Task:
Similar to chapter 5 on part time entrepreneurship, this chapter discusses the paths to full time entrepreneurship. The advantages and disadvantages of each path are discussed: founding, purchasing, franchising, family business and moving from hired manager to owner. Different methods of purchasing an existing business are also explored.
Learning Objectives
After studying this chapter, the student should be able to:
1. Explain he strategies for going into full time business. 2. Describe five ways that people get into small business management. 3. Compare the rewards with the pitfalls of starting a new business. 4. Compare the opportunities with the pitfalls of purchasing an existing business. 5. Explain four methods of purchasing an existing business. 6. Compare the advantages with disadvantages of buying a franchise. 7. Explain the issues of inheriting a family owned business. 8. Describe how hired managers become owners of small businesses. 9. Identify the choices for exiting a business.
Focus on Small Business:
Thomas Caldbeck had worked for several companies when one laid him off only to re-employ him as a consultant. That taste of entrepreneurship led to several others and Caldbeck discovered ways to circumvent changes in the economy.
Discussion Questions
1. In what ways if Tom’s story like that of a “typical” entrepreneur? Many entrepreneurs become serial entrepreneurs, starting more than one business over the life of their careers. When the economy or business problems tried to swamp him, he persevered and found ways to work around these difficulties.
2. What experiences Tom had in creating and growing his business would be considered bootstrapping? He did the work himself on converting his van and used “no cost” space such as his garage and an unused bedroom. He uses low cost advertising in the authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Signs he puts in yards and on his truck.
3. If remodeling is such a pleasant and profitable business, why would Tom (or anyone else) be conflicted about “walking away” from a failing construction business?
One reason is that Tom had created that construction business – failing or not, it’s his “baby.” Additionally, Tom’s experience has him reinventing himself as things change. He may be reluctant to give up on something that was so profitable, thinking he might need it again.
4. Suppose you are a consultant to small business. What advice would you give Tim Caldbeck? Advice will vary from the more optimistic “life’s too short; do what you now like” to the more cautious “let the construction firm go dormant but hang onto its assets just in case.”
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