Instructors Manual for Entrepreneurship: The Practice and Mindset 1st Edition.

Instructors Manual for Entrepreneurship: The Practice and Mindset 1st Edition.

Answers to Questions in the Text Chapter 1: Entrepreneurship: A Global Social Movement ENTREPRENEURSHIP IN ACTION Niari Kevarian, CEO & Partner, Zooz Greek Iced Teas 1. In what ways do you see Niari Kevarian as being totally dedicated to the success of ZOOS? What does dedication mean for the entrepreneur?

Sample Answer: Niari Kevarian has demonstrated total dedication to the success of her business by seeking out a business partner (Tsipouras) who has a wide range of complementary knowledge and skills and by investing large amounts of time and effort in researching her target market and otherwise building her business. Entrepreneurial dedication is a combination of learning what you need to know to be successful and then committing to actually doing the hard work required to apply that knowledge.

2. To what extent do you agree that entrepreneurship is “a marathon, not a sprint?”

Provide some examples to support your position.

Sample Answer: One of the biggest mistakes a new entrepreneur can make is to assume that the success of one’s business is assured in a short period of time as long as one “puts in the hours.”

No matter how smart you are or how well you do your homework, and regardless how many hours you may initially invest in a new venture, if you are going to build a successful business model that lasts, a certain measure of time and patience will also be required.

It is possible to be a very hard worker and still fail as an entrepreneur. You may even be very smart and research-oriented, yet still fail as an entrepreneur. Similarly, patience alone does not ensure success. To succeed as an entrepreneur, you must strike the right balance of intelligence, work, and patience. In a marathon, it does not really matter how fast your first mile split time is.

What matters is what your average mile split time is—and whether or not you cross the finish line. The same is true in the marathons of entrepreneurship.

3. How does an entrepreneur have control over his or her own future? How is being an entrepreneur different from working in a “regular” career when it comes to control and decision-making?

Sample Answer: An entrepreneur has a great deal of control over one’s future if one is successful in an entrepreneurial venture. However, one should always remember that a significant investment of research, hard work, and patience is usually required to achieve that success; such substantial commitments should not be taken lightly. Becoming an entrepreneur does empower an individual with a lot more decision-making power and autonomy over what

one does and when one does it. Conversely, in a traditional job one’s decision-making power and autonomy are more limited as one must largely comply with one’s supervisor’s bidding.

MINDSHIFT Tell Me Your Story 1. In what ways did your chosen entrepreneur confirm your beliefs and expectations?

Sample Answer: Unique to each individual student’s interview experience.

2. In what ways did the story overturn them?

Sample Answer: Unique to each individual student’s interview experience.

3. What did you learn that was most unexpected?

Sample Answer: Unique to each individual student’s interview experience.

RESEARCH AT WORK The Diana Project 1. What do you see as the value of studying women’s involvement in entrepreneurship?

Sample Answer: This answer is open-ended allowing subjective analysis by each student.

However, a point from the article worth reiterating here is that, “teams involving women entrepreneurs tended to perform as well or better than male-only companies.”

2. How would you reevaluate and update the venture capital model as suggested at the end of this feature? What changes should be made?

Sample Answer: This is also an open-ended question aimed at affording students with an opportunity to individually analyze the issue. A point that should be made salient, however, is that an increased focus on and prioritization of promoting women entrepreneurs and executives is what led to their receiving more attention and securing greater amounts of venture capital as a gender. Continuing to focus on and prioritize the same is therefore likely to lead to decreasing historical disparity even more.

3. If you were designing a study of some other underrepresented group in entrepreneurship, how would you go about it? What would you need to know to formulate your research questions?

Sample Answer: Like the two preceding questions, this one is likewise open-ended and invites subjective responses that will vary from student to student. In formulating one’s questions, an

individual should research known statistics concerning the demographic at hand. In addition, one should also research comparable statistics for other groups for the sake of contrasting them to evolve one’s case.

ENTREPRENEURSHIP MEETS ETHICS Business Practices in Developing Countries 1. What does it mean for entrepreneurial ventures to approach global markets from the bottom up? In ethical terms, would a bottom-up approach better serve the public in developing countries?

Sample Answer: A bottom-up entrepreneurial approach focuses on the details and minutia of a venture before trying to determine its greater impacts on a global scale later on in the future. A top-down entrepreneurial approach does the exact opposite. In practical terms, a bottom-up approach tends to better serve the public in developing countries, at least in the short run. This is because it more readily conforms to the cultural and ethical mores of the region, to which people are accustomed. In ethical terms, however, a top-down approach would better serve the public in developing countries in the long run. This is because it would install stricter ethical standards from the venture’s inception, thus avoiding corruption and other corrosive forces damaging to the venture’s long-term structural viability.

2. Can a business maintain more than one set of ethical standards—one set for conducting business in the US or Europe and another set when conducting business in a country like India or China?

Sample Answer: In the short run, a business may get away with doing so; however, a venture is more likely to succeed and remain viable in the long run if it operates under a uniform set of ethical standards that properly safeguards the rights and assets of all stakeholders—regardless where those stakeholders may reside.

3. In addition to people requiring bribes and kickbacks for access to infrastructure and government services, people who want to provide products and services to entrepreneurs offer bribes and kickbacks to the entrepreneur. For a struggling entrepreneur, what criteria would you use for supplier selection?

Sample Answer: It all depends on the extent to which you value your own personal integrity (and the integrity of your business) and whether you are focused on short-term or long-term viability and growth. If you do not particularly value integrity and are focused only on short- term viability and growth, you are apt to accept bribes and kickbacks. If you do value your personal integrity (and the integrity of your business), you will take responsibility to set a higher standard from the get-go and build trust the old fashioned way over time. Taking the latter course may prove very difficult at first, from both a practical and a financial standpoint. In the long run, however, it is the most sensible—and honest—way to go.

Summary Questions 1. Explain the importance of practice and action in entrepreneurship Practice and action make it possible to achieve success. Many of the successful entrepreneurs behind major corporations today established their companies by acting, and intuitive decisions enabling success were made possible by the insights gained from practicing, acting, and then learning and reflecting.

2. List the seven lesser-known truths about entrepreneurship.

Contrary to popular belief, there is no research definitively confirming character traits of successful entrepreneurs are inborn. Despite a disposition for action, entrepreneurs approach risk in a much more calculated fashion than they are given credit for, and many highly successful entrepreneurs achieve their success through collaborative actions.

3. Explain the history of entrepreneurship in the US. There are five main eras of entrepreneurship in the US: Emergence of the Self-Made Man, An Entrepreneurial Nation (1st Industrial Revolution 1776–1865); The Pinnacle of Entrepreneurship (2nd Industrial Revolution 1865–1920); Rise of Institutional America (Interwar and Postwar America 1920–1975); and Confined Re-Emergence (Knowledge Economy 1.0 1975–present).

4. Explore the different forms of entrepreneurship in practice today.

Corporate entrepreneurship (or intrapreneurship) is entrepreneurship within large corporations.

Inside entrepreneurs are similar to corporate entrepreneurs, but they can be found in any type of organization, large or small, nonprofit or for-profit, and even among governing bodies.

Franchising and buy-outs are popular ways to start relatively near the ground level. Social entrepreneurship—entrepreneurship focused on making the world a better place— is manifested in nonprofit and large, for-profit firms alike. A form of social entrepreneurship is the Benefit Corporation, or B Corporation, which has been created to designate for-profit firms that meet high standards of corporate social responsibility. Family enterprises, entrepreneurship started within the family, remain a dominant form a business development in the US and abroad. Serial entrepreneurs are so committed to entrepreneurship that they are constantly on the move creating new businesses.

5. Illustrate the global diversity of entrepreneurship and its impact.

There are hundreds of millions of entrepreneurs worldwide. Despite its appearance as an entrepreneurial powerhouse, the US is eclipsed by many world regions in terms of the percent of the populous engaged in entrepreneurship. Though entrepreneurs may be born out of necessity or to exploit opportunities, they all benefit from education, financial resources, accessible knowledge, and government support providing infrastructure that will enable the fledgling businesses to achieve success.

6. Explore the different ways in which this book will help you practice entrepreneurship.

The tools for success and methods to hone entrepreneurial skills will be available in every chapter. Thought and action exercises alike will be employed, and research and testimonials from proven academics and entrepreneurs will be provided as we move through the text. As a final test of application, case studies will follow every chapter, giving you the opportunity to employ what you have learned, a chance for entrepreneurship within a unique and real-world context.

Answers to Questions in the Text Chapter 2: Practicing Entrepreneurship ENTREPRENEURSHIP IN ACTION Rob Hunter, Founder/CEO of HigherMe 1. Does Rob Hunter’s story exemplify the linear “process” approach to entrepreneurship, the nonlinear “practice” approach, or both? Explain your answer.

Sample Answer: Rob Hunter’s story exemplifies the nonlinear practice of entrepreneurship.

Instead of starting out with a set plan aiming for a specific outcome by following a predetermined checklist, Rob pursued creative opportunities as they presented themselves along his own, unique entrepreneurial journey.

2. In what ways do you agree with the goal “to not just make money off of [job applicants], but to help them succeed in their lives”? How does this fit with your image of entrepreneurship?

Sample Answer: Answers will vary from student to student. However, it should be noted that entrepreneurs who focus primarily on building relationships and developing people tend to be more successful and make more money in the long run than those who focus primarily on making money alone.

3. To what extent do desirable qualities in an employee differ from desirable qualities in a business owner or entrepreneur? Explain your answer and give examples.

Sample Answer: No matter what your position title, certain characteristics will prove universally beneficial. For example qualities, such as hard work, consistence, persistence, determination, honesty, trustworthiness, integrity, punctuality, good listening skills, being friendly and respectful, etc., are universally desirable in both employees and employers. Employees, however, will need to focus more on developing qualities of followership while employers will need to focus more on developing qualities of leadership.

Specific qualities of followership include loyalty and coachability (the ability to take feedback and direction and act promptly on it). Providing appropriate and timely feedback is also a component of followership (the terms “follower” and “followership” do not insinuate blind obedience to authority as a mere “yes man” or woman). Proactivity in one’s performance and communication is also a vital component of followership.

Qualities of leadership include teaching, training, coaching, mentoring, and the ability to give direction as well as to effectively facilitate, mediate, and resolve issues involving team morale, interpersonal conflict, and disciplinary measures. Leaders are also expected to spearhead, promote, and sustain the team and/or organizational vision, mission, values, and goals.

Research at Work The Creation Approach 1. What strengths and weaknesses do you see in the creation view of entrepreneurship?

Give some examples that would apply to real life.

Sample Answer: Flexibility is perhaps the greatest strength of the creation view of entrepreneurship. With a lack of prerequisite variables required to start a creative entrepreneurial project, virtually anyone can be a creative entrepreneur regardless of one’s lack of capital, resources, personnel, certainty, or clear-and-present opportunities. Its weaknesses lie in its typical lack of these same variables (i.e., capital, resources, personnel, certainty, and clear-and-present opportunities).

Anything that was researched, developed, and brought to market “on purpose,” with the end already clearly in mind (a specific vision and mission) would follow a predictive approach to entrepreneurship. Anything that was research, developed, and brought to market “by accident” or by virtue of an unpredictable evolution (a general vision and mission) would follow a creation approach to entrepreneurship.

An example of a predictive approach would be a large corporation (like Microsoft) purposely developing a product that resembles a successful product of a competitor (like Apple).

An example of a creation approach would be the initial research that led to 3M’s famous “sticky notes,” which was originally developed inadvertently as a failed experiment intended to develop an extremely strong adhesive. See URL: http://www.todayifoundout.com/index.php/2011/11/post-it-notes-were-invented-by- accident/ for more information on this fascinating story.

2. If you were asked to participate in Dr. Sarasvathy’s study, how might she classify your ways of thinking and problem-solving?

Sample Answer: Answer will be unique to each student.

3. What additional research questions can you suggest that would shed light on how entrepreneurs think and solve problems?

Sample Answer: Answer is open to discussion. One possible area for research might involve mapping out entrepreneurial theories, models, and strategies for best utilizing both approaches

(predictive and creation) in organized, yet flexible attempts to synergize the strengths from each approach in order to realize the best possible long-term result.

Research at Work The Creation Approach 1. The co-founders of PYP worked on handshakes rather than contractual agreements when they started the business. How can you know if your partners are ethical and trustworthy?

Sample Answer: It is difficult to know for certainty whether or not a person is trustworthy and will act ethically in any given circumstance. However, the best indicator of future behavior is past performance. If you do not have ample past experience working with someone, or if that person has demonstrated unethical or untrustworthy behavior in the past, it is wise to “play it safe” and draw up legally binding written contracts.

2. Can you think of how to get co-founders to negotiate and sign contractual agreements without implying that there is a lack of trust?

Sample Answer: One way to accomplish this is to establish a company policy that “all contractual agreements” will be formalized in writing. By establishing a blanket policy as an overarching safeguard, you can avoid singling anyone out for added scrutiny in contractual situations.

3. If you were Minshew, would you have sued to get your $20,000 funds back? Or, like Minshew, would you have just moved on?

Sample Answer: Answer will vary from student to student. In light of Minshew’s obvious success in moving on, however, it is worth emphasizing the point that future-focused efforts aimed at building something new are typically more productive and lucrative in the long run than protracted efforts to settle scores from the past.

Mindshift The 3-Hour Challenge 1. What assumptions and beliefs did you have before starting the 3-Hour Challenge?

Sample Answer: Answers will vary from student to student.

