia oe, na’u e moe
mamua.”
Mamua ae o ka nana ana o Mua
ia Kila, ua olelo aku o Kila i na
kanaka: “I hiki mai auanei o Mua
a i nonoi mai e moe me Luukia,
olelo aku oukou, e moe i loko o
ka waa nei, ilalo ke alo, aohe
make ala, aohe make oni, aohe
make olelo, e moe malie, i loaa o
Luukia.” A pau ka nana ana ia
Kila, olelo aku la na kanaka ia
Mua e like me na olelo a Kila, a
lohe o Mua, he mea olioli ia. A
moe o Mua i lalo ke alo, i loko o
ka waa, olelo aku o Kila i na
kanaka: “E mimi maluna iho o
soon as Mua had lain face down
in the canoe, Kila told the men to
hold Mua down and urinate on
him. This was done until it
covered him for two days and
one night, so that he died without
accomplishing his desire
respecting Luukia. Thus, through
the wit of Kila, was the betrayer
of Moikeha his father avenged.
During the reign of Moikeha he
had two very powerful warriors,
Niniukalani and Pohinakahonua.
There were none stronger than
these two. Upon seeing the
canoe coming to be moored on
the kapued grounds, Niniukalani
took up his war club,
Kahikinaakala, and approached
the canoe. When he reached the
dry sand he began twirling his
war club. As the man was
approaching, Kila asked his
men: “Which one of you is willing
to go and fight Niniukalani?” No
one spoke up for some time, as
they were all afraid. Ukulii,
however, arose and said: “I will
go and fight him.” Kila then said:
“Yes, you are so small that you
will be able to get very close to
him. When you get ashore don’t
Mua.” Pela ka hana ana, a po ka
la, a ao ka po, a po hou ka la, ua
lana ka mimi maluna o Mua, a
make iho la ia me ke ko ole o
kona kuko ia Luukia. Pela i
hookoia ai ka huhu o Moikeha i
kona mea nana i kumakaia, ma
ka noonoo o kana keiki o Kila.
Iloko o ko Moikeha wa e noho
alii nui ana ma ke aupuni, elua
ona koa ikaika loa, o Niniukalani,
o Pohinakahonua, aohe koa e oi
mamua o laua. Hele mai la o
Niniukalani me kana laau palau,
o Kahikinaakala a ke one maloo,
oniu. Olelo aku o Kila i na
kanaka: “Owai ko oukou e hele e
koa me Niniukalani?” Aohe
kanaka aa, no ka makau; ku ae
o Ukulii a olelo: “Owau ke hele e
koa.”
Ae mai o Kila: “Ae, o oe, o ko
uuku auanei komo oe i loko, o
koiala nui hele i waho, i lele oe i
uka, mai nana oe iluna, o make
oe, i lalo oe e nana ai i ke aka, i
ka malu maluna ou. Ina e
hookaa kela i ka laau ma ka
hema, ma ka akau oe e ku ai,
look up or you will get killed; but
keep your eyes always down
and watch the shadow over you.
If he twirls his club on the left,
jump to the right, as he will then
strike to the left; and if he twirls
on the right, jump to the left.”
After Kila had imparted his
instructions, Ukulii jumped
ashore with his war club and
approached Niniukalani.
Niniukalani was twice the size of
Ukulii and was sure of beating
him, which he likened to so
much chaff. 5
At this time the place was
packed with the chiefs and
people who were eager to see
the conflict. They never had any
idea that the small man had any
chance with the big man at all.
Niniukalani, upon seeing Ukulii,
began to twirl his war club,
Kahikinaakala, and, when Ukulii
was within striking distance, let it
come down; but Ukulii jumped to
the right and toward his
opponent. The club missed its
object and hit the sand, causing
it to fly in all directions, and left a
deep valley, hiding the two
contestants from view for a time.
aia ka hauna laau ma ka hema,
a ina hoi ma ka akau ma ka
hema oe.”
A pau ka olelo ana a Kila, lele
aku la o Ukulii me kana laau, lele
aku la a ku me Niniukalani, ua
palua kona nui imua o Ukulii, a
he mea ole o Ukulii i kona
manao ana, heaha la ia imua
ona? He opala. Ia wa, ua piha ke
one i na ’lii a me na kanaka he
nui loa, e nana ana i ke kaua,
aole nae o lakou manao e ola
ana kahi kanaka uuku i ke
