Entrepreneurship

A balanced and practical combination of entrepreneurial theory and cases from a Canadian perspective In the newly revised second Canadian edition of Entrepreneurship, a team of entrepreneurs, professors, researchers, and mentors delivers an accessible and insightful combination of business concepts and cases illustrating contemporary entrepreneurial theory. Exploring every stage of the entrepreneurial process, this comprehensive textbook covers everything aspiring Canadian founders and future entrepreneurs need to know, from ideation to funding, launch, marketing, and more. Throughout the introductory text, a wealth of engaging case studies and examples demonstrate the real-world application of business theory. Perfect for students of business administration, management, and entrepreneurship, Entrepreneurship offers a hands-on learning experience that will appeal to learners who benefit from an abundance of contemporary real-world cases and practical examples. New to this Edition: New case studies on Indigenous entrepreneurs, social entrepreneurship, and building a founding team. New VIDEO cases on Cheekbone Beauty Cosmetics, Wealthsimple, and Peace by Chocolate New chapter on Indigenous entrepreneurship in Canada, highlighting the 7 Grandfather Teachings and the 7 Generation Principle Updated coverage of the Global Entrepreneurship Monitor(GEM), the recent history of entrepreneurship, the Lean Startup methodology, Agile Development, and Design Thinking Expanded material on the startup lifecycle, key milestones, first revenue, Problem-Solution Fit, and Product-Market Fit Updated information on new forms of funding, such as Initial Coin Offerings (ICOs) and angel investors Expanded coverage of digital entrepreneurship, digital resources, and online platforms and tools New content on entrepreneurial ecosystems and entrepreneurial support organizations New content on small business, family business, and side hustles New discussion of entrepreneurial ethics, policy and entrepreneurship, and the impact of remote work Revised and expanded sections on the business planning process, business models, and the Lean Canvas Wiley Advantage: Combines the concepts and theories of entrepreneurship with practical instruction and real-life examples and cases Offers in-depth discussion of digital entrepreneurship and the resources that help drive it, including various online platforms and digital design tools Provides comprehensive and up-to-date coverage of various forms of entrepreneurship, including necessity- and opportunity-based entrepreneurship and entrepreneurship by immigrants, women, and Indigenous people Covers all stages of the entrepreneurial process, from pre-startup through harvest Features end-of-chapter case studies of entrepreneurs in action, including cases on Indigenous entrepreneurship and crowdfunding. Includes sample syllabi, chapter outlines, case lecture notes, an image bank, discussion questions, a test bank, additional case studies, classroom activities, and other teaching resources

1 The Power of Entrepreneurship 1 Historical Entrepreneurship 2 Entrepreneurial Age 3 Entrepreneurship and Small Business in Canada 5 Why Start a Business? 6 The Entrepreneurial Revolution 9 Intel 10 Microsoft 10 Southwestern Bell Corporation 10 Home Depot 11 Blackberry 11 FedEx 11 Southwest Airlines 12 lululemon 12 WestJet 12 New Tech Ventures 13 Web: Three Revolutions Converge 15 Entrepreneurship Revolution Strikes Gold 16 Web 2.0 19 The Age of Unicorns 20 Web3 20 Creative Destruction 21 Causes of the Entrepreneurial Revolution 23 Changes in the Entrepreneurial Framework Conditions 25 Cultural and Social Norms 25 Government 26 Research and Development 27 Physical Infrastructure 28 Geography Constraints Fade 29 The Falling Cost to Launch 29 Incubators and Accelerators Arrive 30 Human Infrastructure 31 Education, Training, and Professionalization 31 Financial 32 Churning and Economic Growth 33 Global Entrepreneurship Monitor (GEM) 35 Principal Findings from the GEM 35 Activity 36 Entrepreneurship Empowers Everyone 42 Newcomer Entrepreneurship 42 BIPOC Entrepreneurship 