Report: Entrepreneurship and Innovation in New Business Ventures

This report provides an analysis of new business ventures, focusing on entrepreneurship and innovation, with a case study of John Paul DeJoria's ventures, including Paul Mitchell and Patron Spirits Company. It examines the capital resources required for new ventures, methods of obtaining them, and challenges faced by entrepreneurs in the USA. The report includes a PESTLE analysis of the American market, covering political, economic, socio-cultural, technological, legal, and environmental factors. It also discusses potential risks associated with business ventures, highlighting the importance of financial stability, human resources, educational resources, physical resources, and emotional resources for entrepreneurial success. Desklib is your go-to platform for similar solved assignments and study resources.

Running head: ENTREPRENEURSHIP AND INNOVATION
Entrepreneurship and innovation
Name of the Student
Name of the University
Author Note

1ENTREPRENEURSHIP AND INNOVATION
Executive Summary
The purpose of this report is to analyze new business venture in order to find out the capital
sources required for the new business venture and the methods by which they are obtained. The
selected business venture to be discussed here is the business venture conducted by one of the
most renowned entrepreneur of America, John Paul DeJoria. The mentioned entrepreneur has
conducted the business venture of providing the people with superstar hairstyle. Along with that,
the entrepreneur has successfully established the business of High end alcohol by the name of the
Patron Spirit Company. In this report the challenges and difficulties faced by the business
ventures in USA will be analyzed. Along with that, the issues associated with legal,
technological, political, economic, environmental, social and cultural factors will also be
discussed in this report.

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Table of Contents
Introduction......................................................................................................................................4
Discussion........................................................................................................................................5
Capital resources for the new venture and methods of obtaining the same.................................5
PESTLE Analysis of the American Market.................................................................................9
Risks associated with the business venture of John Paul DeJoria.............................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

3ENTREPRENEURSHIP AND INNOVATION
Introduction
The term business venture can be defined as a start up entity which has been developed
with the intention to get profited financially. The success of a business venture is highly
dependent on the efficiency and farsightedness of the entrepreneur. Majority of the business
ventures are created on the basis of the demand of the market. Entrepreneurs generally identify
the needs of the consumers for the specific product or service and based on the specific
requirements of the consumers, the investors proceed to develop innovative ideas. These ideas
are then marketed and the final product is old to the consumers to meet their requirements and
experience gradual enhancement in the revenue of the system. A business venture can be
conducted by a single entrepreneur as well as a group of entrepreneur with the same objective of
gaining financial success. According to researchers, conducting a business venture in a already
saturated market may result in failure (Beamish, 2013). Hence, it is highly crucial for the
entrepreneurs to conduct in depth research of the market about the availability of the product or
services to be offered to the consumers. Majority of the successful business ventured has taken
note of the demand of the market since high demand along with lack of supply of the product or
services to be offered to the consumers facilitates busies venture. When it comes to the
entraprenual business venture, the venture includes new products instead of old business models.
In this report, the business venture of John Paul DeJoria, one of the most renowned
American entrepreneur and a self made billionaire has been highlighted upon. He is best known
for being the cofounder of the Paul Mitchell line of hair products and for being the founder
of The Patrón Spirits Company. While DeJoria committed himself to the business of Paul
Mitchell, who was a superstar hairdresser of his time, the startup for the business was only 700

4ENTREPRENEURSHIP AND INNOVATION
dollars. Within the time span of 2 years the Mitchell-DeJoria due were able to raise the profit of
the company to a huge amount and currently, the company generates approximately 1.5 billion
dollar every year. When it comes to his business of Patron Spirits, it can be said that the business
have gained success due to the incredible approaches to the challenges taken by the mentioned
entrepreneur.
Discussion
In this section, detailed discussion about the origin of the capital sources for new venture
and the methods to obtain the some will be performed along with that, this section will also
include detailed description of the challenges faced by the venture and the potential risks
associated with the business venture.
Capital resources for the new venture and methods of obtaining the same
Financial stability can be considered as one of the most crucial factor that needs to be
considered while supporting a new business venture. According to researchers, the chief capital
sources for the new venture include financial resources, human resources, educational resources,
physical resources and finally emotional resources (Schaper, 2016). While starting a new
business venture it is highly crucial for the entrepreneur to collect adequate resources so that the
business can be established successfully. In the following paragphs the methods of obtaining the
above mentioned capital resources have been discussed.
Financial resources
As being discussed earlier, the most crucial element need to start the new business venture
includes funding. Even the most basic business does need a good amount of startup cost that hlps
the entrepreneur to register the business name and obtain a business telephone line as well as

