SBANC Newsletter
November 29, 2005
Issue 400-2005
|
QUOTE
"I believe through learning and application of what you learn, you can solve
any problem, overcome any obstacle and achieve any goal that you can set for
yourself."
--
Brian Tracy
|
FEATURE PAPER
Bootstrapping Business Start-ups:
Entrepreneurship Literature, Textbooks, and Teaching Versus Current Business
Practices?
This paper was presented by Robert J. Lahm of Middle Tennessee State University
and Harold T. Little of Western Kentucky University at
the 2005 Allied Academies International Conference.
Abstract
Existing
scholarly research on bootstrapping is limited, despite the widespread
use of bootstrapping strategies in actual practice
among start-up entrepreneurs. Popular academic textbooks used
in college and university entrepreneurship
courses seldom provide in-depth coverage of bootstrapping; many
devote
just a few paragraphs or pages to the subject. In sharp contrast
to
the coverage given in these textbooks,
bootstrapping in its various forms has been advocated in, and documented
by, the popular business
press as a widespread phenomenon. Given that textbooks in any established
discipline often draw heavily
upon that discipline’s
existing body of literature, it is not surprising that a lack of
formal research by members of the entrepreneurship scholarly community
reflects the possibility that
textbooks, and courses (if they are based on those textbooks),
may be out-of-step with
entrepreneurial reality.
Introduction
Bootstrapping
is entrepreneurship in its purest form. It is the transformation
of human capital into financial capital. The overwhelming majority
of entrepreneurial companies are financed through this highly creative
process (Freear,
Sohl & Wetzel,
1995; Bhide, 1992), which typically involves the use personal savings,
credit-card debt (Cole, Lahm, Little & Seipel 2005), loans from
friends and family and other nontraditional forms of capital. The
entrepreneurship academic community
has not fully recognized the effect
of bootstrapping on entrepreneurial behavior and organizational success
(or failure) through
formal research. The above positioning statement is supported by
the recent observations
of other scholars such as Van Auken, (2005) who observed: “
Although bootstrap financing commonly is used and is an important
source of capital, few….studies comprehensively have examined
the role of bootstrap financing in small firm financing” (p.
94). Winborg and Landstrom (2001) similarly observed that “bootstrapping
is a phenomenon which deserves more attention in future research
on small business
finance” (p.
235). We also submit a logical chain-of-events argument that suggests
a lack of coverage in the literature, which
also seems to be reflected
in our review of popular academic textbooks, may impact both teaching
(if course content is anchored to assigned
textbooks) and students’ views about the realities
that they will face as nascent entrepreneurs.
Read the Entire Paper...
|
CONFERENCES
2nd
International Conference on Technology, Knowledge and Society
|
| Who: |
--
--
|
| What: |
2nd
International Conference on Technology, Knowledge and Society
|
| Where: |
Hyderabad,
India |
| When: |
December
12-15, 2005 |
|
|
International Business
Information Management Association
|
| Who: |
International Business Information Management Association |
| What: |
5th IBIMA Conference
|
| Where: |
Cairo, Egypt |
| When: |
December 13-15, 2005 |
|
|
The CIBER Research Institute
|
| Who: |
The CIBER Research
Institute |
| What: |
ABR
Conference (business & economics)
and TLC Conference (teaching methods, styles, and administration
|
| Where: |
Disney Boardwalk Hotel in Disney World, Florida |
| When: |
January 2-6, 2006 |
|
|
International Business
and Economy
|
| Who: |
International Business and Economy |
| What: |
Fifth International Business and Economy Conference
|
| Where: |
Sheraton Waikiki Beach Resort Hotel in Honolulu,
Hawaii, U.S.A. |
| When: |
January 5-8, 2006 |
|
|
IPSI 2006 - CALIFORNIA
|
| Who: |
Internet, Processing, Systems, and
Interdisciplinary (Research) |
| What: |
IPSI 2006 - CALIFORNIA
|
| Where: |
Hotel Stanford Terrace in Palo Alto, California |
| When: |
January 8-11, 2006 |
|
|
CALLS FOR PAPERS
The CIBER Research Institute
|
| Who: |
The CIBER Research Institute (CIBER) |
| What: |
ABR Conference (business & economics) and TLC Conference (teaching
methods, styles, and administration
|
| Where: |
Disney Boardwalk Hotel in Disney World, Florida |
| When: |
January 2-6, 2006 |
Submission
Deadline:
December 1, 2005
|
|
|
Institute
for Entrepreneurship Research
|
| Who: |
Institute for Entrepreneurship Research |
| What: |
26th
Entrepreneurship and Innovation Conference "PODIM"
|
| Where: |
Maribor , Slovenia |
| When: |
March 30-31, 2006 |
Submission
Deadline:
January 10, 2006
|
|
|
Institute
for Entrepreneurship and Small Business Management
|
| Who: |
Institute for Entrepreneurship and
Small Business Management |
| What: |
8th
International Conference, "STIQE"
|
| Where: |
Maribor , Slovenia |
| When: |
June 28-30, 2006 |
Submission
Deadline:
January 10, 2006
|
|
|
6th
Annual Hawaii International Conference on Business
|
| Who: |
--
-- |
| What: |
6th Annual Hawaii International Conference on
Business
|
| Where: |
Waikiki Beach Marriott Hotel in Honolulu, Hawaii |
| When: |
May 25 - 28, 2006 |
Submission
Deadline:
January 19, 2006
|
|
|
Institute
for Business and Finance Research (IBFR)
|
| Who: |
Institute for Business and Finance
Research (IBFR) |
| What: |
The 2006 Global Conference on Business and Finance
(GCBF)
|
| Where: |
Hotel Herradura: Golf Resort and Conference Center
in San Jose, Costa Rica |
| When: |
May 31-June 3, 2006 |
Submission
Deadline:
March 17, 2006
|
|
|
|
TIP OF THE WEEK
Locating
Sources of Funds
Once the amount
of funds needed is known, you must find sources for those funds.