2. In what ways did the 3-Hour Challenge confirm your existing assumptions and beliefs? In what ways did it change them?

Sample Answer: Answers will vary from student to student.

3. What did you learn about yourself that was unexpected or surprising?

Sample Answer: Answers will vary from student to student.

Summary Questions 1. Compare and contrast the prediction and creation approaches to entrepreneurship.

The two main perspectives on entrepreneurship are the predictive approach, the older and more traditional view; and the creation approach, which has been developed through recent advances in the field. Prediction is the opposite of creation. Where prediction thinking is used in situations of certainty, the creation view is used when the future is unpredictable.

2. Create a portfolio of five skills essential to the practice of entrepreneurship The five skills of play, empathy, creativity, experimentation, and reflection support the development of different parts of our entrepreneurial selves.

3. Distinguish between entrepreneurship as a method and a process.

The method of entrepreneurship outlines the tools and practices necessary to take action.

Entrepreneurship as a process, instead, guides would-be creators along a thorough but static path from inception to exit.

4. Illustrate the key components of the practice of entrepreneurship.

The practice of entrepreneurship is designed so entrepreneurs can embrace and confront uncertainty rather than avoid it. The eight components include: reflect on your desired impact on the world; start with means at hand; describe the idea today; calculate affordable loss; take small action; network and enroll others in your journey; build on what you learn; and reflect and be honest with yourself.

5. Assess the role of deliberate practice in achieving mastery.

Practice does not make perfect; rather, deliberate practice makes perfect. Starting with specific goals, deliberate practice involves consistent, targeted efforts for improvement. Feedback and self-reflection are necessary for meaningful improvement, and repetition is required to achieve lasting results.

Answers to Questions in the Text Chapter 3: Developing an Entrepreneurial Mindset ENTREPRENEURSHIP IN ACTION Robert Donat, Founder & CEO, GPS Insight 1. In what ways do you see mindset, or mental attitude, playing a role in Robert Donat’s success?

Sample answer: Rob Donat’s mindset, or mental attitude, played a critical role in Rob Donat’s success. Like many entrepreneurs, Donat’s success was not realized overnight. It required an enormous up-front investment on his part, and continual faith that with the right attitude and tools—including a strong work ethic—GPS Insight would eventually succeed. Despite all this, his success was still not guaranteed. With his education and background, there were other, safer options he could have pursued in his career. Despite this, he decided to take the “Road Less Traveled,”—as virtually all entrepreneurs must—as his personal road to success. Once he made his decision to do so, his cultivation of the right mindset and mental attitude became a critical component of his success.

2. If you had been at the helm of GPS Insight when it was approaching $2 million in cumulative losses, would you have decided to continue in business? What information would you have needed to know in order to decide one way or the other?

Sample answer: Answers will vary subjectively from student to student. It can be pointed out, however, that a good understanding of the industry in general (i.e., the success curve and other variables of Donat’s competitors) would be very helpful to making wise decisions. Concepts such as positive mental attitude, having the right mindset, and developing entrepreneurial patience could also be brought into the discussion since such things can help an entrepreneur persevere through initial setbacks and anxious periods of time spent in the fiscal “Red.” It is clear that Donat’s mindset was one of optimistic faith in his own vision for growth and success.

Once again, in his own words: “I just saw the potential for growth and knew that if I threw resources at the company’s growth, it would pay off given the high return on investment to customers and the recurring revenue model which ultimately became very lucrative.”

Fortunately, his vision proved sound, thereby fully vindicating the faith he had in both himself and his company.

3. Do you agree that a budding entrepreneur should wait and accumulate experience working for others before starting an entrepreneurial venture? Why or why not?

Sample answer: Answers will vary subjectively from student to student. It could be argued that generally speaking, previous experience tends to be a significant benefit to any entrepreneur

once he or she has gone off on his or her own. It could also be argued, however, that time spent “getting experience” working for someone else’s venture is time that could perhaps be better spent building your own dream. Effectively balancing these two variables becomes a vital point of decision-making for any entrepreneur. As such, the subject of “opportunity cost” of gaining more experience versus diving in headlong into one’s own venture should be a point of continual discussion throughout the decision-making process. While it can be entrepreneurially unwise to launch your own venture before you possess sufficient knowledge and experience, if you wait too long to begin your venture, you may never become an entrepreneur at all.

Study on Luck 1. Choose someone you consider highly successful and assess the story of his or her success. In what ways does the success story show good luck and/or bad luck?

Sample answer: Answers will vary from student to student in conjunction with each student’s individual perception of the so-called “good” and “bad” luck of whatever entrepreneur he or she chooses to profile for this question.

It should be emphasized, however, that “good luck” and “bad luck” are usually little more than labels assigned to occurrences or events based on our own short-term perceptions of those events or occurrences. The passage of time often changes such perceptions, and sometimes significantly so. In other words, what may appear to be “bad luck” today might turn out to be “good luck” tomorrow, or a year from now, or 10 years from now—and vice versa. Thus it is that the legendary Country Music star, Garth Brooks, once famously sang: “Sometimes I thank God for unanswered prayers.”

2. Do you consider yourself a particularly lucky or unlucky person? Or do you fall somewhere in the middle? Give some reasons to support your answer.

Sample answer: Answers will obviously vary from student to student. Discussion, however, should focus on the reality that what we often refer to as “good luck” or “bad luck,” are merely immediate perceptions or interpretations of a temporary series of events. Over time, these perceptions can change drastically, thereby undermining—or even nullifying—previous labels we may have attached thereto. As such, effective entrepreneurs tend to harbor the paradigm that, “I ultimately make my own luck” by what I think about, say, and do each day, as well as by the habits I cultivate over long periods of time.

3. Can you think of a chance opportunity that came your way because you were open to it? How might you make yourself more open to “lucky” opportunities in the future?

Sample answer: Answers will vary from student to student. Emphasis, however, should be given to the notion that what we actually think about, say, and do (and fail to think about, say, and do) today is likely to have a huge impact on whatever perceived “luck” we will experience in the future.

Mindshift: What Does Your Mindset Say About You? 1. In what ways did this 10-minute observation exercise confirm your existing assumptions and beliefs about your way of looking at the world? In what ways did it change them?

Sample answer: Answers will vary from student to student. Discussion should focus on how perceptions or paradigms may have shifted somewhat from “existing assumptions and beliefs” and the reason for that shift (i.e., the recognition that there is more than one way of looking at something—something that would have become more conscious for students by virtue of this exercise).

2. Did you learn anything about yourself that was unexpected or surprising?

Sample answer: Answers will vary from student to student. Ideal lessons learned should involve positive shifts of personal perspectives and paradigms.

3. Can you think of other ways in which 10 minutes of observing a scene or location could be productive? What else might a person learn from this activity?

Sample answer: Answers will vary from student to student. Some benefits include a greater consciousness and awareness of one’s own thought processes, patterns, perspectives, and paradigms. Other benefits might include learning to better focus one’s thoughts for purposeful direction as well as generating ideas for how one might meaningfully impact or become an agent of positive change in one’s environment.

Entrepreneurship Meets Ethics: Stakeholder Relationships and Trust 1. Critique the argument that entrepreneurs should establish trust with their stakeholders by modeling ethical behavior. Give some examples supporting your position.

Sample answer: In many, if not most, cases, entrepreneurs end up serving as executives of their company or organization. Such positions usually come with power, authority, and prestige that employees typically lack. This makes an entrepreneur a leader and role models within one’s organization—whether he or she likes it or not.

Trickle-down morality is nearly inevitable in an organization. As the English poet Geoffrey Chaucer put it, “If gold rust, what shall poor iron do?” (The Canterbury Tales). If you want to be trusted as an entrepreneur, and if you desire dependable, trust-based relationships with your stakeholders, employees, and competitors, then you really have no choice but to be honest and trustworthy in your own personal and professional conduct. While honest and trustworthy actions by an executive will not always guarantee honest and trustworthy actions by subordinates, it increases the odds that they will be.

2. As a CEO, would you support requiring your employees to sign a company code of ethics? If so, what would be the most important provisions of your code?

Sample answer: Answers will vary from student to student. Since most students are likely to answer, “Yes,” to this question, and since it is a good standard operating procedure (SOP) to develop and do business by such codes, some ethical practices to consider might include the following: 

Circumspect trustworthiness in everyday speech and action—and consequences for failing to abide thereby



Policies regarding confidentiality



Rules that regulate the giving and receiving of gifts and favors



Procedures governing hiring, retention, ranking, discipline, and termination (including issues surrounding nepotism)



Drug use/abuse prohibitions



Etc.

3. What would you do if a supplier sent a private jet to bring you to the supplier’s corporate headquarters to inspect the factory?

Sample answer: Answers will vary from student to student. While the private jet scenario initially sounds like something that could potentially be unethical, it could also be entirely legitimate. The ethicality or unethicality of this situation (and others like it) depends on the general mores of the industry in conjunction with the specific policies and procedures (P&Ps) of the companies involved. If a given scenario is in harmony with mores and P&Ps, it is simply a matter of following SOP. If, on the other hand, an act of generosity or luxury supersedes the same, questions of ethicality should be addressed early and consistently to avoid unethical behavior that could lead to lost business, legal troubles, or both—not to mention the stain on the integrity of the offending party or parties.

Summary Questions 1. Appraise the effectiveness of mindset in entrepreneurship.

Part of the practice of entrepreneurship is having the right mindset (or mental attitude) to start and grow a business. Entrepreneurs who have the right mindset are more likely to persist with ideas and act on potential opportunities.

2. Define “mindset” and explain its importance to entrepreneurs

An entrepreneurial mindset is the ability to quickly sense, take action, and get organized under certain conditions. Of the two mindsets proposed by Carol Dweck, the growth mindset represents a fundamental belief that failure is something to build upon; and a learning mindset is essential for personal and professional growth.

3. Explain how to develop the habit of self-leadership.

Self-leadership is a process of self-direction that utilizes behavior strategies, reward strategies, and constructive thought patterns.

4. Explain how to develop the habit of creativity.

Creativity is defined as the capacity to produce new ideas, insights, or inventions that are unique and of value to others.

5. Explain how to develop the habit of improvisation.

Improvisation is the art of creating without preparation. Improvisation is recognized as a key skill to not just budding entrepreneurs, but business practitioners of all types.

6. Relate the mindset for entrepreneurship to entrepreneurial action.

As entrepreneurship demands practice to achieve success, the right mindset is necessary for that practice to be successful. When people believe they can succeed, they are more likely to pursue the right activities to make that happen.

Answers to Questions in the Text Chapter 4: Supporting Social Entrepreneurship ENTREPRENEURSHIP IN ACTION Arthur Steingart, founder of Symple 1. Should entrepreneurs exist to make money? Solve social problems? Or both? Explain your answer.

Sample answer: Answers may vary from student to student. However, it should be emphasized that if you are interested in making a positive social impact on the greater society within which you operate as an entrepreneur and make money at the same time, social entrepreneurship can be a great way to concurrently realize both objectives. It should also be noted that addressing social problems requires capital, and entrepreneurial ventures (of all kinds) can be a productive means of generating capital required to address social concerns and solve social problems.

2. Explain how the Symple Waterall addresses concern for future generations in addition to conserving water today.

Sample answer: Big changes tomorrow always begin with small changes today. By focusing on a present micro-concern (i.e., conserving water today in a single garden or yard, thereby saving money for the individual citizen), the Symple Waterall system addresses a macro-concern over the existence of water supplies for collective populaces in the future.

3. What entrepreneurial ideas do you have that would benefit society?

Sample answer: Answers will vary from student to student. As the instructor, consider sharing one of your own ideas (or a venture you are familiar with that is not already shared in the text) as a starting-point to generate additional ideas among students.

RESEARCH AT WORK Defining Social Entrepreneurship 1. If you had to craft a definition of social entrepreneurship, how would you go about it?

What facts would you need to know, and what issues would you take into account?

Sample answer: Answers will vary from student to student, but all answers should relate back to the book’s definition: social entrepreneurs create ventures to tackle social problems and bring about social change; they measure performance by advancing social and environmental goals.

Becoming well acquainted (educated in) the facts and issues surrounding a given social problem will help students to better personally define issues in their community and the world-at-large, and help them to best determine how they might play an entrepreneurial role in positively addressing them.

2. Describe a real business that you think embodies what social entrepreneurship should be. What is it about this business that makes it a good example?

Sample answer: Answers will vary from student to student. As the instructor, consider sharing one of your own ideas (or a venture you are familiar with that was not already shared in the text) as a starting-point to generate additional ideas among students. If you cannot think of one off of the top of your head, google the Forbes list of Social Entrepreneurs to access a variety of ideas already in action.

3. Take a social entrepreneurial idea that you might pursue, and explain how it fits your definition of social entrepreneurship. Could your idea be modified to fit the definition even better?

Sample answer: Answers will vary from student to student, based on their own definitions of social entrepreneurship. Since all definitions should relate back to the book’s definitions, it may be useful to reiterate this definition once again (see definition in answer to question 1). This is another question where you, as the instructor, should consider sharing one of your own ideas (or a venture you are familiar with that was not already shared in the text) as a starting-point to generate additional ideas among students. If you are lacking in your own ideas, consider again the Forbes list of Social Entrepreneurs for a list of project ideas that are not already contained in the text.

ENTREPRENEURSHIP MEETS ETHICS The Unintended Consequences of Social Entrepreneurship 1. To what extent do good intentions make an entrepreneurial venture ethical? Do you agree that the Buy One Give One business model may have unintended consequences?