43 Conclusion 45 Case: Alison Barnard 46 Notes 57 2 The Entrepreneurial Process 63 Critical Factors for Starting a New Enterprise 64 Personal Attributes 67 Environmental Factors 68 Other Sociological Factors 70 Evaluating Opportunities for New Businesses 75 The Opportunity 77 The Customer 78 The Timing 78 The Entrepreneur and the Management Team 79 Resources 81 Determining Resource Needs and Acquiring Resources 82 Startup Capital 84 Profit Potential 87 Ingredients for a Successful New Business 88 Conclusion 92 Case: John W. Sleeman— a Canadian Icon 93 Notes 98 3 Opportunity Recognition, Shaping, and Reshaping 101 From Glimmer to Action: How Do I Come Up with a Good Idea? 102 Finding Your Passion 103 Idea Multiplication 105 Customer Centric Innovation 109 Is Your Idea an Opportunity? 110 The Customer 110 The Competition 122 Suppliers and Vendors 127 The Government 127 The Global Environment 127 The Opportunity Checklist 128 I Don’t Have an Opportunity 128 Is Your Family Business an Opportunity? A Brief Introduction to Family Business 130 Family as the Foundation of all Entrepreneurial Activity 131 Transgenerational Entrepreneurship 131 The Future of the Family Entrepreneurship 132 Conclusion 133 Case: Peace by Chocolate: Embracing the Stockdale Paradox 135 Notes 138 4 Understanding Your Business Model and Developing Your Strategy 142 The Business Model 143 The Revenue Model 143 The Cost Model 146 Business Model Generation 148 Building the Business Model 153 The Core 153 The Market 155 Customer Segments 156 Marketing Channels 157 Distribution Channels 158 Revenue Streams 158 Product and Operations 159 Resources 159 Partners 160 Key Metrics 160 Cost Drivers 161 The External Environment and Financial Strategy 161 Industry Attractiveness 161 Financial Strategy 162 The First- Mover Myth 162 Long- Tail Theory 164 Formulating a Winning Strategy 165 The People Are What Matters 165 Entry Strategy 168 Growth Strategy 172 Conclusion 180 Case: New Case: Wealthsimple 181 Notes 184 5 Entrepreneurial Marketing 188 Why Marketing Is Critical for Entrepreneurs 189 Entrepreneurs Face Unique Marketing Challenges 189 Acquiring Market Information 191 Marketing Strategy for Entrepreneurs 193 Segmentation, Targeting, and Positioning 193 The Marketing Mix 195 Digital and Social Media 207 Guerrilla Marketing 210 Marketing Skills for Managing Growth 212 Understanding and Listening to the Customer 212 Building the Brand 213 Viral Marketing 213 Conclusion 214 Appendix: Customer Interview 216 Case: Eu Yan Sang International, Ltd. 218 Notes 232 6 Selling in an Entrepreneurial Context 234 Why This Chapter Focuses on Selling for Startups 235 Customer Discovery 236 Mindset for Successful Selling: Good Selling versus Bad Selling 237 Linking the Entrepreneurial Mindset and Selling 238 Aligning the Buying and Selling Processes 239 Finding, Assessing, and Preparing to Pursue Sales Opportunities 240 Understanding the Environmental Context 240 Understanding the Customer’s Industry 241 Understanding the Client’s Strategy 243 Data Sources for Developing a Deep Understanding of Context, Industry, and Customer 244 Data Sources for Developing a Deep Understanding of the Target Client 244 Developing a Compelling Value Proposition 245 Pursuing Sales Opportunities 247 Cold Calls versus Warm Calls 247 Precall Planning 248 Facilitating the Buying Process by Establishing Common Ground 248 Seeking an Exchange of Value 249 Handling Rejection 249 Dealing with Objections 250 The Closing Process 252 Follow- Through and Customer Service 253 Developing Sales Skills 255 Conclusion 257 Case: Susan Niczowski— a Fresh Take on Selling 258 Notes 261 7 Building the Founding Team 263 The Talent Triangle 264 Power of the Team 266 Where Do You Fit? 267 Premature Scaling 271 How to Build a Powerful Team 271 Bottom- Up Hiring versus Top- Down Hiring 273 Bootstrapping: Building the Team Based on Stage- of- Venture Life 274 Compensation 275 External Team Members 283 Keeping the Team Together 286 Conclusion 289 Case: Box, Inc.: Preserving Startup Culture in a Rapidly Growing Company 290 Notes 301 8 The Business Planning Process 305 The Planning Process 306 Twenty- First- Century Planning 307 Hypothesis- driven Entrepreneurship 311 6 Steps to Executing Build- Measure- Learn: 312 Why Start with Customers? 