Question: A growing number of franchise organizations,

> What are the different ways that advisory boards meet and conduct their business?

> What is the purpose of forming an advisory board?

> What is signaling and what is its potential value for a new venture

> How does a firm compute its profit margin? What is the significance of this ratio?

> What are the costs involved in purchasing a business format franchise? Are these costs similar across franchise systems, or do they vary widely? Which costs are one-time costs and which costs continue indefinitely?

> What is the purpose of an income statement? What are the three numbers that receive the most attention when evaluating an income statement? Why are these numbers important?

> What is the purpose of a forecast? What factors does a firm use to create its forecasts of future sales, income, expenses, and capital expenditures?

> What is meant by the percent-of-sales method as it relates to forecasts?

> How is a focus group used to generate new business ideas?

> What is the purpose of an assumptions sheet?

> What is the purpose of financial ratios? Why are financial ratios particularly useful in helping a firm interpret its financial statements?

> What are the three separate categories of activities that are reflected on a firm’s statement of cash flows? Briefly explain the importance of each activity.

> What is the purpose of a statement of cash flows?

> How does a firm compute its current ratio? Is this a relatively important or unimportant financial ratio? Explain your answer.

> What are the major categories of assets and liabilities on a balance sheet? Briefly explain each category.

> What rules of thumb should an entrepreneurial venture follow to successfully sell its products overseas?

> What is a founders’ agreement and why is it important for a team of entrepreneurs to have one in place when launching a venture?

> Is a limited liability company an appropriate form of ownership for an aggressive entrepreneurial firm? Why or why not?

> What are the advantages and disadvantages of a limited liability company?

> What are stock options and why would a corporation offer stock options to its employees?

> What factors favor older entrepreneurs as opposed to young entrepreneurs?

> What are the differences among a public corporation, a closely held corporation, and a private corporation?

> What is meant by the term piercing the corporate veil and what are the implications for the owners of a corporation if the corporate veil is pierced?

> What is the difference between preferred stock and common stock?

> What are the major advantages and disadvantages of a C corporation?

> What are the differences between a general partnership and a limited partnership?

> What are the six foreign market entry strategies and what are the key characteristics of each one?

> Is a sole proprietorship an appropriate form of ownership for an aggressive entrepreneurial firm? Why or why not?

> What are the advantages and disadvantages of organizing a new firm as a sole proprietorship?

> At what point, during the process of starting a firm, does a business need to focus on the business licenses and permits that it needs, and why at that point?

> What are the differences between a summary business plan, a full business plan, and an operational business plan?

> How will investors typically react if they think a business plan is based on estimates and predictions rather than on careful analysis and facts?

> What are the differences between an opportunity and an idea and why are those differences important for entrepreneurs?

> What is the difference between primary research and secondary research?

> What is the purpose of a licensing agreement? What is attractive about a licensing agreement for those leading an entrepreneurial venture?

> Who reads the business plan and what are they looking for when doing so?

> What is the difference between a merger and an acquisition? How can acquisitions help firms fill their needs?

> What is the difference between an internal and an external growth strategy?

> What is a trademark? How can a trademark help a firm establish a competitive advantage in the marketplace?

> What are the six steps in applying for a patent?

> What is the purpose of an assignment of invention agreement? Is it a good idea for firms to ask their employees to sign assignment of invention agreements?

> Give an example of a design patent. How can having a design patent provide a firm a competitive advantage in the marketplace?

> What is a business method patent? Provide an example of a business method patent. How can having such a patent provide a firm a competitive advantage in the marketplace?

> Do all firms have the potential to be aggressive rapid-growth firms? Why or why not?

> What are the two primary purposes of conducting an intellectual property audit? What risks does a company run if it doesn’t periodically conduct an intellectual property audit?

> How would you describe the four areas that a properly executed feasibility analysis explores?

> What are the two primary reasons for those starting a new venture to write a business plan?