If so, how do you think the model may be altered to increase its social benefit?

Sample answer: Unfortunately, even the best of intentions does not necessarily make an entrepreneurial venture ethical. The Buy One Give One business model clearly comes with some unintended, negative consequences. A way the model might be altered to increase its social benefit would be to charge a small fee for the used item—a lesser amount than it would

cost to buy a new version of the product, but enough of a fee to require a measure of selfreliance on the part of the buyer to procure the item. Vendors could then use the proceeds to improve the service and/or provide wisely allocated philanthropic funds elsewhere. Another way might be to require a reasonable and practical amount of manual labor (or other) service in order to procure the otherwise “free” item. By exerting some personal effort for the item, “buyers” would have a greater investment in the goods and develop a greater sense of self- reliance.

2. Should social entrepreneurs be responsible for assessing the effects of their endeavors, or is it sufficient that they are making an effort to solve a social problem? Explain your answer.

Sample answer: Answers will likely vary from student to student. A worthwhile question to pose as a follow-up to this one is: if social entrepreneurs should be responsible for assessing the effects of their endeavors, who/what should enforce that responsibility, and what results (positive and/or negative) might stem from such external coercion?

For example, if the government were to regulate entrepreneurs in this manner, individual organizations would surely be more responsible for assessing the effects of their endeavors (positive benefit). On the other hand, such governmental enforcement might also stifle and discourage some entrepreneurial efforts from ever advancing past the planning stage (negative consequence). In a perfect world, it makes sense that we all should take such responsibility. The question is whether in an imperfect world, it would be wise to stifle individual liberty in the process. It may also be worth bringing up the fact that those who do not personally assess the effects of their own organizational endeavors leave doors of opportunity open to others to pursue that effort independently—and benefit therefrom as they are able. This should not be used as an excuse for organizations not to make self-assessments, but rather to illustrate a point of simple cause-and-effect in a free market.

3. Imagine that you are a start-up social entrepreneur. How can you—or should you— make sure your business is established and run in an ethical fashion?

Sample answer: Answers may vary from student to student. As students put forth given answers, certain key points should also be made salient. These points include, but are not limited to the following: A. Studying the results others have gotten from pursuing similar entrepreneurial pathways in the past (before you began your own venture).

B. Carefully observing and chronicling the results (and their unintended side effects) that your own organization has gotten in the past and is currently getting in the present.

C. Ensuring that safeguards are put into place and set into motion within your organization in the form of policies, procedures, guidelines, and quality control measures aimed at inhibiting and limiting negative unintended side effects of your venture.

D. Establishing a process of internal and external accountability (e.g., established auditing measures) to identify and remedy negative unintended side effects that may result from your venture.

MINDSHIFT Practice Being “Other Centered” 1. To what extent do you feel you are already “other-centered” in your life? Give some examples of your actions and decisions in this regard.

Sample answer: Answers will vary from student to student. Consider pointing out, however, that people who are truly “other-centered” are, in some regards, more likely to view themselves as being too “me-centered” while those who are truly “me-centered” are, in some regards, more likely to view themselves as being sufficiently “other-centered.”

After pointing this out to the class, facilitate a discussion that seeks to explain this phenomenon—where the best people are the most likely to see their flaws most clearly, while the worst people often fail to see that they even have any flaws in the first place.

2. Was it easier than you expected, or more difficult, to focus for an entire day on being other-centered? Would you want to continue this focus for a second day running?

Sample answer: Answers will vary from student to student. As the instructor, consider participating in this exercise with your students so that you can share with them your own experiences, or reflect back on a time when you undertook a similar exercise to provide individual insights and share personal emotions.

3. What did you learn from this Mindshift that surprised you?

Sample answer: Answers will vary from student to student. As the instructor, consider participating in this exercise with your students so that you can share with them your own experiences, or reflect back on a time when you undertook a similar exercise to provide individual insights and share personal emotions.

Summary Questions 1. Describe what social entrepreneurship is and the role it plays.

Social entrepreneurship is the process of innovating solutions to “wicked” problems relating to water shortages, education, healthcare, poverty, energy, forced migration, and global warming.

While many companies strive simply to maximize shareholder value, social entrepreneurs are often more committed to causes centered on preserving and protecting future generations.

2. Explain how social entrepreneurship can help resolve wicked problems around the world.

Social entrepreneurship can help resolve wicked problems such as those related to water shortages, education, healthcare, poverty, energy, forced migration, and global warming by creating innovative solutions that make a real impact on the lives and livelihoods of others.

3. Identify the different types of social entrepreneurship.

There are three primary types of social entrepreneurship: social purpose ventures, social consequence entrepreneurship, and enterprising nonprofits.

4. Explain how social entrepreneurs can use capital markets to fund their ventures.

Social entrepreneurs can seek funding from Social Venture Capitalists (SVC), and communityfunded venture capital to support operations. Micro-lending is another source of capital available for social entrepreneurs.

5. Identify the primary attributes of stakeholders and how stakeholders can help or hinder a social entrepreneur.

Stakeholders are all those involved in and affected by the activities of a social venture. Building relationships with key stakeholders is typically important for any entrepreneur, social or otherwise, but often social issues need additional support to gain traction with the majority of stakeholders.

6. Distinguish between corporate social responsibility and social entrepreneurship.

Corporate social responsibility and social entrepreneurship differ in one critical sense: the primary objective of the enterprise. Corporations seek to incorporate social initiatives into broader strategic and tactical objectives, while social entrepreneurs put those social issues front and center. To many corporations, social responsibility causes may just be another means to a successful business end.

7. Assess the value of social inclusion globally within social entrepreneurship.

Social inclusion is meant to directly confront some of the inequity that creates personal marginalization and its resulting social issues head-on. Many individuals will not have some of the same opportunities so common for their peers; many around the world have dedicated their careers to breaking down social issues plaguing society, encouraging inclusion with a heavy dose of hope.

Answers to Questions in the Text Chapter 5: Recognizing New Opportunities ENTREPRENEURSHIP IN ACTION Jack McCarthy, Founder, Uglychristmassweaters.com 1. Since the idea of ugly Christmas sweaters already existed, what key factors led to Jack McCarthy’s turning it into a business opportunity?

Sample Answer: One factor was hawking his sister’s ugly Christmas sweater on eBay for a 450% profit and then repeating that success with other, similar sweaters the following Christmas.

Another factor was the fortuitous generation of some television coverage early on in the process of building his business.

2. What are some advantages a teenager might have over an experienced adult when it comes to recognizing and implementing a business opportunity?

Sample Answer: While usually less experienced and knowledgeable than adults, teenagers may be more creative and open-minded to unique opportunities than many adults would be.

Teenagers also often have more energy and a greater desire to try out new ideas than adults.

3. If you were in McCarthy’s position as a business student who already headed a highly successful enterprise, what would your career goals be? Explain the reasons for the goals you propose.

Sample Answer: Answers will vary from student to student. Possible goals worth discussing include bolstering your knowledge base, professional credibility, and business network.

ENTREPRENEURSHIP MEETS ETHICS Improving upon Someone Else’s Idea 1. What are some reasons why governments have laws protecting intellectual property (patent, trademark, and copyright)?

Sample Answer: To establish ethics and order in the marketplace by preventing the blatant theft of another person or organization’s inventions, publications, and processes. By protecting the original work of an author, artist, or businessman or woman, governments seek to incentivize the registering of original work while discouraging the unauthorized reproduction thereof.

It is worth noting that a key differentiator between developed nations and underdeveloped nations tends to be the ethicality and efficacy of their patent, trademark, and copyright laws.

Developed nations (like the US and Great Britain) tend to have well developed legal systems that are supportive of such laws. Underdeveloped countries tend to be more lax in the establishment and enforcement of the same. Points of discord that often occur between countries are the disregard that one country sometimes shows for another country’s patent, trademark, and copyright laws.

2. Do you agree or disagree with Seth Godin’s view that ideas cannot be stolen? Is it more ethical to “steal” an idea if the “stealer” improves on it? Explain your answers.

Sample Answer: Answers will likely vary from student to student. As you discuss this question, consider posing another question as a follow-up query: Would your perspective on this issue remain the same whether you were the person stealing the idea or the person whose idea was getting stolen? After additional discussion, consider pointing out that judgments of ethicality tend to be made more clearly and fairly when viewing a situation through the eyes of the perpetrated rather than the eyes of a perpetrator.

3. Have you ever had someone take credit for your idea or work? Did someone profit financially or receive public praise for your work? How did that make you feel? What did you do in response?

Sample Answer: Answers will vary from student to student. While most students may not have experienced having original work copied in a real-life business or publication sense, chances are good they have felt pressure from someone who desired to copy (cheat) off of their homework or test in school—a scenario that can engender similar, negative feelings.

Bottom line: it does not feel good when someone else steals YOUR idea or takes credit for YOUR hard work and sacrifice. Furthermore, no one wants to spend time addressing the unethical business practices of others when you could be investing your time and capital improving your products and services, increasing your clientele, training your workforce, and otherwise building your business.

MINDSHIFT In Love with Your Idea?

1. In view of this exercise, can you explain the popular saying, “You always find something in the last place where you looked for it”?

Sample Answer: In a variety of ways, entrepreneurs must be persistent and hard working.

Without these traits, they will never get to the “bottom” of their list of ideas—where the very best ones may be hiding.

2. Do you agree that it is always important to look for new ideas and solutions if a workable solution already exists? Give examples to support your answer.

Sample Answer: World-renowned personal development coach, Anthony (Tony) Robbins, promotes an idea he refers to as CANI—an acronym that stands for Constant and Never-ending Improvement. Such is the mantra of any highly successful entrepreneur. The most successful entrepreneurs are never completely satisfied with their products or services; they are always searching for new and better ways to deliver and achieve. This is true even after they have become successful. Continual improvement is essential to remaining competitive in the marketplace; it is also something that successful entrepreneurs tend to value in and of itself. To a successful artist or entrepreneur, excellence itself often is their end-goal; making a lot of money or earning fame for their achievements is merely by-products of one’s continual pursuit of excellence.

3. In what ways did the exercise challenge your previous assumptions and beliefs? Did you learn anything that surprised you?

Sample Answer: Answers will vary from student to student. An example of a surprise that may arise (or that you may want to draw out if students do not) to challenge one’s previous assumptions or beliefs is the discovery that one is more creative than one thought before the exercise. For example, perhaps a person thought himself or herself capable of coming up with a short list of ideas, only to discover that he or she was the idea-generation champion of the group, or at least came up with more ideas than he or she expected.

RESEARCH AT WORK SEEC STUDY 1. Describe any classes you have taken (or are currently taking) that require creative thinking or generating new ideas. What similarities do you find with the training described in this research study? What differences?

Sample Answer: Answers will vary from student to student. As the teacher and facilitator of discussion on this subject, consider interjecting experience from your own, previous educational journey that may fit this question.

2. How would you measure the effectiveness of SEEC training? How would you quantify how innovative students’ ideas were, or how skilled students were at opportunity recognition?

Sample Answer: There are many ways to quantify the effectiveness of SEEC (or similar) training.

The first is to measure the increase of ideas generated during/after the training compared to

before the training. The second would be to measure the efficacy of ideas based on quantifiable measures derived from applying those ideas (e.g., has your client base or profits increased since taking the training; and if so, by how much? Also, is the feedback you are receiving from clients or customers improving in comparison to the feedback you received before the training?)

3. In the training, students were given “a range of SEEC exercises to help them think more creatively.” Make up an exercise that would help accomplish this.

Sample Answer: Answers will vary from student to student. One idea is to engage in a daily (or weekly, etc.) exercise where you spend a set period of time (e.g. 15 minutes and 30 minutes) generating as many ideas as possible for a given task, process, invention, etc. Another idea would be to query a set number of other persons in your network and beyond for their ideas to help you further develop your own. For example, you could set a goal to discuss your ideas with five different people each week in an effort to generate more—and better—ideas than you can come up with all on your own. Both of these exercises would stretch your own imagination and creativity as an entrepreneur.

Summary Questions 1. Explain how the entrepreneurial mindset relates to opportunity recognition.

Having the right entrepreneurial mindset is essential to identifying opportunities, and taking action to start new ventures. It gives entrepreneurs the confidence to network, find unmet needs in the marketplace, and the ability to persist with ideas and build on opportunities.

2. Employ strategies for generating new ideas from which opportunities are born.

Of the nearly countless ways of generating ideas, seven strategies have been outlined by researchers. Included are analytical strategies; search strategies; imagination-based strategies; habit-breaking strategies; relationship-seeking strategies,; development strategies; and interpersonal strategies.

3. Apply the two primary pathways to opportunity identification.

The first is the finding approach, which relies on the notion that, as the global societies shift and develop, undiscovered opportunities abound. Alternatively, Saras Savasvathy asserts that a building approach which assumes that opportunities do not exist independent of entrepreneurs, but are instead a product of the mind is beneficial towards capitalizing on the opportunity.

4. Demonstrate how entrepreneurs find opportunities through active search and alertness.

In the finding approach, entrepreneurs often engage in active search in attempting to discover existing opportunities. While active search can be very helpful in the recognition of opportunities, entrepreneurs need to be alert to random opportunities when they arise.

5. Connect idea generation to opportunity recognition.

The process of moving from idea generation to opportunity recognition is primarily composed of three stages: idea generation, creativity, and opportunity recognition.