kanaka nui. O Niniukalani, ke
hookaa nei i ka laau palau ana,
ia Kahikinaakala hoomoe iluna o
Ukulii, komo ae ana o Ukulii i ka
akau, hala ka laau, loaa ke one,
puehu liilii, moe ke awawa, nalo
Everybody believed that Ukulii
was killed. After [168]the cloud of
sand had settled, the people saw
that both of the contestants were
still there. Ukulii then twirled his
club and made a feint as though
to strike. Niniukalani dodged, but
before he could recover himself,
Ukulii struck to the right which
caught Niniukalani squarely,
cutting him in two and killing him
instantly. At this the crowd cried
out: “One for the stranger and
none for the son of the soil.
Nobly done! No wonder this
canoe dared to land on kapued
ground, for it carries a noble
warrior.”
Pohinakahonua, upon seeing the
death of his mate, came up with
his war club, Puaihanuole. He
then issued a challenge, boasted
and said: “He could not have
been struck at; if he had he
would have been in pieces. He
shall not escape me.”
Ukulii, after his encounter,
returned and boarded the canoe.
When Pohinakahonua was seen
laua nei i loko o ke one. Manao
na mea a pau ua make o Ukulii;
a mahope, ku hou laua nei,
hookaa o Ukulii i ka laau ma ka
hema a [169]hoana, aole nae i
uhau, alo e o Niniukalani, e
waiho ae ana keia ma ka akau,
loaa no o Niniukalani, make loa,
kaawale o luna me lalo.
Uwa ka pihe o uka: “Akahi a ka
malihini, aole a ke kamaaina.
Koa! malama no i komo ia ai ke
awa kapu o ke ’lii e keia waa eia
ka he koa.” Ku mai o
Pohinakahonua, me kana laau
palau o Puaihanuole, paha,
kaena: “He uhau ole ia i ka laau;
e uhau ia okaoka, aole ia e
pakele ia’u.”
O Ukulii, hoi aku la no ia a na
waa noho. Ninau o Kila: “Owai
ke hele e hakaka me
to come out and issue his
challenge, Kila asked: “Which
one of you will go and meet
Pohinakahonua?” Hohoiea
answered: “I will.” Kila then
instructed him what to do, and
he jumped ashore to meet
Pohinakahonua. As soon as he
was within reach Pohinakahonua
swung his club to the right, but
Hohoiea was not there, as he
had jumped to the left of
Pohinakahonua. Hohoiea then
swung his club from the ground
upward, which cut
Pohinakahonua in two from his
hips to his head, killing him. At
this the crowd gave another
shout, saying: “The strangers
have two, and the sons of the
soil have none. This canoe
carries some mighty men who
have killed the warrior guards of
the land.”
The result of the conflict was
then carried to the king, Makalii.
When Makalii heard it he arose
and came down with his war
club, Naulukohelewalewa.
Makalii at this time was living in
a land above the clouds. Makalii
was a goodly man to look upon,
Pohinakahonua?” I mai o
Hohoiea: “Owau.” Ao ao mai la o
Kila a maopopo, hele aku la a ku
me Pohinakahonua. Waiho iho
ana o Pohinakahonua i ka laau
ma ka akau, alo o Hohoiea ma
ka hema, hala; hue lepo ae ana
o Hohoiea i kana laau, mai ka
papakole a ke poo ke kaawale,
make o Pohinakahonua. Uwa ka
pihe o uka: “Alua a ka malihini,
aole a ke kamaaina, ikaiha
kanaka o keia waa, ke make la
na koa kiai o ka aina.”
Lawe ia aku nei ka lohe, a i ke ’lii
ia Makalii olelo; a lohe o Makalii
iho mai la (aia kona wahi iluna);
a hiki o Makalii i lalo me kana
laua palau, o
Naulukohelewalewa. He kanaka
maikai loa o Makalii ke nana
aku, ua like no me kona
kaikuaana me Moikeha, he
ikaika, he koa, he mana no hoi,
aole nae i like me Kila. A hiki o
Makalii i ke kahua kapu, ku iho
la me kana laau palau, e hookaa
ana me ka oniu ma ka akau a
ma ka hema. I aku o Kila i na
kanaka o ka waa: “O Makalii
kela, he ’lii, he ikaika, aole oukou
e ola ke hele aku e hakaka;
closely resembling his older
brother Moikeha. He was very
powerful and brave, but not like
Kila. As Makalii arrived on the
kapued ground he began to
swing his war club right and left.