5ENTREPRENEURSHIP AND INNOVATION
printing business cards. Generally entrepreneurs obtained financial resources from a variety of
sources, the most common being the personal accounts of the Founder. When it comes to the
hair dressing business of John Paul DeJoria, he had invested a lump some money of 700 dollars
as the investment for his business venture. According to researchers, for investors who are
unable to fun the business with the help of personal accounts, loans granted by the financial
institutions, private investors, debt from friends and relatives and loan taken from the
governments are considered to the alternative methods for financial investments (Morris,
Shirokova & Shatalov, 2013).
Human resources
The success of a new business venture is highly dependent on the skill level of its
employees. Hiring skilled candidates who possess the track record of excellence in their area of
expertise ensures that the goal of the company will be achieved efficiently within a shorter
period of time. Considering the fact that the business venture of John Paul DeJoria and Mitshell
includes hair dressing, recruiting employees who have got previous experience in the mentioned
profession and possess expertise to satisfy the consumers are highly crucial (Mohammed &
Obeleagu-Nzelibe, 2014). Since Paul Mitchell himself was a highly renowned hair dresser, he
was able to provide effective training to the employees which in turn enhance their skill level and
eventually resulted in the enhancement of the revenue of the business.wen it comes to
recruitment of employees and supplier of the Patron Sprit company, as the founder, DeJoria has
invested high on the recruitment procedure so that only the best of the candidates are recruited as
the employees of the company.
Educational resources

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In order to gain success in the new business venture, it is highly crucial or the
entrepreneur to gain as much knowledge about the service or the product as possible. Gaining
knowledge about the industry to be operated helps the entrepreneur to understand his
competition and get prepared to make smarter decision so that success can be achieved easily. In
case of John Paul DeJoria, he had gathered enough knowledge about the upcoming demand of
the hair dressers and hair care products in the American market before investing in the same
(Macht & Weatherston, 2014). When it comes to Patron Spirit, the knowledge that the demand
for high end alcohol within the American society is gradually increasing, has led to the
establishment of the company. Some of the methods by which the mentioned resource is
obtained are through professional trade associations, the local chamber of commerce as well as
the small business organization.
Physical resources
Physical resources are defined as the area that is needed by any business to survive.
Physical resources chiefly includes an appropriate work place, properly working internet or
telephone lines, effective marketing material and adequate information system. This aspect of a
new business venture can be costlier than the others. In case of the hair care products line, the
financial resources invested by John Paul DeJoria along with Michell are the chief source of the
physical resources. The physical resources of the Patron Spirit Company were also obtained
through personal investment of the entrepreneur himself.
Emotional Resources
According to researchers, for an entrepreneur, initiating a business can be extremely
stressful. In order to maintain the sanity as well as to stay motivated, it is highly crucial to have

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team support as well as support from the family and friends (Jentsch, Trost & Sterner, 2014).
John Paul DeJoria, being one of the greatest entrepreneurs of all time have always kept himself
motivated. This in turn have imposed positive impact on his business and within a span of 2
years, he has enhanced the revenue of the organization almost by 3 times of the investment.
Potential challenges and difficulties during the business venture
The challenges associated with a new business venture are highly associated with the type of the
business venture. However, irrespective of the type of the business, the following are the major
challenges that are faced by the business entrepreneur.
1. Cash flow management:
During the startup, it gets highly difficult for the entrepreneurs to manage the cash
inflow as well as outflow at the same time. For instance, several entrepreneurs are found
to struggle to pay the bills while waiting for the checks to arrive. The major reasons
behinds the issue includes delayed invoicing.
2. Recruitment
During the initial stage of the business, it becomes difficult for the entrepreneurs
to recruit skilled employees and pay them the salary demanded. This is because, being
new to the business, the entrepreneur lacks the financial stability that is needed to pay the
skilled employees. John Paul DeJoria, in order to cope up with the mentioned issue had
implemented the strategy of recruiting fresher employees and provide them with effective
training so that that they can obtain the potential to become the asset for the company
(Grilli & Murtinu, 2014).
3. Time management