> Suppose you became interested in opening a School of Rock franchise (see Case 15.2 for more information about this company). You fly to Philadelphia and visit the company’s headquarters. After learning more about the opportunity, you tell the School of R

> A friend of yours owns a carpet and installation business, which is a full-time job. To increase his income, he’s thinking about buying a 1-800-Water-Damage franchise, which is a franchise that helps homeowners and businesses restore property that has be

> Bill Watts has decided to buy a sub shop franchise called Super Subs. He lives in Cedar Falls, Iowa, and will be the first Super Subs franchisee in the state. Along with buying a Super Subs franchise, Bill would also like to purchase the rights to offer

> A friend of yours heard her roommates talking about different kinds of franchises. Before she could ask questions, they left for a team meeting to work on a class project. Your friend knows that you are taking an entrepreneurship course. She asks you: “W

> A friend of yours owns a chain of 25 fitness centers in Florida and Georgia. The fitness centers cater primarily to young professionals, ages 21 to 40. Your friend is worried because his centers have declined in terms of overall membership. Your friend t

> Brian Brunner is an entrepreneur who has invented several devices that are used in the telecommunications industry. He has patented the devices and manufacturers them in a job shop in Oklahoma City. Brian sells the devices directly to AT&T and Verizon. L

> Google reportedly offered to buy Groupon for $5 billion to $6 billion in November 2010—an offer that Groupon turned down. Why do you think Google wanted to acquire Groupon, and why do you think Groupon declined Google’s offer?

> Cisco Systems, Microsoft, and IBM often acquire small, technology-based entrepreneurial firms. Why would Cisco Systems, Microsoft, and IBM, which each employ hundreds of product development specialists and engineers, buy other firms to acquire technology

> Zynga is a social network game developer that develops browser-based games that work both as stand-alone games and as application widgets on social networking sites such as Facebook. What are the pluses and minuses of Zynga’s approach to launching games

> When is the appropriate time to write a business plan?

> What is entrepreneurial alertness and why is it important to entrepreneurs?

> Do you anticipate that entrepreneurship will continue spreading throughout the world, or do you think its appeal will subside over time?

> Think of a company that you’re familiar with that has grown via a product line extension strategy. Provide an overview of the company and how it’s rolled out its product line extension strategy.

> Spend some time studying Zero Motorcycles, the focus of the “You Be the VC 14.2” feature. Is it more likely that Zero Motorcycles will grow through internal or external growth strategies? What internal growth strategies and/or external growth strategies

> Collin Ryan owns an electronics firm in central Michigan. As a result of some innovative new products that his company plans to roll out over the next two to three years, he expects a substantial increase in sales. To gear up for the increase in sales, C

> Meredith Colella is a food products engineer who has developed an innovative approach for the packaging of meat. Her approach will extend the shelf life of most meat products by about 30 percent. Meredith is getting ready to try to sell the idea to inves

> Sarah Jeffers lives in Austin, Texas, where she has owned a graphics design company for three years. She spends 12 hours a day at work micromanaging every aspect of her business, yet she still can’t get the business to grow. Using materials included in t

> Kyle Simms just succeeded his father as the CEO of a consumer products firm in Mission Viejo, CA. Prior to returning to the family business, Kyle spent 11 years at Procter & Gamble in Cincinnati. Kyle’s dad built a solid company, but over the past five y

> Three years ago, Chris Dees launched a medical products company that specializes in providing products for people with diabetes. His company is number one in its industry. Recently, a couple of competitors have entered the picture, and Chris is wondering

> Patty Stone owns an industrial equipment company named Get Smart Industrial that sells three products in the oil services industry. Get Smart’s products are sold via a direct sales force. Patty wants to grow the firm by adding new products but has run in

> What is the number one rule in making an investor presentation?

> What is a product line extension strategy? Provide an example of a product line extension strategy and describe how its effective use might increase a firm’s sales.

> Seven months ago, Sam Peters launched a chain of kiosks located in malls that sell smartphone accessories. His first kiosk was in a mall in Washington, D.C., and he is now expanding into Maryland, Virginia, and Pennsylvania. Sam’s company has grown quick

> Pete Martin just purchased a copy of Inc. magazine’s annual issue that ranks the top 500 fastest-growing privately owned companies in America. Pete was amazed by some of the stories that were told in different articles appearing in the magazine and as a

> What is a target market?

> Ken and Jackie Smith just purchased a small winery in the Napa Valley of northern California. One thing they noticed when they were investigating the winery is that the owners never placed the “100% Napa Valley” certification mark on their bottles. Now t

> According to the chapter, a trademark registered with the USPTO can theoretically remain registered forever as long as it stays in use. Does the owner of a trademark have to take affirmative action to demonstrate to the USPTO office that a trademark is r

> Tyler Simms just invented a new product that he is convinced is unique and will make him wealthy. The product is a toothbrush with a tube of toothpaste attached to the handle. Tyler is anxious to file a patent application on the product, but when he tell

> Access the USPTO Web site and look up U.S. Patent Number 5,433,036. Describe the purpose of the patent. Do you think this patent describes an invention that has commercial potential? On a scale of 1 to 10 (10 is high), how significant do you think the po

> Imagine you are about to attend a one-day seminar dealing with intellectual property law, and you contact a friend of yours who is in the process of starting a business to urge her to attend the seminar with you. She says to you, “I’m really busy because

> Read the “You Be the VC 11.2” feature that deals with Eatsa. What actions would you suggest that this firm take to develop a guerilla marketing campaign?