The many sources from which to obtain funds to start and
operate a business boil down to two: the owner and others. Before approaching
a funding source, decide how much money you and others will put into
the business and how much should come from other sources.
For example,
when looking for startup capital, consider all possibilities. Dozens
of resources exist to fund home-based entrepreneurial endeavors.
If you have a good business idea, you should be able to find the
money you need to make your dream come true. Pursue all the resources
available
to you, and you will be on your way to greater home-based success.
Using Your
Own Funds
Some small business owners prefer to invest only their personal funds
and not borrow to start or operate a business. Others believe they
should use little of their own money and instead make as much profit
as possible by using their interest in the business as security when
obtaining funds from others. Normally, owners control a company;
they take the risks of failure but also make the decisions. To maintain
control, you must continue to invest more personal funds than all
the other investors combined. Moreover, you can maintain control
only so long as lenders do not become worried about the safety of
their money.
For example, with
you own capital, you can lend money to your home business, set loan
conditions, and then pay the loan off
to yourself
with interest. Another way you can personally finance your home business
is by keeping your current full-time job and working your home business
around it on a part-time basis.
Your credit cards
can also help fund startup business expenses and purchase equipment
and supplies. The
price one pays for easy access
to credit can by relatively high interest rates, often exceeding
twice those on a business loan secured through a bank.
Using Funds from Others
There are several sources of outside funds. These can be generally
divided into equity investors, who actually become part owners of
the business, and lenders, who provide money for a limited time at
a fixed rate of interest. Both run the risk of losing their money
if the business fails, but this gamble is offset for investors by
the possibility of large returns if the business is successful. Because
the rate of return for lenders is fixed, some security is usually
given to offset their risk.
You may be able
to find investors interested in a venture opportunity. Such people
might be found among, relatives,
friends, attorneys, bankers,
or securities dealers. Building multiple bank relationships early
on in your business is important. But you must have a well-prepared
business
plan and an advocate in the bank on your side.
Special types of
investors -- venture capitalists -- capitalize a business startup
in return
for partial ownership. They seek high-risk
businesses
that show the potential for high profit. The flip side of the coin
for high risk is, of course, a greater likelihood of a loss. A
venture capitalist may have plans to publicly sell shares of stock
of the
successful venture. If your home-based business is involved with
new technology,
Web site design, software development, computer training, or software
consulting, venture capitalists may be interested. To reach potential
venture capitalists and other investors, share information about
your home business opportunity and startup capital needs on the
Internet, in networking organizations such as your city's chamber
of commerce,
and in advertisements placed in a local or national newspaper.
| Megginson,
Leon C., Mary Jane Byrd, and William L. Megginson. Small
Business Management. 5th ed. New York: McGraw-Hill/Irwin,
2006. 117-118. |
|
ANNOUNCEMENTS
Attention
Marketing Educators:
The DMEF 2006 Leonard J. Raymond Collegiate
ECHO
Your challenge
is to develop an integrated campaign, heavily using Direct Mail,
to solidify the brand image of Direct Mail and to improve its image
with leading marketing and advertising professionals. Your strategy
should include the use of Direct Mail, promoting how Direct has developed
beyond the typical response mechanism. You should create excitement
using Mail in marketing campaigns.
If you are interested
in entering, visit www.the-dma.org/dmef and
click under Programs for Students for more information, prize details,
and registration materials.
The
SBANC Newsletter is provided as a service to the members of our affiliates:
Academy of Collegiate Marketing Educators (ACME), Association for
Small Business & Entrepreneurship (ASBE), Decision Sciences Institute
(DSI), Federation of Business Disciplines (FBD), International Council
for Small Business Congress (ICSBC), Institute for Supply Management,
The International Small Business Congress (ISBC), Marketing Management
Association (MMA), Small Business Administration (SBA), Service Corps
of Retired Executives, Small Business Institute (SBI), Society for
Marketing Advances (SMA), United States Association for Small Business & Entrepreneurship
(USASBE), U.S. Department of Veterans Affairs and Western Decision
Sciences Institute (WDSI). If you are interested in membership or
would like further information on one of our affiliates, please see
our web site at http://www.sbaer.uca.edu
SBANC STAFF
Main Office Phone: (501) 450-5300
Dr.
Don B. Bradley III, Executive Director of SBANC
&
Professor of Marketing;
Direct Phone: (501) 450-5345
Esther
Mead, Graduate Research
Ashley
Ford, Development Intern
Olivia
Johnson, Development Intern
Brandon
Tabor, Development Intern
To subscribe or
unsubscribe to the SBANC Newsletter, please E-mail SBANC at sbanc@uca.edu |
|