Answers to Questions in the Text Chapter 6: Using Design Thinking ENTREPRENEURSHIP IN ACTION Anna Haupt and Terese Alstin, Founders, Hövding 1. What do you think was the main catalyst for Haupt and Alstin to design a new bicycle helmet?

Sample Answer: Answers will vary from student to student, but should focus on aesthetic/cosmetic (rather than merely safety or utilitarian) concerns of their customers.

2. How would you describe the creative process of designing something that does not exist?

Sample Answer: Answers will vary from student to student, but should include (generally speaking) elements of the inspiration–ideation–implementation model discussed later in the chapter. Additional insights might include a discussion about how ideation can sometimes be messy, with “fits-and-starts” throughout the process of achieving an end product that sells.

3. What are some ways for an entrepreneur to go beyond convention to design a product to appeal to a particular market?

Sample Answer: Conventional needs are those that everyone is already aware of (e.g., biking helmets are a conventional way to safely bicycle). Going beyond convention considers needs (or in many cases, wants) that most people either did not realize they had, or are unaware of any product of service that meets a given need or want. It involves identifying needs and wants that most people have never fully identified, but once informed about, quickly embrace whatever product or service simplifies, benefits, or adds pleasure and prevents pain in their lives.

RESEARCH AT WORK Helping You Find Your Inner Adult 1. What do you see as the value of providing life insurance services to the under-40 age group?

Sample Answer: The answer may vary from student to student. Nevertheless, a couple of salient points of value can be easily pointed out (if students do not readily recognize them) as follows:

 

The more clients MassMutual can secure before the age of 40, the more clients they are likely to have period. In other words, it is a great way of expanding their clientele, generally speaking.

Statistically speaking, securing clients under the age of 40 greatly increases the number of years that new clients will be paying premiums, thus enhancing their overall profits.

2. Do you agree that people under 40 need a “hip, informal environment” to encourage them to think seriously about the future? Why or why not?

Sample Answer: Answers will vary subjectively from student to student based on their opinions regarding the import of “hip, informal environments.” It should be noted, however, that entrepreneurial success often hinges not so much on the quality of a product or service’s features or attributes, but on a customer’s perceived value of their benefits. If it is well known that a “hip, informal environment” will drastically increase the likelihood of under-40s investing in life insurance, and you are trying to sell life insurance to under-40s, then it makes sense (at least from a profit standpoint) to invest the time, effort, and resources required to effectively tailor your approach to that target audience.

3. What other strategies do you think might appeal to this demographic when it comes to life insurance and financial planning?

Sample Answer: Open for classroom discussion. Consider getting the conversation started with your own idea. One pitch might include the notion that stress can lead to a shorter life, while effective long-term financial planning (including the procurement of life insurance) done early may actually lessen stress—thereby decreasing the likelihood that you will ever have to use it (or at least not until a point in time when you would expect to use it anyway [i.e., very old age]).

ENTREPRENEURSHIP MEETS ETHICS Empathy as an Ethical Challenge 1. How can you design collaboratively and inclusively when resources are highly unequal?

Sample Answer: It is not easy; but can usually be accomplished with innovative, “out-of-thebox” thinking–the variety of thinking employed by Panicker, Chen, Liang, and Murty in their infant-warming product. It requires ideation that is truly “new” in the sense that others, even if they may have engaged it, have never pursued it to create a tangible new product or service.

Consider sharing a famous quote from Albert Einstein as part of this discussion: “We cannot solve problems by using the same kind of thinking we used when we created them.”

2. Design thinking requires incorporation of user feedback and possibly scrapping your original designs. Have you ever had to throw away work you have spent weeks or months on and start over? Would you perceive this as progress or failure?

Sample Answer: Everyone has experienced this in one form or another (whether as a student, employee, entrepreneur, or human being in general). Entrepreneurs should always recognize the reality of learning curves, and learn to flexibly ride them without negative perceptions of failure. The challenge arises when you (or your associates or employees) are making costly errors that could have been prevented with proper planning, investment, and due diligence.

Even the best plans, investments, and homework cannot keep you from some degree of “trialand-error” along your journey. The goal should always be to minimize preventable mistakes and failures in an effort to ensure that “trial-and-error” periods prove as productive as possible in terms of the acquisition of new knowledge, growth, and tangible breakthroughs that lead to future productivity and success.

3. Provide an example of a time when empathy, or an emotional desire to help solve a problem, prompted you to think creatively. What did you do? What were the results?

Sample Answer: Answer will vary from student to student. Consider sharing an example from your own personal experiences as a student, teacher, employee, or entrepreneur to initially generate discussion.

MINDSHIFT Observation to Insights 1. Do you agree that observing and seeing are two different skills? In what ways, if any, are they different?

Sample Answer: There is a big difference between seeing and observing. Any thoughtful person would agree with this. Assuming a person has good eyesight, that person is “seeing” almost constantly during one’s waking hours. That does not mean, however, that the person is observing what one is seeing, much less carefully observing. The difference comes down to focus and intention. You can “see” someone or something without the slightest effort to question or analyze the object or action or intent of that person or thing. When you begin to observe, you begin to question, and when you begin to question, you begin to formulate answers that can, inturn, inform your own thoughts, speech, and actions. Seeing is just a stream of real-time images.

Observation is the art of purposeful study and analysis with regards to what one sees.

2. In the A-E-I-O-U framework, which aspect of observation did you find the most useful?

The most challenging? Explain your answers.

Sample Answer: Answers will vary from student to student. All activities may prove both easy and difficult in various ways for each student. The important thing is not to avoid difficult aspects of observation simply because you do not want to invest the energy or effort. Push through! You will obtain greater insights if you do.

3. What nonobvious insight can you identify for the space you observed in this exercise?

To assess whether your insight is innovative, how would you go about seeing whether others have already had the same insight?

Sample Answer: Answers to the first question will vary from student to student based on what he or she chose to observe. Answers to the second question should involve querying others who have spent time observing the same thing you observed in order to gain or glean from their insights and then compare and contrast them with your own observations and insights.

Summary Questions 1. Define design thinking.

Similar to the practice of entrepreneurship in many ways, design thinking is ultimately a constructive and collaborative process that merges the power of observation, synthesis, searching and generating alternatives, critical thinking, feedback, visual representation, creativity, problem-solving, and value-creation.

2. Demonstrate design thinking as a human-centered process focusing on the customer and their needs.

Before business feasibility and economic sustainability are considered in the design process, the creator first discovers what people need first. Products that achieve all three are bound to be the most successful, but the product or service must first be designed to provide a desired solution or fulfill a need for the design process to be considered human-centered.

3. Describe the role of empathy in the design thinking process.

To create meaningful ideas and innovations, we need to know and care about the people who are using them. Developing our empathic ability allows us to better understand the way people do things and the reasons why; their physical and emotional needs; the way they think and feel; and what is important to them.

4. Illustrate the key parts of the design thinking process.

The design thinking process is comprised of three main overlapping phases: inspiration, ideation, and implementation.

5. Demonstrate how to observe and convert observation data into insights.

An insight in this sense is an interpretation of an event or observation that, importantly, provides new information or meaning. Observations can fall along one of nine different dimensions, and like entrepreneurship, the ability to discern trends and patterns from each dimension is a skill that can be practiced and improved.

6. Demonstrate how to interview potential customers in order to better understand their needs.

There are keys to the potential customer interview that are especially important to emphasize. The interview must be well-prepared for, the customer must be listened to and intelligent questions asked, and the interview must be evaluated when it is over.

7. Identify and describe other approaches to design thinking.

The authors of Designing for Growth suggest four questions that are useful to ask during the design thinking process, all of which have periods of divergence and convergence. They are: What is? What if? What Wows? What works?i Another variation on the design thinking process is from the Stanford Design School, which uses five phases: empathy, define, ideate, prototype, and test. Design thinking can also be used to resolve wicked problems. i

Jeanne Liedtka and Tim Ogilvie, Designing for Growth: A Design Thinking Toolkit for Managers. (New York, NY: Columbia University Press, 2011).

Answers to Questions in the Text Chapter 7: Testing & Experimenting in Markets ENTREPRENEURSHIP IN ACTION Mark Wallace, Pete Endres, and Jason Epstein, Co-Founders, Parlor Skis 1. Identify some ways in which the Parlor Skis founders’ collective experience helped them to start their own business.

Sample Answer: They were all college graduates and avid skiiers.

2. In what ways do you think testing and experimentation helped the Parlor Skis entrepreneurs to grow their business?

Sample Answer: An impressive amount of testing and experimentation (four years of it before earning their first dollar) enabled Parlor Skis to dig deep in really understanding their target market. This empowered them to provide a highly customer-tailored approach (a key component of their business), which in turn led to happy buyers and increased sales.

3. Suppose you started a business and your original assumptions about your target customer base turned out to be incorrect? How would you deal with this setback?

Sample Answer: Wallace, Endres, and Epstein dealt with setbacks of this kind, but by combining a willingness to learn from their mistakes with a positive mental attitude moving forward, they were able to eventually succeed. In their own words: “Get out there and do it. Fail fast and cheaply. Then keep going. Always be learning, [even though] that is a really hard thing to do.

We all think we are really smart and right all the time; it’s not always true.”

RESEARCH AT WORK 1. How would you describe Dholakia and Durham’s hypothesis?

Sample Answer: While it does not explicitly identify their initial hypothesis in the text, it is probable that the researchers conducted their research with an underlying assumption that social media marketing is an inherently savvy move that is likely to bolster business. It is possible that the opposite scenario could also be the case. The text, however, seems to suggest that Dholakia and Durham are social media advocates who wanted to test out strategies for maximizing the efficacy of that marketing medium.

2. Do you think the two experimenters used the most effective approach to test their hypothesis? Why or why not?

Sample answer: Answers may vary from student to student. While it is evident that their approach generated some meaningful data, other research indicated that their approach failed to capture a complete picture of social media’s impact (or lack thereof) on restaurants in Houston.

As such, it would appear that a more comprehensive and sophisticated method of testing would need to be developed to more fully capture the full picture at hand.

3. Choose a particular kind of business that you imagine you are starting. How would you use social media to test a reaction of your target audience?

Sample Answer: Answers will likely vary from student to student and depend on each student’s understanding of and skill level in navigating social media platforms. Simpler methods of testing might begin on Facebook by starting a conversation that informally survey’s one’s immediate peer and/or broader social circle. More complex and sophisticated testing scenarios could then be designed using additional mediums such as LinkedIn, Twitter, blogging, etc.

ENTREPRENEURSHIP MEETS ETHICS The Rights of Research Participants 1. How would you go about finding out what kinds of testing are required for an entrepreneurial product or service?

Sample Answer: Ask questions of those who have already pursued similar entrepreneurial ventures. Do your research (online and otherwise). Carefully consider the needs or wants of your target audience by surveying and otherwise studying them. Monitor your results and then test or experiment to improve.

2. If your product or service was suitable for nonprofessional testing in people’s homes or at a focus group, who would you recruit to participate in your test? Explain how you would choose your best customer types to participate.

Sample Answer: Answers will vary from student to student. As the instructor, consider beginning the conversation with an example from your own bag of entrepreneurial ideas.

3. How would you ensure that the participants in your experiments are treated ethically and their rights are protected?

Sample Answer: Do your due diligence by studying the subject of ethical research practices.

Information can be obtained on the subject online and in books at your school’s library. In addition, always remember to follow both the Golden Rule (treat others as you would want to be treated) and/or the Platinum Rule* (treat others as they would want to be treated). Many ethical concerns can be addressed naturally and spontaneously by always remembering these two rules. *Note: The Platinum Rule is a concept developed by Dr. Tony Alessandra.

MINDSHIFT CREATE A STORYBOARD AND ONE SIMPLE EXPERIMENT 1. At the outset of this exercise, how did you feel about being asked to create a storyboard? Do you think people with artistic training or talent have an advantage in storyboarding? Why or why not?

Sample Answer: Answers may vary from student to student. As for artistic training or talent being an advantage, you could argue that it depends. While more attractive sketches might potentially expand ideas and enhance one’s motivation to pursue those ideas, it might also cause one to focus too much on the drawings themselves and too little on the execution of whatever plans the drawings represent. Either way, it should be emphasized that artistic talent (or lack thereof) need not prevent one from enthusiastically drawing up an entrepreneurial storyboard.

The true value of a storyboard does not lie in its visual attractiveness, but in its capacity to organize thought processes, capture and illuminate concepts, and spawn new, helpful ideas.

2. Is your list of questions longer or shorter than you expected? How easy or difficult was it to translate your top three questions into experiments?

Sample Answer: Answers will likely vary from student to student. Chances are that most will discover some degree of difficulty in translating their top three questions into experiments. It is important for entrepreneurs to push through this and other, similar difficulties throughout the entrepreneurial process. Otherwise, you are apt to become like the would-be entrepreneur who has great ideas but no follow-through.

3. What did you learn from this exercise that surprised you?

Sample Answer: Answers will vary from student to student. A common answer might include: “I now see that you don’t have to be a skilled artist in order to enjoy the benefits of storyboarding.”

Summary Questions 1. Define experiments and describe the steps of experimentation.

Experiments are mechanisms to test the validity of a hypothesis. The starting point of an experiment is the hypothesis—the assumption to be tested—but the formulation of the hypothesis itself begins with asking questions and conducting background research to identify the right questions to be explored further.

2. Identify and describe the six steps of scientific experimentation

The scientific process of experimentation includes the following steps: asking lots of questions; carrying out background research; developing hypotheses; testing the hypotheses by running experiments; analyzing the data; and assessing results.