8ENTREPRENEURSHIP AND INNOVATION
Considering the fact that during the initial period of the business venture, an entrepreneur has
to perform several roles within the business, it becomes highly difficult for him to demonstrate
effective time management. In order to eradicate the issue, creating goal lists and religiously
abiding by them can be considered as an effective method.
PESTLE Analysis of the American Market
In order to understand the potential challenges and difficulties faced by John Paul
DeJoria while conducting the new business venture, PESTLE analysis of the USA market has
been conducted bellow.
Political Factor  Stable political climate
 USA is considered to be a great
destination for foreign investment
 High control of the government on the
cosmetics and the alcohol
manufacturing industry.
 High tax rates
Economic Factor  Deterioration of the economic condition
due to recession.
 Recent drop of GDP in the year 2017
 High unemployment rate
Socio-cultural factor  Aging population
 Health conscious population
 lower consumption of alcohol among

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elite class
 High Literacy rate
 Socio economic mobility in USA has
got increased
Technological factor  Highly advanced technology
 24*7 hours transportation and internet
service
 More than 90 percent of the population
uses popular social media sites like
Facebook, Instagram and others
 Rate of technological innovation is
rapid in the nation
Legal factor  Each state of USA has its own
governmental structure
 The nation has strict regulations
(Drucker, 2014)
 minimum 135 days for initiating a new
business venture
 34.5 percent of the GDP is taxable
Environmental factor  The population is highly conscious
about environmental degradation
 All the industries are entitled to high
fine in case of not abiding by

10ENTREPRENEURSHIP AND INNOVATION
environmental lrules and regulation
 Extreme climate disaster have resulted
in financial damages and disruption in
everyday life

Political Factor
USA is the second largest democracy across the world and the elections held in the nation is
usually transparent and fair. Stable political condition does impose positive impact on new
business ventures (Cavusgil et al., 2014). Stable political condition attracts foreign investors to
invest in the local industry. USA has been the 1st choice for investment for several multinational
organizations for a prolonged period of time. However, the fact that the government imposes
high control over the alcohol and cosmetic producing organizations does has the potential to
impose negative impact on the business venture of John Paul DeJoria.
Economic Factor
In spite of being a developed nation, the recent recession has imposed highly negative
impact on the economic stability of the country. The rate of unemployment has got increased.
However, this factor has added a benefit for new venture across the nation. Entrepreneurs are
able to recruit skilled labor at a much cheaper rate. When it comes to the business venture of
DeJoria, financial crisis has created a major challenge for the business since it hinders the
consumers to invest more in cosmetic and hair care products.
Socio-cultural factor

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USA has aging population. Due to this, the health consciousness of the citizens is higher.
This has created a major challenge for the Patron Spirit Company since the alcohol consumption
of the people has got reduced in the recent years. Considering the fact that the company sells
only high end alcohol, the business may suffer major loss due to the exiting high demand of
luxurious alcohol among the elite class.
Technological factor
USA being a highly technological advanced nation has imposed several positive impact
on the new business ventures of the nations. First of all, due to the round the clock availability of
the transportation service and the service across the nation, it has become easier for entrepreneur
to manage both inbound and outbound logistics more efficiently. Along with that the 24 hours
round internet service along with the presence of majority of the citizens in popular social media
has made it easier for entrepreneurs to promote their business online through cost effective
mediums like social media platforms (Bruton et al., 2015). For instance, social media sites like
Facebook and LinkedIn had highly helped DeJoria to promote his hair care product to the
consumers. Social media platforms also enable entrepreneurs to enhance their consumer base and
loyalty by directly communicating with the consumers through internet and understand their
specific requirements.
Legal Factor
Since, each of the states in USA has their own rules and regulation, the entrepreneurs
needs to abide by both the state as well as country regulations in order to establish the business
in the country. Moreover, the high control of the government over the business industries and
34.5 percent of the tax can be considered as another major challenge faced by the new venture

