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Strategic IssuesStrategic Issues inin

Entrepreneurial Ventures andEntrepreneurial Ventures andSmall BusinessesSmall Businesses

Prof. Rushen ChahalProf. Rushen Chahal

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Entrepreneurial Ventures & Small Businesses

99% of all businesses

23 million small businesses 60% -80% new jobs annually

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Entrepreneurial Ventures & Small Businesses

Small business firm

Independently owned & operated

Not dominant in field

Not engaged in innovative practices

Employs fewer than 500people and sales ofless than $20million annually

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Entrepreneurial venture

Primary goals profitability and growth

Characterized by innovative strategic

practices

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Differences

Not in types of goods and services but in

Fundamental views on growth and innovation

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Entrepreneur

Ultimate strategist

All 3 levels Corporate

Business Functional

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Lack of strategicplanning in small

business

Not enough time

Unfamiliar with strategic planning

Lack of skills Lack of trust and openness

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However, a survey of the high growth Inc.500firms revealed that 86% performed strategic

planning and 94% of those reportedimproved profits.

Degree of formality

Process far more informal in small companiesthan in large corporations

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Informal questions to begin strategic

management process

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Strategic decision-makingprocess forentrepreneurial ventures

Develop basis business idea Product/service with target market/customers

Scan external environment Locate factors of opportunity/threat

Scan internal factors Relevant to the new business

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Strategic decision-making process for

entrepreneurial ventures

Analyze strategic factors Current situation using SWOT

Decide go or no go Opportunity to go

Generate business plan Transform idea into reality

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Advisory Boards

External business people voluntary

Discuss strategic and other issues

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Entrepreneurial Ventures & Small Businesses

Sources ofInnovation (PeterDrucker)

The unexpected

The incongruity

Innovation based on process need

Changes in industry or market structure

Demographics

Changes in perception, mood, meaning

New knowledge

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Factors affecting new venture success

Structure of industry (rapidly changingindustries vs. stable industries).

Business strategy of new venture (focus

differentiation). Behavioral characteristics of entrepreneur

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Entrepreneurial Characteristics

Identify opportunities better

Sense of urgencyaction oriented

Detailed knowledge-physical stamina

Access to outside help

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Sub-stages of small businessdevelopment

Existence

Survival

Success (disengagement vs. growth)

Take-off

Resource maturity

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Evaluation and Control

Line between debt and equity is blurred

Lifestyle is a part of financial statements

Standard financial formulas dont apply

Personal preference determines financialpolicies

Banks combine personal and business wealth