3. Demonstrate how to test hypotheses and identify customers.

It is critical that when testing hypotheses, entrepreneurs need not actually develop elaborate, extremely robust experiments; the goal is to think like a scientist, not emulate one perfectly. The type of customer to be targeted must also be carefully weighed. Customers differ in terms of their levels of consumption, rate of adoption, and ability to influence; furthermore, many factors influential to the perception of a new product or service need not stem from actual customers, but could instead come from critics or celebrity endorsements.

4. Explore different ways of generating data and describe the rules of experimentation.

When experimenting, entrepreneurs should build upon learning, including recently acquired information (positive and negative) into future experiments. Again, a scientific mentality should be adopted, but not to an extreme degree—data should be well tracked and many questions should be explored, but cost and experiment duration should be kept to a minimum whenever possible. Finally, all possible stakeholders should be the focus, both in terms of consideration and interaction.

5. Identify three types of experiments most commonly used.

The three most commonly employed types of experiments are trying new experiences; deconstructing products, processes, and ideas to better understand how and why they function; and conducting trials and pilots.

6. Illustrate the power of storyboarding as a form of prototyping and a basis for experiments.

Engaging, simple, and effective in communicating a point or position, storyboards exemplify the old adage that a picture is worth a thousand words. Inexpensive and easy to make, storyboards are also great tools for eliciting questions from the audience or getting them involved in the creative process.

Answers to Questions in the Text Chapter 8: Building Business Models ENTREPRENEURSHIP IN ACTION Tanzeel urRehman, Co-founder and CEO, Virtual Force (VF) 1. How would you describe the business model used by VF? Sample Answer: VF’s business model includes the following objectives:   

Create value by joining a new start-up’s team as an unofficial Chief Technology Officer (CTO) or “tech co-founder.”

Deliver value by servicing the complicated tech tasks of modern start-ups that cannot effectively service their own IT needs.

Extract value (payment) in one of the following two ways: (1). Receive cash payments either up front, or along the way as services are provided and (2) Contractually negotiate equity payments in the future for services rendered in the past.

2. Why do you think VF changed its business model?

Sample Answer: They discovered that many start-ups lack financial capital to pay for VF’s services initially, but that VF could negotiate future equity payments that could potentially be worth even more than a cash payment if they were willing to wait.

3. Do you think taking ownership in his client’s businesses will be valuable in the long run?

Explain your reasoning.

Sample Answer: It depends on whether the client’s businesses prove successful. It also depends on how the equity payments are contractually negotiated.

ENTREPRENEURSHIP MEETS ETHICS Attack of the Clones 1. What do you think are the ethical implications of copycat business models?

Sample Answer: Perhaps the greatest risk comes in inadvertent infringement of trademarks and copyrights. Copycat entrepreneurs should probably hire (or at least have good access to) a good legal team to ensure it does not get itself into hot water with copyright or trademark lawsuits.

2. Do you think cloning products and services is good business practice? Why or why not?

Sample Answer: Answer is subject to opinion, and may vary from student to student. It should be emphasized, however, that copycat businesses are legal as long as they do not infringe on copyright or trademark laws, and can be very profitable and serviceable—as illustrated by the success of Rocket Internet.

3. What would you do if someone else cloned your product or service?

Sample Answer: Assuming that no copyright or trademark laws were infringed upon in the process, there is really not a lot you can do about it except for continually trying to improve upon your own version of the product in an effort to regain market competitiveness or supremacy.

MINDSHIFT Create Your Own BMC 1. Why do you think this tool is called the Business Model Canvas?

Sample Answer: Because like a canvas that an artist paints something new upon, you, as an entrepreneur, are “painting” (listing) out your ideas regarding how to create and deliver value, thereby painting a metaphorical picture of what your future business may look like.

2. In what ways does the division between value creation and value delivery help to clarify the process of refining the business model?

Sample Answer: The division between value creation and value delivery emphasizes the transcendent importance of adding value to the customer’s life. Once you are crystal clear on how the customer’s life will be better because of your product or service, you will be better prepared to refine your process of delivery in a way that both earns you a profit and maintains a high level of value for the customer, thus refinining your overall business model.

3. In completing a BMC for your idea, what did you learn that surprised you or overturned your expectations?

Sample Answer: Answers will vary from student to student. Consider sharing any areas of surprise you may have experienced in the development of your own BMCs (literally or mentally) over the years.

RESEARCH AT WORK Peer-to-Peer Business Models

1. Do you think the peer-to-peer business model is better than the traditional business model? Why or why not?

Sample Answer: Answers may vary from student to student. It is likely that each student’s opinions will be based largely on their own, individual experiences (be they positive or negative) with companies employing one or the other business models. For example, if someone has taken mostly dirty, smelly taxi rides all of one’s life and then has a transcendently positive experience getting a lift from an Uber driver whose car smells nice and offers them a snack, one will inevitably develop opinions and biases in favor of Uber over taxis (and vice versa). The lesson to be learned here is that if you can provide a needed and/or wanted product or service better, and/or more conveniently, and/or more affordably, etc., than your competition, you will have a great business model and plan—no matter what the particulars of that model and plan may be.

2. What do you think the impact will be if traditional businesses fail to adapt to peer-topeer business models?

Sample Answer: Failing to adapt to peer-to-peer competition will usually end up being bad for business in the long run.

3. How would negative press or reviews influence your decision to use peer-to-peer services?

Sample Answer: It depends on how confident and determined you can be that your service will generate a minimum of negative press or online reviews. If you have already developed a peerto-peer business and you are getting a lot of negative reviews, you should be prepared to either make significant changes in an effort to minimize further negative feedback, or consider exiting the market before you go out of business.

Summary Questions 1. Define the business model.

The business model is the framework for creating and delivering consumer value, while extracting value for the entrepreneur as well.

2. Identify the four core areas of a business model.

Each business model includes an offering, customers, infrastructure, and financial viability.

3. Explore the importance of the CVP in further detail.

The CVP outlines exactly how the firm will generate value, how it will generate it in excess of its competition, and how it will continue to do so in the future. Like the true measure of any business is creating value, the true measure of a business model is its customer value proposition.

4. Describe the different types of CVPs and show how to identify your target customers.

Businesses tend to have different CVPs for each customer segment. This is to ensure they are meeting the needs of the customers within each segment. Examples of different customer segments targeted by different types of businesses include: mass market, niche market, segmented market, diversified market, and multi-sided markets.

5. Identify the nine components of the business model canvas.

The four core elements of a business model can be expanded to nine business model components Separating core elements into their respective components makes them easier to define and integrate with one another.

Answers to Questions in the Text Chapter 9: Planning for Entrepreneurs ENTREPRENEURSHIP IN ACTION Michele Pytko, Bark ‘N Leash 1. What evidence of planning can you identify in Michele Pytko’s launch of Bark ‘N Leash?

Sample Answer: Michelle Pytko is an outstanding example of an effective entrepreneurial planner. From her diligent market analysis and competitor research, to her dedicated review of relevant social media and her commitment to providing superior service, her savvy approach has combined raw intelligence with a conscientious operating style to earn her great success.

2. Pytko’s plan also caters for “worst case”—do you think all plans should include this element? Why or why not?

Sample Answer: Answers may differ from student to student. There are various viewpoints inherent in this question. One viewpoint is that including a “worst case” scenario in your plan might distract your focus from the “best case” scenario and (consciously or unconsciously) lead to mediocre performances. Another viewpoint is that keeping a “worst case” scenario in mind is more practical when working in the real world, and may help you to avoid overextending your entrepreneurial reach, which, in severe cases, can lead to insolvency and bankruptcy.

Additionally, having a “worse case” scenario in mind allows you to better absorb setbacks (both rationally and emotionally) when they come, and they always will eventually.

3. What aspects of Pytko’s planning strategy would you apply to your own business?

Sample Answer: Answers will vary from student to student. Point out that entrepreneurial success requires a lot more than big ideas and enthusiasm; it also requires diligence, conscientiousness, and consistency, all of which require careful planning and execution over time.

ENTREPRENEURSHIP MEETS ETHICS Ethical Business Planning 1. Can you think of instances when the quality of a product or service was exaggerated and you were disappointed or even angry?

Sample Answer: Answers will vary from student to student. This question is likely to spawn plenty of input since virtually everyone has had negative experiences with product purchases.

2. How many times are you willing to give a company another chance once you have had a bad experience?

Sample Answer: Answers will vary from student to student. It is worth pointing out that one bad experience can poison the water for many, so entrepreneurs should do everything they can to always provide positive experiences for every customer, every time, in an effort to prevent losing customers. It should also be pointed out that even the best companies are still run by human beings who sometimes make mistakes. If you give up on a company after one negative experience, you may cheat yourself out of a lot of positive experiences in the future with that same company. Furthermore, if you always give up on a company after one mistake, you may find it increasingly difficult to find vendors who are “perfect” in your eyes.

3. How do you think these ethical considerations should be built into the planning process?

Sample Answer: Clear codes of conduct and ethical behavior should be written into Corporate Constitutions (policies and procedures) up front in the establishment of any new business. In addition to codifying these codes, it is essential to establish accompanying consequences for compliance failures, up to and including termination of offending parties.

MINDSHIFT The Vivid Vision Checklist 1. Is three years a useful and reasonable time period to look ahead and envision your business? If you think three years is too long or too short, explain why.

Sample Answer: It totally depends on what your business is and the products and services you intend to offer. If you are trying to develop a dog-walking business, three years would likely be plenty of time, and perhaps even too far out for this exercise (perhaps projecting out one or two years out would suffice). If, like Elon Musk, you are trying to develop a space exploration or electric car company, three years would be far too short a period time for this exercise (perhaps 10, 15, or 20 years would be more realistic).

2. In the Vivid Vision checklist, which questions did you find the most useful? The most challenging? Explain your answers.

Sample Answer: Answers will vary from student to student depending on each student’s individual interests and aptitudes.

3. Is there anything in your plans for your business that is not covered in the Vivid Vision checklist? Anything that is not relevant to your business?

Sample Answer: Answers will vary from student to student depending on each student’s unique future business plans. An example of a missing question might include: What business headaches and/or unwanted legal challenges have arisen since starting your business?

RESEARCH AT WORK How Valuable Are Business Plans?

1. What value do you think a business plan adds to an early-stage venture?

Sample Answer: Perhaps the single greatest benefit of writing a business plan in the early stages of your venture is to provide vision, clarity, and direction to yourself as the entrepreneur—and others who may be co-founding, or otherwise helping you launch it. Even though your vision and direction might evolve or change in the future, the initial process of articulation can serve as a tangible exericse that boosts your confidence and bolsters your enthusiasm for your ideas and plans moving forward.

2. Do you think writing a business plan is a worthwhile exercise for every entrepreneur?

Why or why not?

Sample Answer: Answers may vary from student to student, but it should be noted that the research suggests that writing a formal business plan is not the most important indicator in the success of a start-up. Moreover, because every entrepreneur is an individual with a unique personality, some people are apt to enjoy the process of writing a business plan—and benefitting from the exercise—more than others.

3. At what stage do you think you might start writing a business plan for your start-up?

Sample Answer: Answers will vary from student to student. While one can always choose to write a business plan at any point in the process of building a business, it is typically ideal to at least start the writing process in the earlier stages of business development.

Summary Questions 1. Define “planning” from an entrepreneurial perspective.

From an entrepreneurial perspective, planning helps to clarify the entrepreneurial vision and helps the entrepreneur articulate where the business going and how it can succeed.

Entrepreneurs can use alternative planning methods, including simplified plans, planning with preparation, and planning with imagination.

2. Define TRIM and explain its importance to entrepreneurial planning.

The TRIM framework (Team, Resources, Idea, Market) lists the most important questions that must be addressed in any type of entrepreneurial planning.

3. Explain the different types of plans used by entrepreneurs.

Different types of plans include: back of a napkin, sketches on a page, the business model canvas, the business brief, the feasibility study, the pitch deck, and the business plan.

4. Debate the value of writing business plans Experts disagree on the value of spending the time writing a business plan. Some see a business plan as complex, time-consuming, and based on untested assumptions; while others believe it is a useful way to crystallize and organize ideas. Formal business plans have their place, but they may not necessarily be relevant to the new entrepreneur.

5. Implement the tips for writing business plans.

Some tips for writing business plans include: using visuals; removing any fluff; avoiding typos, grammatical mistakes, and inconsistencies; avoiding the exaggerated hockey stick; and being realistic.

Answers to Questions in the Text Chapter 10: Creating Revenue Models ENTREPRENEURSHIP IN ACTION Shane Kost, Founder, Chicago Food Planet Food Tours and Food Tour Pros 1. What do you consider to be the most important factors driving revenue in Chicago Food Planet Food Tours and Food Tour Pros?

Sample answer: The friendliness of the tour guides and the tastiness of the food along the way.

2. How does the company use revenue to grow the business?

Sample answer: Kost used revenue from Chicago Food Planet Food tours to launch Food Tours, thus expanding his business into two separate ventures and revenue streams.

3. Kost believes that lifestyle and working toward goals are more important than accolades and financial returns. Do you agree with his view? Why or why not?

Sample answer: Answers may vary from student to student. Consider pointing out, however, that the most successful entrepreneurs are often NOT those who are endlessly crunching numbers in a frenzied attempt to squeeze every last dime out of their customers. The most successful entrepreneurs are typically those who enjoy their work, find it rewarding, and derive satisfaction from helping others out along the way.