> Shannon Garza has developed a new type of space heater that is quieter and safer than previous generations of space heaters and is specifically geared to people who live in small spaces, such as apartments or dorm rooms. Shannon doesn’t know how to price

> What are the advantages of preparing a business plan for a new venture?

> Spend some time looking at Red Bull’s website (www.redbull.com). Comment on each element of Red Bull’s marketing mix (product, price, promotion, and place in terms of distribution and sales). If you need additional information, conduct Internet or librar

> If you decided to start a small-business consulting service in Columbus, OH, how would you approach the following topics: market segmentation, selecting a target market, and developing a positioning strategy?

> Reread the Opening Profile. After doing this, make a list of all the things that you think that Andrew Pohle, Jake Schaufeld, and Jordan Levy have done well in building an effective marketing program for Real Time Cases.

> Of the three primary reasons people become entrepreneurs, which one is given most commonly and why?

> Joshua Sherman, who lives near Vancouver, Canada, is preparing to pitch an idea for a social gaming website to a group of angel investors. The site has some new and novel aspects to it. He made a practice presentation in front of his advisory board, and

> Ed Sayers just returned from a meeting with his banker with a frustrated look on his face. He tosses his keys on the kitchen counter and tells his wife, “I just can’t understand where my banker is coming from. I have a great idea for a new firm, but the

> Jim Carter, a classmate of yours, is preparing to launch an e-commerce company to sell home repair guidebooks, tools, how-to videos, and related material for home repair and remodeling projects. He just told you that he talked to his paternal grandmother

> Samantha Smith, a friend of yours, was recently telling you about a company that her father is starting in the solar power industry. Samantha’s father is using a technology he developed, which has received favorable write-ups in several technical publica

> Jose Peacher is an executive with a large manufacturing company. A former coworker of his recently started a company and raised $1 million from a well-known angel investor even though he did not need the money to launch the business. Jose thinks his frie

> Cindy Combs, a professional investor, was having lunch with a colleague recently and said, “Do you remember Peter Kennedy, the entrepreneur we met the other day who created an iPhone app that helps busy families keep track of their activities? I checked

> What is the purpose of a sources and uses of funds statement?

> Currently, Ann Schafer is a sales representative for The Pampered Chef, a direct sales organization which sells kitchen utensils and related products. Ann, who lives near Houston, Texas, is thinking about leaving her current job so she can open her own f

> Suppose a colleague of yours is gearing up to write a business plan for a business she intends to start. She told you she plans to prepare the financial statements first, to get that job out of the way before she tackles the rest of the plan. What the fl

> What items on the left side (or top) and what items on the right side (or bottom) of a firm’s balance sheet should receive the greatest scrutiny? In regard to each of these items, what are the most important factors that a new venture should focus on to

> Casey Cordell is the owner of a digital photography service in Madison, WI. The company has been profitable every year of its existence. Its debt ratio is currently 68 percent, its current ratio is 1:1, and its debt-to-equity ratio is 72.2 percent. Do th

> How can finding a gap in the marketplace create a business opportunity?

> Jorge Martinez is thinking about buying an existing printing business and has been carefully studying the records of the business to get a good handle on its historical financial performance. Jorge heard that you are taking a class in entrepreneurship an

> Chipotle Mexican Grill is a publicly traded company. Calculate the firm’s price-to-earnings ratio (P/E). What does Chipotle’s P/E ratio tell you about investors’ expectations regarding the company’s growth? How do Chipotle’s financial ratios compare to r

> Kate Snow just retired from a career with Walmart, cashing out a sizable retirement fund at the time of doing so. To start a second career, she is looking at the possibility of buying three different businesses. She has three years’ historical financial

> Suppose a friend of yours showed you the pro forma income statements for his start-up and exclaimed excitedly that during the first three years of operations his firm will make a net income of $150,000 per year, which is just the amount of money ($450,00