ENTR500: Entrepreneurship Assignment - Core Concepts and Analysis

This document presents a comprehensive analysis of key concepts in entrepreneurship. It addresses crucial questions such as the importance of a strong team, the inevitability of competition, and the differences between marketing strategies of startups and established companies. The assignment also explores the creation of pro forma financial statements, venture capital investment, business valuation methods, and strategies for entrepreneurs when facing a lack of immediate business opportunities. Furthermore, the solution provides insights into managing team dynamics, including preventing burnout, resolving interpersonal conflicts, and addressing family pressure. The document provides a detailed exploration of the core principles of entrepreneurship. This assignment provides valuable insights and real-world applications of these principles.

Running Head: ENTREPRENEURSHIP 1
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1. Explain the rationale behind the statement, “A first-class team with a second class
idea is better than a second-class team with a first class idea.”
The rationale means that if one identifies a good opportunity but their team does not have the
required experience to implement the opportunity, the team will be unable to fulfill the potential
of the idea. Additionally, the important ingredients for the success in entrepreneurship include an
excellent market opportunity and a superb entrepreneur who has an efficient management team
(Burns, 2016). Moreover, entrepreneurship skills do not come by luck, but by the ability to
combine one’s knowledge and experience in bringing an idea to life.
2. Why is the statement, “My startup has no competition,” always wrong? How can you
find out about your competitors?
According to Ruisi (2015) when starting a business, competition is always there no
matter the type of market a start-up business is venturing in, whereby competition may be in the
form of the availability of substitute products in the market. In the world of start-up businesses,
higher potential and increased stakes for success and disruptive growth make competition to be
very fierce. Obviously, various well-known start-up competitions exist in all industries, with the
highest competition coming from the already established and experienced businesses in the
industry. The established businesses have the benefit of funding, validation, customer loyalty and
trust, and exposure in the industry, with winners being basically rewarded with capital which is
the main driver for all businesses.
Additionally, the funding comes about without businesses being required to sacrifice
various limitations and equity, hence gives the organization a greater value as compared to other
funding sources. Generally, there is a mixed track record for successful start-ups, since success
cannot be guaranteed solely by winning. However, there are enough winners for successful

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competition that the early attention and exposure achieved by the companies can be considered a
viable success path. Competition may present itself in the form of stealth competition and,
therefore, it is the responsibility of the entrepreneur to use databases suppliers and other critical
channels in the tracking down of stealth competitors.
3. Why is the marketing done by entrepreneurship different from marketing done by
established companies?
Established companies have astronomical budgets as compared to the budget available
for small businesses; hence entrepreneurs are aware of the differences in their plans for
marketing and those of corporate titans enjoying the economies of scale. Additionally, the
differences in staffing place the established corporations a very high competitive edge, since the
marketing department is flooded with various highly experienced marketing professionals. For
small businesses, the organizational chart places marketing responsibility in the top box, with the
owner of the business having the responsibility of managing the marketing processes.
4. Three major problems your team may face are burnout, interpersonal conflicts, and
family pressure. Describe how you can prevent and overcome
Several training programs and approaches are available for the management, early
recognition, and the prevention of burnout situations, family pressure, and internal conflicts.
Generally, prevention is based on establishing facts which promote unity, eradicate burnout, and
foster healthy minds in the workplace. The factors include actively coping with situation
transformations, and avoiding acting directly on the emotions of employees. Additionally,
sustaining plan development and active involvement assists in dealing with direct stress factors,
including family pressure.

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5. Inexperienced entrepreneurs often believe the misconception that a business plan is
solely designed as a brochure for investors.
The financial benefits as to why entrepreneurs use a business plan are known and
successfully practiced by different entrepreneurs. Investors use a business plan to assist in
improving cash flows, identification of benefit of taxation that can save money and strengthen
profit margins. Therefore, fresh entrepreneurs who believe in the business misconception are
either looking for an established market leader or capital investment to venture into the business.
6. Explain why it is important to construct pro forma financial statements for new
ventures
A pro forma financial statement provides very important information about expectations
in future including proposed capitalization, earning forecast, cash flows and sales and therefore it
helps in accessing the sustainability of new ventures in the competitive environment.
Furthermore, the construction of pro forma will help in estimating how much the new venture
will need for the first years. The calculation of the venture’s capital requirement determines the
equity investments (Bottazzi, Rin & Hellmann, 2008).
7. Describe venture capital investment from the perspective of the firm’s general partners.
According to Cumming & Johan (2008), venture capital investment provides financial
services to small businesses and startup companies, which have the potential for long-term
growth. From the view of a firm’s general partners, venture capitals can be traditional whereby
each investor has rights of investing with equal terms. It can also be asymmetric whereby
different terms have different investors. Furthermore, the firm’s general partners investing with
the venture capital in private and public companies manage the investment portfolio and await
future sizeable returns before seeking to exit. In order for a business to invest well in venture

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capital investment, general partners manage the firm’s few funds with different restrictions on
investment such as geography.
8. Name the ways of valuing a business, and explain why none of them can be called ideal
Various ways in which a business can be valued include assets valuation including both
tangible and non-tangible resources, historical earning valuation, relative valuation, discount
cash flow valuation and future maintainable valuation. However, there is no single method,
which is ideal since the business value depends on future strategies of the company, risk,
opportunities, future harvest, the time horizon of analysis, purchaser’s financial resources and
alternative analysis. Additionally, each method is considered appropriate for the valuation of a
business although none is fit for every business.
9. What can an entrepreneur do when there are no business opportunities at all?
Entrepreneurs should focus on their core products, keep their pitch simple, stay true to
who they are, map their capabilities, and make use of marketing tools that suit the customers,
implement an action plan, and make use of the plan. The entrepreneur should keep on watching
the business environment in order to identify any opportunity that might arise. Furthermore, the
entrepreneur should also utilize that time by conducting benchmarking and market research that
will strengthen the existing opportunities.

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References
Bottazzi, L., Da Rin, M., & Hellmann, T. (2008). Who are the active investors?: Evidence from
venture capital. Journal of Financial Economics, 89(3), 488-512.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Cumming, D., & Johan, S. (2008). Information asymmetries, agency costs and venture capital
exit outcomes. Venture capital, 10(3), 197-231.
Ruisi, M. (2015). . The Role of Business Competitions in the Processes of Defining and
Launching a New Venture. Cases of Companies Involved in the ‘StartCup’Palermo and
Developed Inside the ARCA Academic Incubator. Start-ups and Start-up Ecosystems:
Theories, Models and Case Studies in the Mediterranean Area, 90.