Upon seeing this Kila said to his
men: “That is Makalii, the king.
He is a very powerful man; none
of you will be able to stand up
against him. I will go and meet
him. But before I go, I want you
to remember this: if I shall be
slain in this encounter, you have
your course of escape, return by
it to Kauai; but in case I live, then
all will be well.” Kila then took up
his war club, Kahihikolo, 6 and
jumped ashore from the canoe,
stepping on the rocks. At sight of
Kila the crowd began to shout,
admiring his beauty. Even the
ants were heard to sing in his
praise; the birds sang, the
pebbles rumbled, the shells cried
out, the grass withered, the
smoke hung low, the rainbow
appeared, the thunder was
heard, the dead came to life, 7
the hairless dogs were seen and
countless spirits of all kinds were
seen. All these things mentioned
were the people of Moikeha, who
owau ke hele ae. Eia nae ka’u
olelo ia oukou, i hele au a i
make, oke ala no nei hoi ia
Kauai, aka hoi, i ola au, aole hoi
o ia.”
Hopu iho la o Kila i kana laau
palau o Kahikikolo, a lele iho la
mai na waa aku, a hehi iho la i
ka paala. Uwa ka pihe o uka i ke
kanaka maikai o Kila; uwe ka
naonao, kani na manu, nehe ka
iliili, oleole ka pipipi, mae ka
manu, moe ka uwahi, pio ke
anuenue, kui ka kekili, olapa ka
uwila, ua ka ua, kahe ka wai,
kaikoo ke kai, popoi ka nalu, lele
ke akoakoa me ka puna i uka,
olo ka pihe a ka hanehane, ala
na ilina, ala ke namu ke nawa,
ka huhu ai laau, hoike ka olohe,
hele mai kini o ke ’kua, ka pukui
akua, ka lalani akua, na mea a
pau loa. O keia mau mea a pau
loa, oia na kanaka o Moikeha, a i
ka hiki ana o Kila kana keiki,
hoike lakou, oia ka hoailona o ke
’lii nui.
upon the arrival of Kila his son,
caused themselves to be seen,
in testimony of Kila’s high chief
rank.
As Kila came within reach,
Makalii brought down his war
club, Naulukohelewalewa. The
wind whistled by, the dust and
sand arose in clouds, and a
deep valley [170]was seen where
the club struck the ground. The
two were hidden in the dust. The
people ashore thought that Kila
was killed, but after the cloud of
dust and sand had settled they
beheld Makalii and Kila still
facing each other; because when
Makalii swung his club on the
right he brought it down on his
left, so Kila had jumped toward
the right side of Makalii and was
saved from a terrible death. As
they again faced each other, Kila
twirled and brought down his
club, Kahikikolo, the swirl of
which felled Makalii. The reason
of this escape was because Kila
had in mind the warning given
him by Moikeha his father, upon
his departure from Kauai, in the
following words: “You are about
to go on your voyage. If you
A kokoke o Kila i o Makalii la,
hoomoe iho ana o Makalii i kana
laau palau, ia
Naulukohelewalewa hio ka
makani, lele ka lepo me ke one,
kahawai kahi i loaa ai i ka
[171]laau, nalo laua i loko o ka
lepo. Manao o uka, ua make o
Kila; a pau ka wili ana o ka lepo,
ku aku ana no o Makalii me Kila,
no ka mea, ua kaa akau ka
Makalii laau, ma ka hema ka
hoomoe ana. Nolaila, komo o
Kila i ka akau, a pakele i ka
make weliweli a Makalii.
Ku hou laua, hookaa na laau
hoomoe o Kila i kana laau palau,
ia Kahikikolo i lalo o ka lepo,
mana kahawai, kahe ka wai, wili
ka puahiohio, wili ka lepo me ke
one i ka lewa. O Makalii, ua loaa
i ka hau o ka laau a Kila, ua
waiho i lalo, o ke kumu o keia
pakele ana o Makalii, o ka olelo
kauoha a Moikeha i ka wa i
Kauai ia Kila penei: “Ke hele la,
a i hakaka oe me ko makuakane
should fight with your uncle,
don’t be thoughtless, else you
will kill him.” This was the only
reason why Makalii was saved;
otherwise he would not have
again seen the warming sun.
After the fight Kila returned to his
canoe, while Makalii laid on the
ground for a period of time
