Global entrepreneurs face adversity with an optimistic mind-set and a willingness to learn. They have the ability to deal with contradictory or unexpected events while keeping an open mind and a focus on what their goals are.
Integrity. Integrity is critical for getting and keeping the support of employees, investors, and partners. Global entrepreneurs walk the talk by being honest, being morally upright, and meeting their commitments. Integrity is one of the most sought-after traits by customers, vendors, and investors. Without integrity from the top, the entrepreneur, the venture will soon falter.
Global Sense of Responsibility. Global entrepreneurs care about their employees and environment where they operate. They are sensitive to their employees’ and customers’ needs. Their goals are to not only build a profitable global venture but also contribute toward the sustainable development of the community in which they operate.
The Need for Global Entrepreneurs
In the past, companies ventured abroad only after having established and grown a strong business at home. They would start by approaching nearby countries and progressively establish partnerships. For example, Johnson & Johnson only decided to enter a foreign market 33 years after its inception. The country they chose to enter was an easy choice, Canada, as it could be easily reached by simply driving across the border (Isenberg, 2008). Walmart went global first in Mexico, rather than Canada, despite the language difference due to its closer geographic proximity to the company's headquarters in Bentonville, Arkansas.
Nowadays, companies are born global. From outsourcing manufacturing in China, employing a team of programmers in India, seeking funding on international platforms such as Kickstarter.com, and even selling their products internationally through the Internet, entrepreneurs and investors seek the best deals worldwide with little to no boundaries.
The world has changed, and today's ventures do business in several countries before dominating their local markets. Two main explanations justify entrepreneurs crossing borders: (1) defensive and (2) offensive motivations (Isenberg, 2008). Defensive motivation leads entrepreneurs to go overseas to produce products that are competitive in the global market. When one of the authors produced his first mobile software application for the iPhone, he requested budgets from several development teams in Europe and the United States using elance.com. The average fee for a U.S.-based production was $20,000 at the time. In Western Europe, the price for the same project would fluctuate between $9,000 and $15,000. He ended up recruiting a developer from Southeast Europe who charged $3,000, which included several rounds of revisions and testing. Before he had even started the venture, he had out-sourced the software development of the upcoming product at a fraction of the price it would have been to develop it in the United States.
An offensive approach occurs when entrepreneurs discover a new business opportunity that involves maintaining a presence beyond their country's boundary. This was the case of the now famous mobile game Angry Birds, created by Rovio (Kendall, 2011). While their roots are in Finland, home of Nokia Corporation, they decided to pass on the opportunity to do business locally and target their upcoming game to iPhone users predominantly present in the United States. In December 2009, Rovio launched the game Angry Birds through Apple's iPhone app store. It rapidly became a best seller, and since then, the game has been downloaded more than a billion times by smartphone owners from all over the world.
Being global is not a choice anymore for entrepreneurs. Entrepreneurial ventures need to be able to leverage the global economy and its advantages to become competitive both locally and globally.
What is Different about Entrepreneurial Finance?
Finance for entrepreneurs is somewhat different from either corporate- or investment-oriented finance. When we consider traditional financial techniques and concepts, we see that the discipline is based on a number of key assumptions. These assumptions include readily available data, efficient markets, diversification as a way to control risk, and statistical analysis as a means to measure risk. These are the key assumptions or techniques that underlie both the theory and practice of traditional finance.
When we deal with entrepreneurs or entrepreneurial ventures, especially startups, there are two key points to consider:
1 there is usually a paucity of any historical data, and
2 entrepreneurs do not have the ability to diversify or even measure their risk in the normal way.
Thus, entrepreneurial finance is considerably different from main-line finance. We acknowledge that entrepreneurial finance requires an in-depth knowledge of finance theory and technique and an understanding of the strengths and weaknesses of these theories and techniques. However, the final element that needs to be equally weighted in the entrepreneurial environment is the application of skill and judgment in selecting and applying the appropriate theory or technique given the problem at hand. We do not deny that this is also important in the areas of traditional finance, but we assert that it is more acute with entrepreneurial firms. In the entrepreneurial setting, it is not just a matter of calculating the answer (which is what is usually done in the more traditional areas of finance). The entrepreneur must know:
1 What to do if historical data are not available
2 What techniques may be used when certain data are missing
3 How to compute ranges of outcomes rather than focusing on specific outcomes
4 How to use projections that are based on data that are not historical
Summary
There has never been a better time to explore international opportunities and become a global entrepreneur. Becoming an entrepreneur today is less of a trade-off than it used to be. Between corporate layoffs, foreign competition, and the decline of labor unions, the typical employee may no longer assume that his or her job will be there for the next 3 to 5 years. Entrepreneurs need to have a global mind-set to face a highly competitive global economy. Common traits identified among global entrepreneurs are cultural diversity, desire to achieve, internal locus of control, clear vision, tolerance for ambiguity, integrity, and a global sense of responsibility. Companies are born global, and internationalization is no longer a choice but a requirement for today's global competitive business environment.
Chapter 2 Business Planning for Entrepreneurs
Learning Objectives
To understand the purpose of a business plan
To understand the elements of a business plan
To know the process of building a business plan
To know how to develop the necessary financial information and statements
Case: TerraPower, Inc.
Bill Gates, Nathan Myhrvold (the former chief technology officer of Microsoft), and Lowell Wood (a renowned astrophysicist) were brainstorming about new ideas at an intellectual property incubator and licensor, Intellectual Ventures. The three knew that they needed to come up with an idea that would have significant potential by solving a large problem in the future and then developing a strategic plan and eventually a business plan to get there. While