12ENTREPRENEURSHIP AND INNOVATION
(Brenkert, 2017). Along with that, a minimum of 135 das are required in order to open a new
business in USA. All these factor if not abided by the entrepreneur has the potential to act as a
major challenge for the establishment of the business in USA.
Environmental Factor
In order to eradicate environmental degradation, the government of USA has imposed
several rules and regulation and all the business organizations are liable to abide by the same.
Moreover, the population of the nation is also highly conscious about the environmental
sustainability. Hence entrepreneurs need to abide by the environmental regulations in order to
successfully expand their business in Australia.
Risks associated with the business venture of John Paul DeJoria
John Paul DeJoria, being one of the most well known American entrepreneurs has
conducted the business venture of providing the people with superstar hairstyle. Along with that,
the entrepreneur has successfully established the business of High end alcohol by the name of the
Patron Spirit Company. In the above paragraph the external environmental analysis of the market
of USA has been conducted. Several risks associated with the mentioned business venture has
been detected.
Firstly, due to enhanced health consciousness of the population, the consumption of
alcohol among the higher class and deluxe class societies in USA has got reduced (Bertoni,
Colombo & Grilli, 2013). This can be considered as a major risk for the Patron Company since it
sold high end alcohol to the consumers. In order to deal with the issue, the company can diverge
its product so that it can also capture the middle class consumer base.

13ENTREPRENEURSHIP AND INNOVATION
Secondly, due to recession, the attraction of the consumers towards cosmetics and hair
care product has got reduced. The high rate of unemployment has reduced the GDP of the nation
and people prefer cheaper skin and hare care products rather than the expensive ones.
Conclusion
From the above discussion it can be conclude that the being farsighted, John Paul DeJoria
has successfully established his new business venture in USA. The capital resources possessed as
well as obtained by the entrepreneur has helped him to ehance his business in the market o USA.
However, the fact that several difficulties and risks are associated with the establishment of the
business venture cannot be ignored. In order to deal with the difficulties efficient strategies along
with vision of solving the problems are required which in turn will bring great success to the
business along with eradicating the issues.

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References
Beamish, P. (2013). Multinational joint ventures in developing countries (RLE International
Business). Routledge.
Bertoni, F., Colombo, M. G., & Grilli, L. (2013). Venture capital investor type and the growth
mode of new technology-based firms. Small Business Economics, 40(3), 527-552.
Brenkert, G. G. (2017). Entrepreneurship, ethics, and the good society. In Entrepreneurship (pp.
85-128). Routledge.
Bruton, G., Khavul, S., Siegel, D., & Wright, M. (2015). New financial alternatives in seeding
entrepreneurship: Microfinance, crowdfunding, and peer‐to‐peer
innovations. Entrepreneurship Theory and Practice, 39(1), 9-26.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L.
(2014). International business. Pearson Australia.
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Grilli, L., & Murtinu, S. (2014). New technology-based firms in Europe: market penetration,
public venture capital, and timing of investment. Industrial and Corporate
Change, 24(5), 1109-1148.
Jentsch, M., Trost, T., & Sterner, M. (2014). Optimal use of power-to-gas energy storage
systems in an 85% renewable energy scenario. Energy Procedia, 46, 254-261.
Macht, S. A., & Weatherston, J. (2014). The benefits of online crowdfunding for fund‐seeking
business ventures. Strategic Change, 23(1‐2), 1-14.

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Mohammed, U. D., & Obeleagu-Nzelibe, C. G. (2014, January). Entrepreneurial skills and profitability
of Small and Medium Enterprises (SMEs): Resource acquisition strategies for new ventures in
Nigeria. In Proceedings of 25th International Business Research Conference (Vol. 64, No. 16,
pp. 1-21).
Morris, M. H., Shirokova, G., & Shatalov, A. (2013). The business model and firm performance: The
case of Russian foodservice ventures. Journal of Small Business Management, 51(1), 46-65.
Schaper, M. (Ed.). (2016). Making ecopreneurs: developing sustainable entrepreneurship. CRC Press.

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Appendix
Figure 1: John Paul DeJoria
Figure 2: Range of Patron Spirit Company