sufficiently long to cook an oven
(umu) of food; whereupon he
arose and staggered to the
house. While on his way to the
house he congratulated himself
on his miraculous escape. This
was the last time he was seen
on earth, for he returned up
above 8 and died there.
The end of this contest saw Kila
master of all the lands. The
canoe was then beached and he
went ashore. At this the shells 9
cried and asked: “What is the
object of this voyage that has
brought my lord here?” Kila
replied: “It is a voyage in search
of a chief.” The shells said:
“There are no more chiefs; all
are dead. We were deserted by
your father in this place, without
food and without fish, your father
me Makalii, mai hana naaupo
oe, o make ko makuakane.” Oia
wale no ko Makalii mea i ola ai,
ina ua haalele i ka la i ka mea
mahana.
Hoi aku la no o Kila a luna o na
waa noho, o Makalii hoi, waiho
iho la, a moa ka umu, ala ae la
me ke kunewanewa a hoi i ka
hale. Ma keia hoi ana, he mihi
nui ko Makalii i kona pakele mai
make, o kona ike ana no ia i ka
aina, hoi i luna a make.
Puni ae la ka aina ia Kila, pae
aku la na waa, hele aku la o Kila,
uwe ka pipipi, a ninau mai:
“Heaha ka huakai a kuu haku o
ka hiki ana mai?” I aku o Kila:
“He huakai imi alii.” Hoole mai ka
pipipi: “Aohe alii, ua make, o
makou wale no koe, haalele ia
iho makou e ko makuakane, i
keia wahi, aohe ai, aohe ia, ua
lawe aku ko makuakane a pau
loa, o ke opu wale iho no ka
makou.” Pela no o Kila i hele ai,
taking everything with him, and
we have managed to just exist.”
Kila then continued on his way,
meeting the former inhabitants of
the land who wailed and cried to
him, until he arrived at the
palace of Moikeha,
Moaulanuiakea. This was a very
beautiful house, being very lofty
and was thatched over with the
feathers of birds. The battens
were made from the bones of
birds and the timbers were of
kauila wood. It is said in the
legend of Moikeha that the
reason why Moikeha journeyed
to Kauai and lived with
Hooipoikamalanai was on
account of his oath, never to
return after the ridge-pole of his
house, Moaulanuiakea, had sunk
out of sight.
When Kila arrived at the house
he looked it over and saw that it
was indeed grand, majestic and
lofty; but there were no people;
the doors were fastened; the
guards were dead and the place
was overgrown with weeds. Kila,
however, had with him the
means of unfastening the doors
me ka uwe mai o na
makaainana ia ia nei, a hiki keia
i ka hale o Moikeha ia
Moaulanuiakea. He hale maikai
loa, a he hale kiekie loa no hoi,
he hulu manu o luna i ako ia ai,
he iwi manu ka aho, he kauwila
ka laau. (Ua oleloia i loko o ko
Moikeha kaao, oia kona kumu i
noho ai ia Kauai me
Hooipoikamalanai, alaila,
nalowale ke kaupoku o kona
hale o Moaulanuiakea.)
A hiki o Kila, nana aku la ia i ka
hale, nani, hanohano, kiekie,
aole nae he kanaka, ua paa na
puka, ua make na kiai, ua kupu
ka nahelehele. Aia ia Kila, he ki
no ka hale, no na kiai, no na
mea a pau. A komo o Kila i ka
pa a wehe aku la, ala mai elua
kiai, a uwe mai la ia Kila, komo o
and of bringing the guards to life
as well as everything else. As he
opened the gate, two of the
guards came to life and wept
over him. As he entered the
roadway to the house, two more
of the guards came to life.
Arriving at the main door, two
more guards came to life. As the
door was opened another two
came to life, and entering the
house he found a guard in each
room who all came and kneeled
before him with tears in their
eyes. Kila then lit the lamp which
once belonged to Moikeha,
walked to the couch and laid
down. [172]
While Kila was asleep Luukia
came outside of the house,
spying, watching this glow
inside, its redness; and when
she saw this red glow, tears fell
from her eyes. She choked, and
her heart quickened when she
