Post on 13-Dec-2015
transcript
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Learning Objectives
• Discuss how entrepreneurs should prepare for contingencies
• Explain the purpose of a harvest plan • Describe the role of bankruptcy in business
failure
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Preparing for Contingencies
• Identifying potential risks– Process improvement strategies to reduce
the probability of risk through alliances– Buffer strategies to protect against potential
risk that can’t be prevented – Assess supply chain risks
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The Components of a Contingency Plan (continued)
• Taxes and regulations• Intellectual piracy • Product liability• Cyber risk • Succession planning
– Succession planning in family-owned businesses
– Decline in sales
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The Components of a Contingency Plan (continued)
• Calculating the probability that the risk will occur
Risk of loss = (P x C x S)
Probability of OccurrenceCost of ImpactLevel of Significance
(Example on Page 427)
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Figure 19.1: Managing Risk in a New Venture
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The Harvest Plan
• Types of career paths– Growth entrepreneurs– Habitual entrepreneurs– Harvest entrepreneurs– Spiral, or helical, entrepreneurs
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The Harvest Plan (continued)
• Selling the business• Cashing out but staying in by
– A phased sale
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Figure 19.2: Restructuring the Business
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Dealing with Failure: Bankruptcy
• Chapter 11– Chapter 11 reorganizes the business so it
can continue operating and paying its debt• Chapter 7
– An order for relief– It liquidates the assets and discharges most
types of debt
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Dealing with Failure: Bankruptcy (continued)
• Chapter 7 (continued)– Advice for making a bad situation better
• Entrepreneurs should talk to other entrepreneurs who have been in similar situations
• End a business before it affects the entrepreneur’s life• A business owner should never commingle
personal/business funds• Do not ignore the government• Begin looking for opportunity• Pay back investors first
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Final Thoughts• Entrepreneurship is
– A mindset– A set of attitudes– A skill set that can be learned
Who should be an entrepreneur?
– Anyone who wants to experience the
freedom and independence that comes from
knowing that opportunities and resources to
make those opportunities a reality are within
their grasp!