A Point Worth Pondering: While he was not an entrepreneur, per se, Viktor Frankl—a famous psychiatrist, writer, teacher, and Nazi concentration camp survivor—often gave the following advice to his students, advice that you will discover a lot of successful entrepreneurs embrace along their journey to success.

Don’t aim at success—the more you aim at it and make it a target, the more you are going to miss it. For success, like happiness, cannot be pursued; it must ensue, and it only does so as the unintended side-effect of one’s dedication to a cause greater to oneself or as the by-product of one’s surrender to a person other than oneself.

Happiness must happen, and the same holds for success: you have to let it happen by not caring about it. I want you to listen to what your conscience commands you to do and go on to carry it out to the best of your knowledge. Then you will live to see that in the long run—in the long run, I say!—success will follow you precisely because you had forgotten to think about it.1

1 Frankl, V. (2006). Man’s Search for Meaning. Boston, MA: Beacon Press.

ENTREPRENEURSHIP MEETS ETHICS Creating Revenue Models 1. Do you believe there should be an ethical boundary on the percent of profit a company should get? If so, who would decide on the boundary and how would it be enforced?

Sample answer: This kind of question opens up a bag of ideological and political worms, students are therefore bound to differ in their opinions. In a perfect world, everyone would follow the golden rule to transact business in a consistently fair and just manner. In an imperfect world, of which ours is certainly one, individuals cannot always be relied upon to act in such a magnanimous manner.

Students who are more socialist-minded are apt to argue that the government ought to be the ethical referee by strictly regulating the free market according to executive, legislative, or judicial fiat. Students who are more capitalistically minded are apt to argue that the government ought to stay out of it and allow the free market to check itself over time (e.g., vendors who sell lousy products or overprice their services will eventually be driven out of business by competitors who provide higher quality products and services and/or lower cost alternatives.)

Who is right? We will leave that up to individual opinion and class discussion. It should be noted, however, that our current system in the US offers a mixed bag approach by providing a combination of free-market ideals that are bridled to varying degrees in each industry by governmental regulation.

2. Should the ethical boundary on profit margins depend on the type of product or service?

Sample answer: Yes, because not all products and services are alike. Some products and services require large amounts of time, education, research, labor, and expertise while other products and services require much less of the same. Profit margins should reflect the incredibly dynamic nature of various products and services themselves.

3. Does the ethical boundary on profit margins depend whether the company “earned” the profit?

Sample answer: Answers may vary from student to student. The issue of profit margins can be complex because situations often differ widely from one product/service and industry to another. However, it should be pointed out, and most students will likely agree, that certain ethical boundaries do and should exist in every situation. Moreover, some external (governmental) regulations can play a useful role in preventing companies from an obvious and outright gouging of customer’s wallets, especially in sensitive situations such as health and wellness products/services (e.g., Martin Shkreli and Turing Pharmaceuticals’ gross overpricing of the life-saving drug, Daraprim).

MINDSHIFT Is Value the Same Thing as Price?

1. What are the differences between your pricing estimates and the actual pricing? What do you believe is the source of the differences?

Sample answer: Answers will vary from student to student based on each student’s results from the price estimation exercise.

2. As a consumer, do you care more about the price of certain items than others? What influences your level of concern about price?

Sample answer: Answers will vary from student to student.

3. In this exercise, did you learn anything that surprised you?

Sample answer: Student’s may be surprised at whatever gaps may exist between their cost estimations and the items actual price. The wider the gaps, the bigger their surprise will likely be.

RESEARCH AT WORK From Freemium to Premium 1. What do you see as the benefits and disadvantages to the freemium business model?

Sample answer: The main benefits include drawing increased traffic to your website, products, and/or services, and potentially expanding your customer base. Two main disadvantages include: (1) the risk of giving away too much without being properly compensated for whatever time, labor, education, research, expertise, etc., you invested in developing, constructing, and offering up to customers; and (2) the risk you take of sufficiently satisfying customers’ needs or wants with free products so that they have no motivation to become premium members and spend money. Like so many other entrepreneurial options, there is an upside and a downside to the freemium model. The key is to do whatever due diligence is required to discover whether the upside outweighs whatever downside exists within your niche market.

2. What considerations would you take into account when designing your freemium model strategy?

Sample answer: You want to carefully consider/research the likelihood that your freemium offerings will lead to premium memberships. Calculating this likelihood will require you to study your target market’s sampling vs. buying proclivities.

3. How would you encourage your user to convert from freemium to premium?

Sample answer: Answers will vary from student to student. This question is an excellent one to generate class discussion. Consider starting off the discussion with one of your own ideas as the instructor (e.g., offer an additional, recurring freebie to premium members on a monthly or yearly basis).

Summary Questions 1. Define a revenue model and distinguish it from the business model.

The revenue model specifies exactly how income and earnings will be generated from the value proposition, whereas the business model is the framework established to create value for the consumer while preserving some of that value for the entrepreneur.

2. Illustrate the ten most popular revenue models being used by entrepreneurs.

There are many effective revenue models. Commonly employed models include: Unit sales revenue model, advertising revenue model, data revenue model, Intermediation revenue model, and licensing revenue model, franchising revenue model, subscription revenue model, professional revenue model, utility & usage revenue model, and freemium revenue model.

3. Explain how companies generate revenue by profiting from “free.”

The freemium concept has exploded in popularity in recent times. Many companies are finding that small, experience-amplifying transactions can be profitable after introducing consumers to a limited version of their product or service for free.

4. Identify the drivers that affect revenue as well as cost.

Revenue drivers include the customer, purchase frequency, transaction, and price.

5. Identify different strategies entrepreneurs use when pricing their product and service.

Pricing is critical for a product or service. Some common pricing strategies include: competitionled pricing, customer-led pricing, loss leader, introductory offer, skimming, psychological pricing, fair pricing, and bundled pricing.

6. Explain different methods of calculating prices.

There are several methods to help you calculate the best price for your product or service, such as cost-led pricing, target-return pricing and value-based pricing.

Answers to Questions in the Text Chapter 11: Learning from Failure ENTREPRENEURSHIP IN ACTION Tom Hatten, founder and CEO, Mountainside Fitness 1. Tom Hatten turned down a lucrative offer from a competitor even though his business had failed and he was facing bankruptcy. Do you think he made the right choice? Why or why not?

Sample answer: Answers may vary from student to student. This would almost certainly be a difficult decision for many entrepreneurs. It would seemingly be very challenging to turn down an offer that would have immediately solved his personal financial problem—and many of the stresses that accompanied it. It is, however, a tribute to Hatten’s entrepreneurial vision and determination that he chose to soldier on through his moment of greatest difficulty.

Fortunately, he was rewarded for taking the road less traveled.

2. What positive or constructive lessons can you derive from Hatten’s story?

Sample answer: Hatten is a successful millionaire, but getting there was anything but easy.

Becoming a successful entrepreneur is not a journey for the faint hearted. Typically, you have to be prepared to make sacrifices, work very hard, and push through great adversity in order to eventually “make it.”

3. Imagine one or more failure scenarios for a business of your own. How do you think you would respond to the threat of failure?

Sample answer: Answers will vary from student to student. Consider noting that in any entrepreneurial venture, there will be a measure of failure. It is not a matter of if you will fail, but when, and how severely. This is not to say that all entrepreneurial ventures fail; it just means that there will be some failure along the way. If you are unprepared to face failure and rebound positively, you probably are not ready to be an entrepreneur.

ENTREPRENEURSHIP MEETS ETHICS Learning from Failure 1. How would you decide which course of action is the right one if you were Huh?

Sample answer: Unethical behavior may seem to pay off in the short run; but in the long run it is always a bad choice. Even if you are never caught/found out, you still have to live with your conscience. In response to this question, spend some class time discussing the likely short-term vs. long-term consequences of Ben Huh’s three potential courses of action outlined in the text.

Then, based on the discussion of potential long-term consequences, survey the class on which of the three options they believe would be the wisest course of action? Also consider querying the class on what a fourth or fifth alternative option might look like, including its potential consequences.

2. How difficult is it to remove the emotional aspect of decision making in order to make the most ethical decision?

Sample answer: It can be very difficult, as many entrepreneurs can attest. The most successful entrepreneurs are usually those who learn how to effectively balance the feelings and desires of their hearts (emotion) with the rational reasoning of their heads.

3. Do you believe there are reasons why an entrepreneur might “deserve” to fail, or “need to learn a lesson the hard way” through failure? If not, why not? If so, give some examples.

Sample answer: Answers may differ from student to student. As difficult as it can be to experience failure, rejection, disappointment, and loss, such experiences—and the emotions that accompany them—teach important lessons that can build character. This is why many successful entrepreneurs typically attribute their success, at least in part, to tough lessons and hard knocks suffered along their pathways to prosperity. In many cases, discovering the “right formula” to success as an entrepreneur can be very challenging and time consuming. Making that discovery often requires a measure of failure and struggle, not to mention the passage of time. Those who learn from their failures, are willing to make adjustments, and never give up, typically find success eventually.

RESEARCH AT WORK Grief and Business Failure 1. Would you agree that entrepreneurs have an emotional connection to their businesses?

Why/Why not?

Sample answer: Yes. Without that connection, who would be willing to take the risks and invest the time and effort required to engage in entrepreneurial activity?

2. How do you think the grief recovery process can help entrepreneurs overcome the loss of their businesses?

Sample answer: An understanding of the grief recovery process can help an entrepreneur to identify his or her emotions as normal feelings that have been experienced previously by many others. It also provides context and perspective to negative feelings while bolstering hope that those feelings will eventually be transformed into positive, rewarding feelings that accompany success.

3. What steps would you take to get over the loss or failure of a business?

Sample answer: Study and learn about the different stages of grief, strengthen your support system (relationships), and give yourself the freedom and space to step back and focus on something else for a time while strategizing how to make a more successful attempt on your next entrepreneurial go-round.

MINDSHIFT Your Failure Resume 1. Was it easier than you expected, or more difficult, to list your biggest failures?

Sample answer: If students are honest, they will probably admit that it was harder than they expected. Listing out, or otherwise focusing on, one’s failures, is not an easy or pleasant experience for most people. This does not negate the potential value (in the form of lessons learned) that can be derived from the exercise. The most successful entrepreneurs are often those who are the most humble and honest in their willingness to identify their failures and weaknesses and then take practical steps to transcend them to be more successful in the future.

2. What emotions did you experience as you wrote your “failure resume”?

Sample answer: If you are a human being with a beating heart, then you probably experienced some degree of embarrassment, timidity, or even shame. This is natural and normal, and not a bad thing. Much good can spring forth as we allow ourselves to feel the emotional pain that accompanies an honest assessment of our shortcomings. For example, it can provide a wellspring of motivation to do better and to be better.

3. How do you think you will be able to take the lessons learned from your failures and use them to attain more success in the future?

Sample answer: The key to entrepreneurial success always lies in not giving up after a disappointment, rejection, or failure. But there is more to entrepreneurial success than persistence and determination. You must also make accurate observations and correct analyses that are rooted in rational thinking. In other words, it is not enough to merely “try again” after you have failed.

You must identify why you failed, develop a better and smarter plan for the future, and then try again.

Summary Questions 1. Describe failure and its effect on entrepreneurs.

Learning and further opportunities often come with failure. Failure does, however, come with extreme costs (financial and emotional) that need to be well managed to enable success down the road. If failure is seen as an acceptable step on the path to success, it is much more likely that failure may serve to hone the business and the entrepreneurs behind it.

2. Identify several different types of reasons for failure.

Failures come in all shapes and sizes. Common types of failure include: deviance, inattention, lack of ability, process inadequacy, poor business process flow and communication uncertainty, and exploratory experimentation.

3. Describe the consequences of fear of failure for entrepreneurs.

Fear of failure makes the entrepreneur less likely to pursue and achieve the transformative power of learning from failure.

4. Explain the different ways entrepreneurs can learn from failure.

Failure often goes hand-in-hand with experimentation, with each iteration bringing a product or service nearer to the state necessary for market success. Something can be learned from any failure, and it is important the firm and its founders establish a blame-free climate in which learning can be maximized.

5. Describe the significance of “grit” and its role in building tolerance for failure.

Grit is that “special something” that enables people to persevere though prolonged hardship to maintain commitment and achieve long-term goals.

Answers to Questions in the Text Chapter 12: Bootstrapping for Resources ENTREPRENEURSHIP IN ACTION Gregor Lawson, AFG Media / MorphCostumes (formerly Morphsuits) 1. What evidence do you see of Gregor Lawson and his co-founders using assets other than cash to get their business started?

Sample answer: First off, it should be remembered/noted that in the very beginning, the three co-founders each contributed $1,500 to their joint venture. In nearly EVERY entrepreneurial undertaking, at least some money—however small the amount might be—will be required to get the ball rolling. After this initial, small investment, they launched their product on Facebook, which would not have cost them anything. In the beginning, the trio also invested an enormous amount of their own sweat equity in the business instead of hiring others to complete essential busy-work tasks such as assembling, packaging, and preparing to ship their product.

2. What level of accomplishment did the entrepreneurs have to achieve before they were able to secure investment capital?

Sample answer: Over $1 million in sales.

3. What insights does this example provide to help you get your venture started with little to no cash?

Sample answer: Great progress can be made when you unleash an enormous amount of focus, passion, and sweat equity directed at an entrepreneurial venture that has potential.

ENTREPRENEURSHIP MEETS ETHICS Bootstrapping for Resources 1. Do you want to work in a company with a cultural story about success achieved from lying or tricking others?

Sample answer: If you are interested in long-term success and desire to keep your integrity intact, then the answer is “No” … period.