thought it was Moikeha. The
night was far spent when the
guards fell asleep. Luukia
walked softly and carefully to
where Kila was sleeping and
looked at him; he resembled
Moikeha, but was handsomer.
Kila a ke alanui e komo aku ai,
ala mai elua kiai, a hiki o Kila i
ka puka, elua kiai, a hemo ka
puka, elua kiai. A komo o Kila i
loko, he lumi no he kiai, he lumi
no ke kiai, ala mai la na kiai a
pau a kukuli imua o Kila me ka
waimaka. Hoa ia ae la ka ipukui
o Moikeha e Kila, hoi aku la o
Kila a luna o ka hikiee o Moikeha
moe, po iho la moe o Kila. [173]
Ia Kila e moe ana, hele mai la o
Luukia a mawaho o ka hale
hoomakakiu, e nana ana i keia
mea wena i loko, a me ka ula, a
ike o Luukia i keia mea ula, uwe
iho la ia me ka helelei o ka
waimaka.
I kona manao o Moikeha, pela
ka hakui o kona puuwai, pela ke
kaoo ana o kona manao. A pau
na kiai i ka moe, a aneane e huli
ke kau o ka po, nihi aku la o
Luukia a hiki io Kila ala, nana iho
She leaped on him crying, and
embraced and kissed him. Kila
awoke startled and looked at her.
Then they contended together
until the break of day, when
Luukia said: “I have no private; it
was corded up by Olopana, and
it has been sealed up from the
time your father went away to
this day.” Kila then said: “If you
will consent it can be
unfastened, and it can be closed
again.” Luukia consented, and
Kila unfastened [the cords]. Then
they gathered up the fine strands
of thought, indulging in love’s
desire, and braided the lehua
wreaths in dreamland, after
which Luukia went her way.
Later she became wholly Kila’s.
And that is the end of this
legend.
[161]
la, ua like me Moikeha a oi ae,
lele iho la maluna, uwe; apo iho
la me ka honi, puoho ae la o
Kila, a nana ae la. I loko o ia wa
laua i aumeume ai i ke kihi o ka
malama, i aku ai o Luukia: “Aohe
mai, ua paa i ke kamaaha ia e
Olopana, mai ka la a ko
makuakane i hele aku ai a hiki i
keia la.” Olelo aku la o Kila: “Ina
he ae oe, he hemo wale no ia, a
he paa hou no ke hana.” Ae mai
o Luukia, wehe iho la o Kila a
hemo. Ia wa laua i mali iho ai i
na kaula makalii a ka manao, e
nonoke ana i na hakina pau ole
a ke aloha, e wili ana i na koai
lehua a ka moe. A pau ae la, hoi
aku la o Luukia, a mahope lilo
loa ia Kila.
Oia ka pau ana o keia kaao.
1 The two tides, rising and ebbing, are
here ingeniously likened to two
powerful demi-gods of the ocean. ↑
2 Anahulu is a measure of time only,
indicating a period of ten days and
nights. The term did not apply to any
other counting, neither of years nor of
articles. The length of time might be
one, two or forty anahulus and so many
days, as fractions of an anahulu. ↑
3 Kalukalu, a delicate, gauze-like
kapa, to which the morning mist is
likened as it is dissolved by the rays of
the rising sun. ↑
4 In the story of Moikeha this netting of
cords which was designated “the
pau of Luukia” was her own doing,
according to other versions, not
Olopana’s. ↑
5 Opala, rendered here as “chaff”, falls
far short of the contemptuous
expression of nothingness, rubbish, or
anything worthless which may be blown
away by the wind, conveyed in the
original. ↑
6 The naming of war clubs appears to
have been a very general custom,
as they are frequently referred to in
tradition as being famous. It is likely
that their names may have been
applied to commemorate an event, as it
is noted that these named clubs are the
dependable weapons of celebrated
warriors. ↑
7 A fairy story recognition by the
elements of a royal descendant, at
whose approach the spirits of former
subjects appear as if to do homage. ↑
8 This doubtless refers to returning to
a mountain abode, from which the
lowland plains are designated “the
earth”. ↑
9 Even the shells of the shore are
made to recognize a royal scion. ↑
 [Contents]