314 Conclusion 316 Case: Gravyty: The Art + Science of Better Nonprofit Fundraising 317 Notes 349 9 Building Your Pro Forma Financial Statements 350 Common Mistakes 351 Financial Statement Overview 354 Building Your Pro Forma Financial Statements 355 Build- Up Method 355 Revenue Projections 356 Types of Revenue Models 358 Cost of Goods Sold 358 Cost of Client Acquisition (CoCA) 359 Scalability 359 Operating Expenses 360 Preliminary Income Statement 362 Comparable Method 363 Building Integrated Financial Statements 365 Income Statement 366 Balance Sheet 368 Statement of Cash Flows 369 Financial Statements versus Financial Models 369 Putting It All Together 371 Conclusion 371 Case: Gravyty: Understanding Your Market and Building Realistic Proformas 373 Notes 380 10 Financing Entrepreneurial Ventures Worldwide 381 Entrepreneurial Financing for the World’s Poorest 382 Microfinancing 383 Microcredit for the Poorest of the Poor 384 Crowdfunding: The Evolution, Impact, and Prospects 385 Entrepreneurs and Informal Investors 387 New Types of Informal Investors 388 Characteristics of Informal Investors 392 Financial Returns on Informal Investment 393 Supply and Demand for Startup Financing 393 Sources of External Seed Funding 394 Angel Investors 394 Business Angels 396 Searching for Business Angels 396 Types of Business Angels 397 Putting Together a Round of Angel Investment 398 Venture Capital 400 Importance of Venture Capital in the Growing Economy 404 Mechanism of Venture Capital Investing 406 Four Types of Venture Capital 410 Candidates for Venture Capital 411 Ideal Candidates for Venture Capital 413 Actual Venture Capital–Backed Companies 413 Dealing with Venture Capitalists 415 Negotiating the Deal 417 Follow- On Rounds of Venture Capital 417 Factors Affecting Availability of Financing 418 Total Entrepreneurial Activity and Informal Investing 418 Factors Affecting Informal Investing 418 Factors Affecting Venture Capital 418 Conclusion 419 Case: DayOne 421 Notes 438 11 Raising Money for Starting and Growing Businesses 442 Are You Reading for Funding? 443 Match Startup Stage to Funding Source 443 Understanding the Spectrum of Finance 444 Major Milestones and Funding Sources 445 Matching Capital to Stage, Traction Level, and Major Milestones 446 Connecting the IRL to the Spectrum of Finance 447 Bootstrapping New Ventures 447 Jim Poss, Bigbelly Solar 447 Valuation 449 Earnings Capitalization Valuation 450 Present Value of Future Cash Flows 450 Market- Comparable Valuation (Multiple of Earnings) 451 Asset- Based Valuation 451 Example of Market- Comparable Valuation 452 Asset- Based Valuation Example 454 Financing a New Venture 456 The Art of the Pitch 457 The Elevator Pitch 457 The Executive Summary 459 The 10 Magic Investor Slides 459 Style Pointers for the Written Plan and Oral Presentation 461 Samples of Investor Decks from Famous Startups 462 Harvesting Investments 465 Initial Public Offering 465 The Process of Going Public 468 Selling the Company 471 Why Be Acquired? 472 Conclusion 473 Case: Derek Szeto and Red Flag Deals: When to Exit Your Successful Startup 476 Notes 480 12 Debt and Other Forms of Financing 482 Getting Access to Funds— Start with Internal Sources 483 Credit Cards and Home Equity Lines 484 Cash Conversion Cycle 485 Working Capital: Getting Cash from Receivables and Inventories 486 Using Accounts Receivable as Working Capital 487 The Sales Pattern 487 Cash versus Credit Sales 488 Credit Policies 488 Setting Credit Terms 489 Collection Policies 490 Setting Credit Limits for Individual Accounts 491 Inventory 492 Sources of Short- Term Cash: More Payables, Less Receivables 493 Cash from Short- Term Bank Loans 494 Cash from Trade Credit 494 Cash Obtained by Negotiating with Suppliers 495 Cash Available Because of Seasonal Business Credit Terms 495 Advantages of Trade Credit 495 Cash Obtained by Tightening Up Accounts Receivable Collections 495 Obtaining Bank Loans through Accounts Receivable Financing 