Q Entrepreneurship

and small business

Start-up, growth and nra.

PAUL BURNS
Professor of Entrepreneurship and Dean,
University of Bedford Business School, UK

palgrave

macmillan

VII

List of figures

xvi

List of tables

xviii

Preface to the third edition

xix

How to use the book and website

xxi

Guided tour of the book and website

xxvi

Part 1 Entrepreneurship

1 Entrepreneurship in the twenty-first century

The stuff of dreams
The entrepreneurial revolution
The economics of ehtrepreneurship
Entrepreneurs and owner-managers
Small firms
^
The differences between small and large firms
Lifestyle and growth firms
The UK small firms sector
Global Entrepreneurship Monitor [GEM)
Summary

3
5
8
9
11
16
18
19
21
24
27

Case insights
Bill Gates and Microsoft
Michael Dell and the Dell Corporation
Richard Branson and Virgin
Shaa Wasmund and Brightstation Ventures
Marc Demarquette
Joseph Bamford and JCB

6
8
13
15
17
23

Cases with questions

Julie Spurgeon

20

Sara Murray - Serial entrepreneur

26

2 Entrepreneurs and owner-managers

Start-up influences
Personal character traits
Character traits of owner-managers

31
33
34
36

Contents

Character traits of entrepreneurs

Antecedent influences
Ethnicity and immigration
Gender
Growth businesses
National culture
Situational factors
Summary

38
42
44
46
48
49
53
58

Case insights
Steve Hulme
Simon Woodroffe and YO! Sushi
Market traders
Kenyan Asians
Elizabeth Gooch and EG Solutions
Will King and King of Shaves

33
39
43
45
47
54

Cases with questions

Duncan Bannatyne, Dragon
Hilary Andrews and Mankind
3

55
57

Innovation and entrepreneurship

Innovation
Innovation and competitive advantage
Discontinuous innovation
Innovation and entrepreneurship
Creativity and entrepreneurship
Innovation and size
Innovation and location
Summary

63
65
65
69
71
74
75
77
80

Case insights
James Dyson
McDonald's
Who invented the world wide web {www}?
Trevor Baylis
Great Ormond Street Hospital for Children
Swarfega

67
69
71
72
73
73

Case with questions

Big companies and new ideas

79

4 Social and civic entrepreneurship

The rise of social entrepreneurship
Social enterprise and the social economy
'
Legal forms of social enterprise in the UK
The social entrepreneur
The growth and development of the social enterprise
The civic entrepreneur
The dangers of social entrepreneurship
Summary

83
85
87
88
92
94
96
99
102

Contents

Case insights
The Maggie Keswick Jencks Cancer Caring Centres Trust
Abs-Kids
Bright Ideas Trust

91
91
91

Seven Stories

91

Cases with questions

Big Issue
Ridgeway Primary School
Nin Castle, Phoebe Emerson and Goodone

Part 2 Start-up

89
98
100

107

5 Developing creativity and the business idea

109

Creativity
Barriers to creativity
The creative process
Techniques for generating new ideas
Recognising opportunity
The business idea
The internet
Safeguarding your ideas
Summary

111
113
113
116
121
125
128
129
137

Case insights
Martin Dix and Current Cost
Bruce Bratley and First,Mile
Tom Mercer and mOma
Adrian Wood and GTI

115
116
123
125

Cases with questions

Alex Tew and the Million Dollar Homepage
eBay
Andrew Valentine and Streetcar
6 Evaluating the business idea
What you need to start a business
Personal attributes
Knowing your customers
Knowing your competitors
Marketing strategies
Resources
Capital
The importance of networks
Planning and evaluation
Summary
Case insights
Quad Electroacoustics
Morgan Motor Company
Alan Pound and Aculab
Richard Branson