2. How much “embellishment” is it acceptable for entrepreneurs to convey about their product or service?

Sample answer: Same as the answer to question one: None … period.

3. How do you determine the point at which an embellishment has to be acknowledged and the truth told—or the embellishment exaggerated even further?

Sample answer: You should acknowledge embellishment as soon as you catch yourself (or your employees) engaging in the practice—and then immediately stop the practice moving forward.

The only way to guarantee that a culture of integrity is being developed in your company is to make an unwavering determination to remain dedicated to objective facts, commit to the habit of truth-telling, and then do not deviate from that standard—ever.

RESEARCH AT WORK Crowdfunding: A Revolutionary Change in Funding New Ventures 1. What would you consider to be the pros and cons of crowdfunding?

Sample answer: The pros of crowdfunding include the relative affordability and ease— especially when social media platforms are your primary pitching tool. The cons, based on current research, include a high failure rate (nearly 50%), and potential handicaps to success based on where your company is being launched (geography) in addition to what industry your company belongs (e.g., research shows that you are more likely to be successful if your venture falls in certain industry categories such as hardware, software, games, and product design).

2. How would you use crowdfunding to raise funds for your own project?

Sample answer: Answers will vary from student to student, but it should be pointed out that social media platforms typically play a vital role in virtually any successful twenty-first century crowdfunding campaign.

3. How would you ensure your product was delivered on time to meet demand and expectations?

Sample answer: Ensure that the clerical, financial, logistical, and workforce components of your venture are well organized and running smoothly.

MINDSHIFT Kickstarter Assessment 1. What conclusions can you draw about the project category you chose? In what ways is it typical or atypical of Kickstarter projects?

Sample answer: Answers will vary from student to student depending on what product category one chooses.

2. Of the top five reasons for success, which do you think are most attainable for your entrepreneurial idea?

Sample answer: Answers will vary from student to student based on what one’s entrepreneurial idea is.

3. Of the top five reasons for failure, which do you think your entrepreneurial idea is most vulnerable to?

Sample answer: Answers will vary from student to student based on what one’s entrepreneurial idea is.

Summary Questions 1. Define bootstrapping and illustrate how it applies to entrepreneurs.

Bootstrapping is the process of starting and building a business with very little start-up capital.

Bootstrapping relies on the creative use of those resources. Initial funding can come from many sources, and businesses do not need to start as large-scale endeavors. Combined with sweat equity, funding can come from personal lines of credit, such as an existing job or credit cards.

2. Identify common bootstrapping strategies used by entrepreneurs.

The list of common bootstrapping techniques is extensive. It includes ideas like using the home as the office, renting or leasing before buying, minimizing personal salary initially, developing and reaching out to contacts, offering equity reimbursement, and maintaining low operating inventories.

3. Explain the difference between crowdsourcing and crowdfunding.

Crowdfunding involves raising funds from a large audience, typically through the Internet.

Crowdsourcing involves using the Internet to attract and manage free labor generated by enthusiasm for the product or service.

4. Describe the effects of crowdfunding on entrepreneurship.

The crowdfunding movement has provided a democratic means of funding that has never before existed to the scale it exists today. Equity crowdfunding has emerged as a popular crowdfunding alternative, where ownership stakes (stock) are issued in exchange for funding.

5. Define the four contexts for crowdfunding.

Crowdfunding largely falls into one of four contexts: the context of patronage, the context of lending, reward-based crowdfunding, and investor context.

6. Explain the advantages of crowdfunding for entrepreneurs.

Crowdfunding is not just a means to generate necessary cash, but also a good direct line of contact with end users. Many crowdfunding options exist, and entrepreneurs are free to use whichever method they chose.

7. Describe ways in which entrepreneurs can conduct a successful crowdfunding campaign.

Crowdfunding is flexible and exciting but not without its challenges; it is not free money.

Entrepreneurs still need to make sure their product/service addresses a real business need, a benefit to customers that is being under addressed or unaddressed. Successful campaigns start as early as is feasible, maintain commitments, and do not overpromise.

Answers to Questions in the Text Chapter 13: Equity Financing for Entrepreneurs ENTREPRENEURSHIP IN ACTION Jason Craparo, Co-Founder, Contap, Inc. 1. What are the potential risks involved in personally financing start-ups in the early stages?

Sample answer: If the start-up fails, you lose whatever capital you initially invested. It should be noted, however, that even when you lose money in a venture, you often gain knowledge, experience, and wisdom in the process, all of which can be put to effectively use in a future venture.

2. When do you think is the right time to seek outside financing as an entrepreneur?

Sample answer: Answers may vary from student to student. It really depends on how financially conservative or liberal you are as an entrepreneur, as well as how much you want to accelerate the growth of your business.

3. How would you use external financing to enhance your offering?

Sample answer: Answers will vary from student to student depending on what kind of business you intend to build. Examples might include upping the quality of your products and services, heightening the efficiency of delivery, improving customer service, expanding/diversifying your offerings, etc.

RESEARCH AT WORK Talk About the Losses 1. Why do you think VCs tend to “bury their dead quietly”?

Sample answer: In the minds of many VCs, failures make them look bad, so they like to focus on their successes instead of their failures.

2. Do you think it is important to learn about failures as well as successes? Why or why not?

Sample answer: Definitely yes! If an entrepreneur wrongly assumes that most entrepreneurs succeed most of the time with most of their ventures, he or she may overly-magnify any

personal occurrences of failure and avoid trying again. The fact is that many, if not most, entrepreneurs face a great deal of failure along their journeys to success, and when they finally do succeed, it is largely a result of the applied knowledge and experience they have earned throughout the process.

3. What do you think you could learn from a VC about failed investments? Think of some questions you would like to ask a VC on this topic.

Sample answer: Perhaps the most valuable thing one can learn is that failure does not mean it is the end of the line for you as an entrepreneur; it merely provides you with a painful experience that can be turned into a learning opportunity along your journey to success.

Sample questions to ask a VC: 

What have been some of your failures along your pathway to success?



What motivated you to keep trying after experiencing a painful failure?



What is something you learned from a past failure that has led to a future success?

MINDSHIFT Find an Investor–Entrepreneur Pair 1. Was it easier than you expected to find an entrepreneur and investor to interview, or harder?

Sample answer: Answers will vary from student to student. For many students, however, it will probably be harder than they expected to find an entrepreneur or investor they can interview, especially if they did not already know such a pair. It will require them to talk to people they may not know well and ask good questions to complete their search and conduct the interviews.

2. What obstacles or challenges did you encounter in your conversations?

Sample answer: Answers will vary from student to student. A likely challenge might include breaking through any reticence an interviewee may have about opening up to difficult questions that query him or her about his or her personal or professional failures.

3. Did you learn anything that surprised you or that ran counter to your expectations?

Sample answer: Answers will vary from student to student.

ENTREPRENEURSHIP MEETS ETHICS Approaching Investors 1. You are in a meeting with an angel investor whose funding could jump-start your venture. How would you feel if you had to answer the investor’s questions with “I don’t know” several times in a row?

Sample answer: You would probably feel pretty embarrassed and chagrined. However, it is better to be honest and endure the minimal pain of the moment than to be dishonest and feel the prolonged pain of an entrepreneurial failure that could have been avoided with proper preparation.

2. It is impossible to prepare thorough responses to all of the questions an angel investor may ask, particularly personality-related questions. What ground rules can you establish that will allow you to remain confident and ethical when not knowing the answers to an angel investor’s questions?

Sample answer: In virtually all cases in business or life, honesty really is the best policy. It is wiser to say, “I don’t know, but I’ll go back, do my research, and get back to you with an answer as soon as I can,” than to try and get away with fluffy answers that will not only infringe upon your own integrity and likely make you look foolish as well.

3. What would you do if you realized you had unintentionally provided critical but inaccurate information to an angel investor?

Sample answer: Answers may vary from student to student. However, it is important to emphasize the importance of honesty and transparency if you are interested in maintaining your integrity and achieving long-term success. Wise students will always place a high priority on their personal and professional integrity.

Summary Questions 1. Define equity financing for entrepreneurs and outline its main stages.

Equity financing is the sale of ownership stake within the company in exchange for funding.

Seed stage financing, start-up financing, and early-stage financing describe funds in support of different early-business objectives. As the organization grows, it may then seek out second or later stage financing through subsequent rounds of financing. Businesses may also choose to undergo an IPO, opening the firm to general market funding.

2. Illustrate the basics of enterprise valuation.

Investors use a variety of factors to come to valuation proposals, including market conditions, opportunities, competition, comparables, and how much value a given firm can add to the mix.

3. Describe angel investors and how they finance entrepreneurs.

Angel investors are typically high-net-worth individuals that are accredited investors investing their own money in start-up ventures. Other types of angels include corporate angels, professional angels, enthusiast angels, and micromanagement angels, each characterized by distinct goals and value-added capabilities.

4. Explain the role of venture capitalists and how they finance entrepreneurs.

Venture capitalists differ from angels in the sense that they are professional money managers.

Entrepreneurs should also exhibit at least as much caution as venture capitalists when seeking VC funding; the owners are likely to concede significant ownership stake in the venture, and need to be certain of both why venture capital is absolutely necessary and which firm would provide the best guidance.

5. Describe how investors carry out due diligence processes.

To ascertain the prospects of any potential investment, angel investors and venture capitalists alike conduct due diligence appraisals of the firm under consideration. Essential to this process is identifying a method and timing for the investors to recoup their capital at interest, such as completing an IPO. 6. Explain the money versus power trade-off and the funding life cycle.

The typical “entrepreneur’s dilemma” is choosing between retaining significant ownership and control versus securing substantial funding. The venture typically starts with finding partners and securing initial funding, followed by formal founding and registration of the business. As the business grows and additional financing is needed, angel and venture capital investments are sought out. Finally, the most successful of start-ups often accomplish an IPO.

Answers to Questions in the Text Chapter 14: Developing Networks ENTREPRENEURSHIP IN ACTION John Hite and Franklin Yancey, Co-Founders of College Comfort / Vice Presidents, IMG College—Stadium Seating 1. How important was John Hite’s network towards achieving his goals?

Sample answer: In the beginning, it was critical. This is because the help of his dad and childhood friend—Franklin Yancey—was considerable variables in his initial success.

2. Do you think Hite would have succeeded on his own? Why or why not?

Sample answer: By himself, Hite never would have succeeded on the scale that he did. No entrepreneur ever succeeds in a big way on his or her own. While small entrepreneurial successes may be possible working as an individual, large-scale growth of any kind simply requires leveraging your own efforts with the contributions of others. While a single entrepreneur can have a monumental idea on one’s own, bringing big ideas to full fruition always require a strong network of other people who can help out all along the way.

3. What are some ways in which you can use your own network to attain your goals?

Sample answer: Answers will vary from student to student, and should focus on how members of your network can serve as sources of counsel, advice, encouragement and cheerleading, capital and resources, references and referencing, etc.

RESEARCH AT WORK The “Dirtiness” of Professional Networking 1. What do you think is easier—forging a professional relationship for personal gain or forming a spontaneous professional contact?

Sample answer: For most people, forming a spontaneous professional contact is likely to be much easier because it typically takes less time and does not require one to move as far outside of one’s comfort zone.

2. Would you consider deliberately forming a professional contact for professional gain “dirty”? Why or why not?

Sample answer: Answers may vary from student to student. It should be pointed out, however, that there is nothing inherently “dirty” about forming a professional contact for personal gain as long as you are committed to providing a service or benefit that is commensurate to, or greater than, whatever “gain” you plan to acquire from the client-vendor relationship (i.e., win/win).

3. How would you go about forming your own professional relationships?

Sample answer: Answers may vary from student to student. Just emphasize that while manipulation tactics might get you a short-term sale, authenticity and integrity are required to earn long-term customers.

MINDSHIFT Analyzing My Network 1. How easy or difficult was it to think of 15–20 people in your current network? Could you think of more than 20 people?

Sample answer: Answers will vary from student to student, depending on one’s background and experiences. Help students expand upon their list by providing ideas about people they may not have thought of while making their list (e.g., current and/or former employer, coach, teacher, guidance counselor, principal, tutor, pastor, neighbor, local governmental official, etc.)

2. Do you think the A, B, C, and D categories are a helpful way to categorize the members of your network? Would you use other categories instead or in addition?

Sample answer: Answers will vary from student to student. It is a pretty good starting point, but could certainly be expanded upon. An example of another category that could be added is a list of people in your network that could potentially serve as angel, capital, or equity investors.

3. How do you think others would categorize you as a member of their networks? What qualities do you possess that would be valuable to others in their networks?

Sample answer: Answers will vary from student to student. It may be worth noting and/or discussing the fact that as human beings, we are sometimes prone to either overestimating or underestimating our perceived value in the eyes of others. As such, a valuable skill to cultivate is the capacity for self-awareness and self-analysis, which can empower us to see ourselves as we really are rather than how we would merely like or hope others to see us.

ENTREPRENEURSHIP MEETS ETHICS Ethics and Social Media in the Workplace 1. Do you think ethics should be addressed in social media policies? Why or why not?

Sample answer: YES! Without any ethical guidance, you potentially open up “Pandora’s Box” with regards to the potential ethical (and other) dangers of social media. Social media should be safeguarded with relevant, ethical policy structures and practices just like any other means of human communication and action.

2. What would you regard as “acceptable behavior” when it comes to using social media in the workplace?

Sample answer: Utilizing social media platforms (particularly professional platforms such as LinkedIn) for strictly professional purposes. Also using additional social media platforms in approved ways that bolster workplace efficiency and effectiveness.