FORNANDER COLLECTION
OF
HAWAIIAN ANTIQUITIES
AND FOLK-LORE
 THE HAWAIIAN ACCOUNT OF THE
FORMATION OF THEIR ISLANDS AND
ORIGIN OF THEIR RACE WITH THE
TRADITIONS OF THEIR MIGRATIONS,
ETC., AS GATHERED FROM ORIGINAL
SOURCES

BY
ABRAHAM FORNANDER
Author of “An Account of the
Polynesian Race”
With Translations Revised and
Illustrated with Notes by
THOMAS G. THRUM

Memoirs of the Bernice Pauahi Bishop

Museum
 Volume IV—Part II

Honolulu, H. I.
Bishop Museum Press
1917

[Contents]
 CONTENTS

Story of Umi.
CHAPTER PAGE

I. Ancestry of Umi 178

II. Birth of Umi 180
III. How Umi Lived in Humble Circumstances 186
IV. Relating to Nunu and Kakohe 190
V. How Umi Became King of Hawaii 204
VI. Relating to the Trip of Umi and His Chiefs Around
Hawaii 210
VII. How Umi and Piikea, the Daughter of Piilani of Maui,
Became United 214
VIII. Succession of Umi 218
IX. Battle Between Umi and the Chiefs of Hilo—His Victory
and the Joining of Hilo 222
X. Umi Conquers Other Districts 226
XI. The Family of Umi—His Beneficent Reign 228
XII. Death of Umi—His Body Taken and Secreted by Koi 232

Kihapiilani.

I. The Piilani Family—Chant of the Maui Chiefs 236

II. Relating to Kihapiilani 242
III. How Umi Made War on Piilani, King of Maui 246
IV. Umi’s Generals, Omaokamau, Koi, Piimaiwaa 248

Story of Lonoikamakahiki.
CHAPTER PAGE