scarb eesbm8e ppt 16.ppt › ccsf › smbs135 › pearson8 › chapter_16.pdf · 2015-11-20 ·...

ESSENTIALS OF ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT ●Chapter 16: Building a New Venture Team and Planning for the Next Generation

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Copyright © 2016 Pearson Education, Inc. 1

Copyright © 2016 Pearson Education Inc

Copyright © 2016 Pearson Education, Inc.

Building a New Venture Team and Planning for the Next Generation

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Section 4: Putting the Business Plan to Work: Sources of Funds

Section 4: Growing the Business

Explain the challenges involved in the entrepreneur’s role as a leader and what it takes to be a successful leader. Describe the importance of hiring the right employees

and how to avoid making hiring mistakes.Explain how to create a company culture that

encourages employee retention.Describe the steps in developing a management

succession plan for a growing business that allows a smooth transition of leadership to the next generation.Explain the exit strategies available to entrepreneurs.

16 - 3Copyright © 2016 Pearson Education, Inc.


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Leadership:The process of influencing and inspiring

others to work to achieve a common goal and then giving them the power and the freedom to achieve it.

Entrepreneurs must take on many roles in their companies, but none is more important than that of leader.


Business leaders should be:

Innovative

Passionate

Willing to take risks

Adaptable


Effective leaders:

Create a set of values and beliefs for employees

and passionately pursue them.

Establish a culture of ethics.

Define and then constantly reinforce the vision

they have for the company.

Develop a strategic plan that gives the company

a competitive advantage.



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Respect and support their employees.

Set the example for their employees.

Create a climate of trust in the organization.

Build credibility with their employees.

Are authentic.

Focus employees’ efforts on challenging and

driving toward those goals.


(continued)

Provide the resources employees need to achieve their goals.

Communicate with their employees.Value the diversity of their workers.Celebrate their workers’ successes.Are willing to take risks. Encourage creativity among their workers.Maintain a sense of humor.


(continued)

Create an environment in which people have the motivation, the training, and the freedom to achieve the goals they have set.

Create a work climate that encourages maximum performance.

Become a catalyst for change when change is needed.

Develop leadership talent. Keep their eyes on the horizon.


(continued)


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Do we want to build a great company, and are we committed to doing the things that are required to make our company great?

Do we have the right people on the bus and in the key seats?

What are the brutal facts?What are we best at, and what do we have an

unbounded passion for?Company hedgehog



What is our company’s 20-Mile March, and are

we hitting it?

Where do empirical data tell is that we should

be placing our big bets?

What are the core values and core purpose on

which we want to build this enterprise over the

next 100 years?

What is our 15-to25-year BHAG?


(continued from 16-10)


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What could kill our company, and how can we

protect our flanks?

What should we stop doing to increase our

discipline and focus?

How can we increase our luck?

Are we becoming a Level 5 leadership and

cultivating a Level 5 management culture?


(continued)

There is no one single “best” style of leadership.Many workers respond well to servant

leadership: A leader takes on the role of servant first and

leader second.What do people need?How can I help them get it?What does my organization need to do?How can I help my organization do it?


1. Add the right employees and constantly improve their skills.

2. Create a culture for retaining employees.3. Plan for “passing the torch” to the next

generation of leadership.



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Study: 80% of employee turnover is caused by bad hiring decisions.

Most common causes of poor hiring decisions: Relying on candidate’s description of themselves.Failing to follow a consistent, evidence-based

selection process.Failing to provide candidates with sufficient

information about the job.Succumbing to pressure to fill a job quickly.Failing to check candidates’ references.



Provide rewarding, challenging work.Pay employees fairly.Provide training opportunities and mentoring

relationships.Offer flexible work schedules.Provide simple (and inexpensive) rewards such as

thank-you notes for extra effort or “good job” notes for jobs well done.

Conduct exit interviews when employees leave to determine areas that require improvement.



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Commit to hire the best talent.Elevate recruiting to a strategic position.


Look inside the company first.Look for employees with whom your

customers can identify.Make employment advertisements stand

out. Use multiple channels to recruit talent.Encourage employee referrals.


Recruit on campus. Forge relationships with schools and other

sources of workers. Recruit “retired” workers. Consider using offbeat recruiting

techniques. Offer what workers want.


(continued)


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Commit to hire the best talent.Elevate recruiting to a strategic position.Create practical job descriptions and job

specifications.



Step 1:

Create a job description:

A written statement of the duties, responsibilities, reporting relationships, working conditions, and materials and equipment used in a job.

Handy tool: Dictionary of Occupational Titles



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Worm Picker - gathers worms to be used as fish bait; walks about grassy areas, such as gardens, parks, and golf courses and picks up earthworms (commonly called dew worms and nightcrawlers). Sprinkles chlorinated water on lawn to cause worms to come to the surface and locates worms by use of lantern or flashlight. Counts worms, sorts them, and packs them into containers for shipment.

(# 413.687-014 in D.O.T)


Step 2:

Create a job specification:

Written statement of the qualifications and characteristics needed for a job, stated in terms such as education, skills, and experience.