496 Other Loans and Financing 497 Obtaining Loans against Inventory 497 Obtaining “Financing” from Customer Prepayments 498 Short- Term Financing 498 Traditional Bank Lending: Short- Term Bank Loans 499 Equipment Financing 503 Obtaining Early Financing from External Sources 504 Business Development Bank of Canada (BDC) and Futurepreneur Canada Loans 504 Applying for a BDC or Futurepreneur Loan 505 Planning Cash Flows and Profits 507 Conclusion 507 Case: FEED Resource Recovery 509 Notes 522 13 Legal and Tax Issues, Including Intellectual Property 524 Leaving Your Present Position 525 Corporate Opportunity 525 Recruitment of Fellow Employees 526 Noncompetition 526 Intellectual Property 527 The Basics: What Is Protectable and How Should It Be Protected? 528 Confidential Information 528 Patents 531 Trademarks 536 Copyright 543 Industrial Design 544 Choice of Legal Form 546 Control 547 Personal Liability 547 Taxation 548 Initial Investment of the Founders 549 Administrative Obligations 549 Shareholders’ Agreements 549 Negotiating Employment Terms 550 Transfer to Third Parties 550 Disposition of Ownership Interests upon the Owner’s Death 550 Disposition of Ownership upon Termination of Employment 551 Comparison of Share Redemption Agreement and Share Cross- Purchase Agreement 551 Distributions of Company Profits 551 Redemption Provisions 552 Legal and Tax Issues in Hiring Employees 552 Employees as Agents of the Business 552 Employment Discrimination 553 Employment Standards and Employment Agreements 553 Raising Money 554 Entrepreneurship and Government Policy 554 Funding Programs 554 Tax Policies 555 Regulations 555 Incentives 555 Conclusion 555 Case: Acme and PDFix 557 Appendix to Chapter 13 Shareholders’ Agreement Checklist 560 Notes 563 14 Entrepreneurial Growth 566 Making the Transition from Startup to Growth 568 Looking Forward: The Choice to Grow, or Not or Sell 568 A Model of Driving Forces of Growth 569 The Growth Process 571 Execution 571 Instituting Controls 573 Tracking Performance 575 Managing the Cash Cycle 578 Leveraging the Value Chain 579 Maintaining the Entrepreneurial Organization 580 Opportunity Domain 580 Organizational Resources and Capabilities 583 Obtaining Financial Resources for the Growing Company 584 Intangible Resources and Capabilities 584 Leadership 586 Starting the Delegation Process 586 First- Level Management 587 From Delegation to Decentralization 588 Professional Management and Boards 588 Coordinating the Driving Forces 589 Leading People; Developing Entrepreneurs 589 Conclusion 590 Case: Lazybones 592 Notes 600 15 Social Entrepreneurship 602 The Rise in Social Entrepreneurship 603 Social Entrepreneurship Defined 604 A Social Entrepreneurship Typology 606 1. Traditional Venture 608 2. Social Consequence Venture 608 3. Social Purpose Ventures 609 4. Enterprising Nonprofits 610 Hybrid Ventures 611 Choosing Your Venture Type 612 Measuring Impact 615 Conclusion 617 Case: Bruce Poon Tip: G Adventures and Social entrepreneurship 619 Notes 625 16 Indigenous Entrepreneurship 628 Indigenous Entrepreneurship & Cultural Resurgence 630 The Global Context 630 Entrepreneurship as a Form of Resistance 630 Alternative Approaches to Business and New Venture Creation 631 The Value of Diversity of Thought and Experience 631 Historical Background 632 Pre- Contact Trade in North America 633 Post- Contact Trade in North America 635 Historical Barriers to Entrepreneurship in Canada 636 Indigenous Entrepreneurship in Canada 638 The Current and Potential Indigenous Economy in Canada 639 The Emerging Indigenous Economy 642 Indigenous Entrepreneurship & Reconciliation 646 Fundamentals of Indigenous Entrepreneurship 649 What Is Indigenous Entrepreneurship? 650 Defining Indigenous Entrepreneurship 650 Traditional Knowledge, Worldviews, and Ways of Being 651 The Relational Approach 653 Indigenous Collectivism and Western Individualism 655 The Seven Grandfather Teachings 656 Defining the Teachings 657 Living the Teachings 659 The Seventh Generation Principle 660 The Quadruple Bottom Line 660 Conclusion 662 Case: Cheekbone Beauty, Inc. 664 Notes 674 Glossary G- 1 Index I- 1