118
131
136
141
143
143
145
146
148
154
155
157
159
163
152
153
153
155

Contents

Robbie Cowling and Jobserve

Big companies and strategic alliances

155
159

Cases with questions

David Sanger and Rollover
Mark Constantine and Lush

160
161

7 Launching the business

Marketing strategies
Pricing
Differentiation
Developing customer focus
Entrepreneurial marketing
Undertaking market research
Developing selling skills
Retailing on the internet
Legal forms of business
Summary

167
169
172
177
178
180
182
185
188
190

196

Case insights
Martin Penny and Good Hair Day
Jean Young
Radio Spirits
Mark Dorman and Black Vodka
Mark Goldsmith and Goldsmith s Fine Foods
Gary Frank and the Fabulous Bakin' Boys
, Cases with questions
' The Body Shop franchise
Stephen Waring and Green Thumb
Calypso Rose and Clippy

8 International entrepreneurship
Globalisation and international entrepreneurship
The international start-up
The stage model of internationalisation
The influence of networks and learning theory
Export strategies
The agency dilemma
Summary
Case insights
Michael Ross and Figleaves
John and Julie Gilbert and Hop Back
Julie Diem Le and Zoobug
Cases with questions
B&Q
Hightech Components

9 Running the business

Cash flow and Death Valley
The profit statement
The balance sheet

173
175
178
184
186
189

193
194
195
201
203
205
207
209
210
213
216
208
211

213
204
214
221
223
224
229

Contents

Planning and control

Financial drivers
Break-even
Decision-making
Summary

232
233
236
238
243

Case insights
Jean Young
225, 226, 228,231
Chris Hutt and tffe Newt & Cucumber
234
David Speakman and Travel Counsellors
237
Flitwick Manor Hotel
237
Penforth Sofa Beds
239
Appendix 1: Forecasts and budgets - an example
246
252
Appendix 2: Accounting records - an example

10 Financing the business

Money
Bank finance
The bank's perspective
Banking relationships
Venture capital institutions and business angels
The equity investor's perspective
Stock market floatation
Is there a financing gap?
Gender, ethnicity and finance
Summary
Case insights
Martyn Dowes and Coffee Nation
Peter Kelly and Softcat
Andrew Barber, Robin Hall and FBS Engineering
Fred Turok and LA Fitness
Bob Holt and Mears Group
Elizabeth Gooch and EG Solutions
Cases with questions
Specsavers

257
259
263
267
269
270
272
273
275
278
281
264
267
271

274
275
280

NDT

272
276

Part 3 Growth

287

11 Planning for growth

Ingredients of success
A framework for developing strategy
Sustainability and corporate social responsibility
Vision and mission
Values and ethics
The SWOT analysis
Financial performance analysis
Value chains
SLEPT analysis

289
291
292
293
297
299
300
304
308
309

Contents

Strategy intent
Securing competitive advantage
Successful entrepreneurial strategies
Developing entrepreneurial strategies in the real world
Summary

311
313
314
320

Case insights
Jordans
Dale Vince and Ecotricity
Abet & Cote
J. J. Cash
Dell Computer Corporation

294
295
296
303
312

Cases with questions

Dmitry Kotehko and Nitol Solar
Lastminute.com
easyJet

312
316
318

12 New products and services

Product life cycles
Product portfolios
Portfolio strategies
Managing the product life cycle
Financial implications of the product portfolio
Implications for the entrepreneur
Summary

310

325
327
330
332
335
338
339
340

Case insights
Heinken

331

Cases with questions

Cadbury 1
Barbie and Mattel Corporation

333
336

13 Growing the business

Growth options
Market penetration
Product/service development
Market development
Diversification
Risk
Buying growth
Summary

343
345
346
348
349
350
352
355
360

Case insights
Wilson & Sons
Virgin
Tim Slade, Julian Leaver and Fat Face
Wing Yip

347
348
350
352

Cases with questions

Jim Ratcliffe and Ineos Group
George Brian BoedeckerJr. and Crocs
Cadbury 2

357
358
359

Contents

14 Developing the business plan

363

Why you need a business plan

The planning process
What a business plan looks like
Using the plan to obtain finance
The bankers' view
The investors' view
Presenting a case for finance
Pro forma business plan
Summary