Linking Tasks from a Job Description to the Traits Necessary to Perform a Job Successfully


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Commit to hire the best talent.Elevate recruiting to a strategic position.Create practical job descriptions and job

specifications.Plan an effective interview.



Involve others in the interview process.

Develop a series of core questions and ask them of every job candidate.

Ask open-ended questions rather than questions calling for “yes or no” answers.

Create hypothetical situations candidates would encounter on the job and ask how they would handle them.

Situational interviews


Probe for specific examples in the candidate’s work history that demonstrate the necessary traits and characteristics.

Ask candidates to describe a recent success and a recent failure and how they dealt with them.

Arrange a “non-interview” setting that allows others to observe the candidate in an informal setting.


(continued)


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Commit to hire the best talent.Elevate recruiting to a strategic

position.Create practical job descriptions and job

specifications.Plan an effective interview.Conduct the interview.



Break the ice. Goal: diffuse nervous tension.

Ask questions. Puzzle interviews.Remember the 25/75 Rule.Be respectful and keep it legal!

Sell the candidate on the company. The best candidate will have other job offers.Convince the best candidate that your company is a

great place to work.



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Commit to hire the best talent.Elevate recruiting to a strategic

position.Create practical job descriptions and job

specifications.Plan an effective interview.Conduct the interview.Contact references and conduct a

background check.



Checking an applicant’s references is an important part of protecting a company against making a “bad hire.”

Is it really necessary? Yes! According to a CareerBuilder survey, 53%

of all candidates either exaggerate or falsify information about their previous employment on their résumés.




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Culture: Distinctive, unwritten, informal code of

conduct that governs the behavior, attitudes, relationships, and style of an organization.

“The way we do things around here.” In small companies, culture plays as

important a part in gaining a competitive edge as strategy does.


Respect for work and life balanceSense of purposeSense of funEngagement




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Respect for work and life balanceSense of purposeSense of funEngagementDiversity




Respect for work and life balanceSense of purposeSense of funEngagementDiversityIntegrityParticipative managementLearning environment




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Job simplification:Breaks work down into its simplest form and

standardizes each task.Job enlargement (horizontal job loading):Adds more tasks to a job to broaden its scope.Job rotation:Cross-trains workers so they can move from one

job in a company to others, giving them a greater number and variety of tasks to perform. Often used with a skill-based pay system.


Job enrichment (vertical job loading):Builds motivators into a job by increasing the

planning, decision making, organizing and controlling functions (traditional managerial tasks).Five core characteristics:

1. Skill variety2. Task identity3. Task significance4. Autonomy5. Feedback


(continued)

Flextime:

An arrangement under which employees build their work schedules around a set of “core hours” - such as 11 a.m. to 2 p.m. - but have flexibility about when they start and stop work.

Job sharing:

A work arrangement in which two or more people share a single full-time job.


(continued)


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Flexplace:

A work arrangement in which employees work at a place other than the traditional office, such as a satellite branch closer to their homes or, in some cases, at home.

Telecommuting:

An arrangement in which employees have employees working from their homes use modern communications equipment to hook up to their workplaces.


(continued)

The key to using rewards to motivate workers is tailoring them to the needs and characteristics of individual workers.Money is an effective motivator …up to a point.Pay-for-performance systemsProfit-sharing plansOpen book managementCafeteria benefit plan


Intangible rewards can be powerful, yet inexpensive, motivators.

Praise

Recognition

Celebrations

Entrepreneurs tend to rely on non-monetary rewards.



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Family businesses:

Account for 90% of all U.S. businesses.

Account for 64% of U.S. GDP.

Employ 62% of private sector work force.

Comprise 33% of the Fortune 500companies.

Created 78% of the U.S. economy’s net new jobs over the last two decades.


Unfortunately, only 30% of first-generation businesses survive into the second generation.

Of those that do survive to the second generation, only 12% make it to the third generation.

Only 3% make it to the fourth generation and beyond.


Primary causes of lack of continuity among family businesses: Inadequate estate planning.Failure to create a management

succession plan.Lack of funds to pay estate taxes.Sibling rivalries and personality conflicts.



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Step 1. Select the successor.Step 2. Create a survival kit for the successor.Step 3. Groom the successor.Step 4. Promote an environment of trust and

respect.Step 5. Cope with the financial realities of

estate and gift taxes.




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Buy/Sell agreementLifetime giftingSetting up a trustIrrevocable life insurance trustIrrevocable asset trustGrantor Retained Annuity Trust (GRAT)Estate freezeFamily Limited Partnership (FLP)


Entrepreneurs planning to retire often use two exit strategies: Sell to outsidersSell to insidersLeveraged buyout (LBO)Employee Stock Ownership Plan

(ESOP)


Leadership is the process of influencing and inspiring others.

Leadership shapes company culture.A succession plan is a crucial element in

transferring leadership. An exit plan allows entrepreneurs to step

down and benefit most from the sale of the company.


scarb eesbm8e ppt 16.ppt › ccsf › smbs135 › pearson8 › chapter_16.pdf · 2015-11-20 ·...

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