3. As the founder of a start-up with several employees, how would you address the issue of ethics in relation to social media usage?

Sample answer: Establish explicit standards (formally codified in your company’s Policy & Procedure manual) for the ethical use of social media platforms, in conjunction with concrete consequences for failing to abide thereby. Then follow through by holding offenders accountable.

Summary Questions 1. Explain the role of networks in building social capital.

Networks provide social capital such as access to sources of financing, information, expertise and support, and networks can be excellent sources for loyalty. They allow for learning and information exchange, and social capital enables access to a range of resources, including venture capitalists, angel investors, advisors, banks, and trade shows.

2. Demonstrate the value of networks for entrepreneurs.

Relationships are key to business success, and entrepreneurs in particular will need to skillfully interact with a vast array of stakeholders. Networks provide entrepreneurs with access to private information, diverse skillsets, and power. Networks can also be relied on for personal and emotional support.

3. Describe several different ways of building networks.

Building a network extends beyond socializing with friends and acquaintances, and it often involves active participation in organized networking events. In new relationship, it is better to give value to get value; value is a two-way game.

4. Illustrate the benefits of virtual networking.

Social media sites and other forms of virtual networking provide additional channels to meet or interact with stakeholders from the world over. Entrepreneurs have a number of different virtual communities in which they can participate, with many communities offering access to a specific subset of interests in entrepreneurship. Common social media platforms like Facebook also contain groups that are similar in fashion to online entrepreneurship communities.

5. Explain how networking can help to build the founding team.

One of the most valuable things an entrepreneur can do is connect with individuals that serve as great complements on a founding team; research even suggests team-started ventures are more successful than solo-founded ventures. Networking skills can often be relied upon as the means to that end.

Answers to Questions in the Text Chapter 15: Navigating Legal and IP Issues ENTREPRENEURSHIP IN ACTION Corey Hague, FlexGround 1. How does the Hague family take legal considerations into account to benefit Flexground?

Sample answer: Corey’s dad is a lawyer, who advises him to, “Know the law better than any of your competitors.”

2. Laws differ from state to state. How would you go about ensuring your start-up was legally set up?

Sample answer: Conduct personal research for each State and then obtain additional legal counsel (state-by-state) as needed to fill in whatever gaps you were unable to fill with your own research.

3. What steps would you take to protect your product/service from being copied by competitors?

Sample answer: Always apply for official patents, and then further protect any pending patents with “provisional patent applications.”

MINDSHIFT Patent Search 1. How easy or difficult was it to think of a cool product for your patent search? What factors came into play?

Sample answer: Answers will vary from student to student. Because there are so many patents already registered, it is harder than ever before to think up something totally original. However, that is not to say that it cannot be done—as evidenced by the thousands of additional patents that are secured each and every year.

2. Did you find many other patents for products related to the one you were searching for?

Sample answer: Answers will vary from student to student.

3. What did you learn that surprised you or went against your expectations?

Sample answer: Answers will vary from student to student. Perhaps some students will be disappointed to find out that their ideas (or something very close to their ideas) have already been taken. On the other hand, it is also quite possible for any student to have an original idea for a product that has never been patented before.

RESEARCH AT WORK Patent Trolls 1. How would you protect your start-up against patent trolls?

Sample answer: Consider starting a business in an industry where patent trolls take little-to-no interest. If that is not a viable option, diligently research steps you can take to eliminate, or at least minimize, the risk of patent trolls getting into your business. One way to do this is to seek out a mentor in the same industry in which you plan to build your business. Those who are already in the field and have done battle with patent trolls will typically be the best resources to guide you in effectively eliminating, or at least managing, whatever negative impacts patent trolls may exert on your start-up.

2. Do you think individuals or firms have the right to hold patents without producing any useful products of their own? Why or why not?

Sample answer: Answers may vary from student to student. While compelling arguments may be possible on both sides of the issue, the fact that the issue has become so political suggests that a great deal of reform may be in order to enhance ethicality and avoid frivolous inhibitions of corporate productivity in the future.

3. What are the effects of patent trolls on start-ups?

Sample answer: In worst-case scenarios, patent trolls can actually cause a start-up to have to shut down. At the very least, they can cause a great deal of stress and grief on small business owners or CEOs of start-ups.

ENTREPRENEURSHIP MEETS ETHICS Navigating Legal and Intellectual Property Issues 1. Why is it important to protect intellectual property?

Sample answer: Because for some, if not many, companies, it is the most important asset you possess.

2. Whose responsibility is it to protect intellectual property?

Sample answer: Yours as the entrepreneur.

3. When is the best time to apply for intellectual property protection?

Sample answer: As soon as you know you will be needing it.

Summary Questions 1. Discuss how legal considerations can add value to an entrepreneurial venture.

Understanding the legal considerations applicable to the business is as important as understanding user needs. Taking legal considerations into account may add value to the firm. Whether it is a lawyer, free website content, or some form of legal expert, obtaining competent legal advice will certainly help improve the performance of the venture.

2. Explain the most common types of legal structures available to start-ups The most common types of legal structures include: Sole Proprietorship, General Partnership, C corporation, and S corporation, Limited Liability Company (LLC), Limited Partnership, Limited Liability Partnership (LLP), and Benefit Corporation. In addition, most of these business structures can be run as a not-for-profit provided the company complies with IRS section 501(c).

3. Outline the most common legal errors made by start-ups.

Start-ups may make some common mistakes which could be expensive. The most common mistake they make is in choosing the legal structure of the venture, not having a written agreement defining the many parameters of their relationship, not paying close enough attention to forming the right vesting schedules, and issuing shares to people who are not accredited investors.

4. Define IP and how it affects entrepreneurs.

(IP) is intangible personal property created by human intelligence, such as ideas, inventions, trade secrets, slogans, logos, and processes. The four main types of IP are copyright, trademark/service mark, trade secret, and patent. It behooves entrepreneurs to understand IP because start-ups are by definition innovative and likely to involve the creation of IP. 5. Assess the global impact of IP theft.

Millions of people all over the world violate IP laws every day by ignoring copyright. IP theft costs the US almost $300 billion every year.

6. Identify the common IP traps experienced by entrepreneurs.

Entrepreneurs often make mistakes in the following areas: 

Publicly disclosing an invention or innovation;



Failure to protect products, processes, brands, etc.;



Inability to determine originality;



Failure to allocate ownership; and



Failure to protect IP in global markets.

7. Explain the legal requirements of hiring employees.

Legal requirements related to hiring employees include: registering employees with the state labor department, keeping records of employee tax history, preparing the appropriate legal documentation, and complying with safety regulations.

Answers to Questions in the Text Chapter 16: Marketing and Pitching Your Idea ENTREPRENEURSHIP IN ACTION Andrew Loos, Managing Partner and Co-Founder, Attack! Marketing 1. How did Andrew Loos get buy-in from his agency contacts? What made his pitch attractive to them?

Sample answer: He already had good relationships with them, and then he showed them how they could save a lot of money by changing their marketing approach.

2. If you are just starting out, how can you create a network of contacts to pitch to?

Sample answer: You can focus on building positive relationships of trust with potential clients you already know about (online and in person) as well as seek to make additional connections (online and in person) as you come and go each day. To find additional contacts, you may need to attend networking events, do market research online and elsewhere, and perhaps query competitors in your industry regarding techniques they have used to gain in-roads into a desired market in the past. Depending on the market, you can sometimes buy contacts from marketing vendors if you have access to capital and it makes good financial sense to invest money in that that way.

3. Do you agree with Loos that it is better to say “no” than to “fake it ‘til you make it”?

Why or why not?

Sample answer: Answers may vary from student to student. In general, it can be risky to make any commitment that you are not 100% sure you can keep. However, there may be instances early on in growing a business where you are still testing out your own capacities and riding your own company’s learning curve where innocent mistakes are made causing commitments to be missed. Inevitably, some leaps of faith usually have to be taken in order to stretch, grow, and mature as a business. Along the way, you may have to learn the hard way that you cannot make and keep certain commitments with certainty. The focus and goal should be to always strive to keep 100% of your commitments. Then if/or when one slips through the cracks, do all in your power to make it up to the customer by fully compensating (or even overcompensating) them for their inconvenience or loss. Finally, strive to go the extra mile for that customer on the next goround. Doing so will leave an extra positive impression and instill good will in his or her mind and heart towards you as a business.

MINDSHIFT Pitch Practice 1. Were your listeners able to articulate your idea in their own words more accurately than you expected, or less so?

Sample answer: Answers will vary from student to student. Emphasize that if your listener did not do as good a job as you had hoped, it may be tempting to place all of the blame on their failure to listen or communicate. A wiser approach is to assume that any issues your partner has is a reflection that you could have communicated more clearly yourself. This then provides you with an opportunity to solicit his or her feedback and then try again in an effort to obtain even greater clarity.

2. Over the course of your five pitches, did you notice any pattern in areas of your message that your listeners misinterpreted, or did not catch?

Sample answer: Answers will vary from student to student.

3. In what ways would you improve your pitch in the future for greater clarity and effectiveness?

Sample answer: Answers will vary from student to student.

RESEARCH AT WORK Pitching Trustworthiness 1. Give some reasons why trustworthiness is so important to potential investors.

Sample answer: If you trust the person you give your money to, you feel more comfortable and confident in their commitment to use that money honestly and wisely in the way they commit to doing.

2. Explain the relationship between trustworthiness and coachability. How can an entrepreneur demonstrate coachability during the pitch?

Sample answer: It is very difficult to be coachable if you do not trust your coach.

Trustworthiness is therefore a vital prerequisite to effectively coaching someone. To demonstrate coachability, make sure to listen carefully to what the coach, customer, or investor suggests that you do, and then immediately take action on his or her suggestion.

3. What are some ways you can demonstrate trustworthiness during a pitch?

Sample answer: Always be honest in your responses and if you do not know an answer to a question, say: “I don’t know, but I will find out and get back to you as soon as I can.”

ENTREPRENEURSHIP MEETS ETHICS Navigating Legal and Intellectual Property Issues 1. How can you draw attention to your company and educate your customers in the overcrowded marketplace on social media without resorting to practices that are borderline unethical?

Sample answer: Make a conscious, committed resolve to always conduct your business ethically no matter what medium you are using to communicate or advertise with. Then establish an accountability policy that ensures consistent follow through.

2. Suppose someone fraudulently posts unflattering material about your company on social media. How can you best respond and clear your good name?

Sample answer: Author Joseph Torrillo, of reputationmanagement.com, offers several tips to confronting this dilemma. They include: A. Identify false or malicious activity as soon as possible by regularly monitoring your social media accounts and/or online product/services reviews.

B. Contact the sender or web hosting service to see if you can get the false or malicious material removed.

C. If you cannot get the material removed, always respond to attacks in a positive, professional manner.

D. Strive to develop a credible reputation by consistently providing quality products and services to all of your real customers.

For more information or to read this excellent article in its entirety, visit URL: https://www.reputationmanagement.com/blog/fighting-fake-reviews-removal-responsereputation 3. What can you do to remedy a customer’s negative perceptions before it goes viral?

Sample answer: Do everything you can to contact and then compensate customers who have posted online complaints or that you know feel like they received poor service or were otherwise put out at your establishment. Whatever you do, do not lash back at the customer.

Remember the law of sales: “The customer is always right.” You cannot always control what goes viral and what does not, but you can monitor your business social media closely and do the best you can to manage your business’s online image and reputation by being professional and conscientious yourself. Note: See answer to question TWO (2) for additional insight to this question.

Summary Questions 1. Describe the role of marketing and pitching in entrepreneurship.

The pitch is the entire act of presenting a product concept. It is meant to be brief and enticing, and well developed to take the interests of the intended audience into account. Marketing is a method of putting the right product in the right place, at the right price, and at the right time.

2. Explain the principles of marketing and how they apply to new ventures.

It means the right product in the right place, at the right place, and at the right time. For entrepreneurs, this extends to identifying needs, serving those needs, communicating the value proposition, supplying the product or service, and supporting the customer relationship from then on.

3. Compare entrepreneurial marketing with traditional marketing.

Entrepreneurial marketing represents more interactive marketing focused on customers (instead of the product) and rapid adaptation to changing consumer needs. Hallmarks of entrepreneurial marketing are innovation, risk-taking, resourcefulness, value creation and proactivity, attributes supported by smaller, more agile start-up companies.

4. Highlight the value of social media for marketing opportunities.

Social media is ubiquitous, and in many cases, entirely free for the entrepreneur to use. It allows direct access to individual customers and general access to billions of potential customers. Furthermore, the structuring of the content is often a guided process and users tend to be well versed in the presentation of content, regardless of the social media venue.

Social media strategies help to attract customers, increase recognition of your brand, and provide efficient customer service. Creating interesting content as part of a social media strategy can also help to drive sales.

5. Describe how to make a good impression during your pitch.

Many investors, when asked, might confess that when choosing investment opportunities, they are more interested in the people behind the product than the product itself. First impressions are created extremely quickly, and they tend to endure. Presenters need to be cognizant of their body language, confident, well-groomed, and good listeners.

6. Describe the pitch process and different types of pitches.

Preparing a pitch involves thorough understanding of the audience, deliberate framing of the problem and solution, the resources required (the “ask”), and the method by which all of this will be communicated. Some popular pitches include the elevator pitch, the rocket pitch, the storytelling pitch, the Pixar pitch, the question pitch, and the Twitter pitch.