365
365
369
371

Cases with questions

Chris Hutt and the Newt & Cucumber

15 Exit: failure and success

Stagnate and die
Failure
The ingredients of failure
Predicting failure
Dealing with failure as an individual or a sole trader
Dealing with failure as a company
Success - selling the business
Company valuation
Summary
Case insights
Nick Kenton, Rob Taub'and Sportsbase
Nicholas Hall
Tech Board and Imperial Board Products
ZedZed.com
Alex Meisl and Taotalk, then Sponge
Peter Durose and the English Grocer
Kristian Segerstrale and Ptayfish
Vivid Imaginations
The Body Shop
Julian Harley Ian West and Harley West Training
Anne and Simon Notley and Feather and Black
Cases with questions
Cobra Beer

Part 4 Maturity
16 The family firm
The advantages of family
Family business is big business
The conflict between family and business cultures
Succession
Points of conflict
The introvert firm
Resolving conflict: the family constitution

374
375
377
378
382
372

385
387
388
390

394
396
397
400
403
404
387
390
392

393
394
397
401
401
402
403
404

399

407
409
411
413
414
417
419
421
422

Succession planning
Summary
Case insights
Doreen Lofthouse and Fisherman's Friend
Adidas vs Puma
Values and beliefs
Ferrero Rocher
Noon Products
Litttewoods
Alex Ramsay
J&B Wild
Everards Brewery
Cases with questions
Timberland
Wates Group
Mars Inc.

425
428
412
414
415
416
419
420
420
421
423
416
424
427

17 From entrepreneur to leader

Growth and crises
Changing skills
Coping with crises
The role of leader
The evolving vision
Leadership style
Building the management team
The board of directors
Entrepreneurial structures
Traditional large firm structures
Structure, change and task complexity
Creating culture
Entrepreneurial leadership skills
Summary

431
433
435
439
440
442
444
448
450
451
453
454
456
459
465

Case insights
David Poole and DP&A
Gary Redman and Now Recruitment

455
460

Cases with questions

Michael Dell

461

18 Corporate entrepreneurship
Defining corporate entrepreneurship
Entrepreneurial architecture
Learning organisations
Building the architecture for entrepreneurial
transformation
The role of culture
The role of structure
Management, structure and control
Intrapreneurship

469
471
474
475
477
480
482
485
489

Contents

Organising new venture ideas

Corporate venturing
Summary

498

Case insights
Julian Metcalf, Sinclair Beecham and Pret a Manger
Richard Branson's Virgin Group

472
484

Cases with questions

David Hall and HFL
Nokia
3M

487
494
496

Further reading and journals

Subject index
Author index
Quotes index

491
492

505
508
513
516

Companion resources
Visitwww.palgrave.com/business/burnsforanaccompanying students' website :
and password-protected lecturers' website:
Students' website
0 Video commentaries by the author
> Interactive chapter tests
t> General Enterprise Tendency (GET) Test
> Corporate Entrepreneurship Audit Tool
> Leadership Style Test
> Small business audit checklists
:
0 Five entrepreneurship assignments including a small business growth
audit
> Downloadable versions of the cases with questions, including additional;
cases not included in the book
D> Downloadable versions of a pro forma business plan and the specimen
plans for Sport Retail, Jean Young and Dewhurst Engineering
> Additional exercises on basic business skills such as accounting, financial
management and marketing
[> Checklist of regulations to be met in setting up a business in the UK
> Sources of information, help and advice in the UK
> Selected websites offering further learning resources and practical,
up-to-date help and advice, with hyperlinks
i
Lecturers' website
t> Powerpoint slides for each chapter
> Notes on the entrepreneurship exercises
> Teaching notes for cases with questions
t> Teaching notes for the specimen business plans
> Selected case studies from the European Case Clearing House, many with
related DVDs. These are particularly valuable for postgraduate teaching.