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1. What are the components of a good Business Plan and briefly explain the Importance of each components. Ans. Within the overall outline of the business plan, the executive summary will follow the title page. The summary should tell the reader what you want. This is very important. All too often, what the business owner desires is buried on page eight. Clearly state what you're asking for in the summary. The statement should be kept short and businesslike, probably no more than half a page. It could be longer, depending on how complicated the use of funds may be, but the summary of a business plan, like the summary of a loan application, is generally no longer than one page. Within that space, you'll need to provide a synopsis of your entire business plan. Key elements that should be included are:
Business concept. Describes the business, its product and the market it will
serve. It should point out just exactly what will be sold, to whom and why the business will hold a competitive advantage.
Financial features. Highlights the important financial points of the business
including sales, profits, cash flows and return on investment.
Financial requirements. Clearly states the capital needed to start the business
and to expand. It should detail how the capital will be used, and the equity, if any, that will be provided for funding. If the loan for initial capital will be based on security instead of equity, you should also specify the source of collateral.
Current business position. Furnishes relevant information about the company,
its legal form of operation, when it was formed, the principal owners and key personnel.
Major achievements. Details any developments within the company that are
essential to the success of the business. Major achievements include items like patents, prototypes, location of a facility, any crucial contracts that need to be in place for product development, or results from any test marketing that has been conducted. When writing your statement of purpose, don't waste words. If the statement of purpose is eight pages, nobody's going to read it because it'll be very clear that the business, no matter what its merits, won't be a good investment because the principals are indecisive and don't really know what they want. Make it easy for the reader to realize at first glance both your needs and capabilities. 2. You wish to start a new venture to manufacture auto components. Explain Different stages in the process of starting this new business.
Ans. Every business starts out as an idea. This idea usually involves the invention of a new product, or revolves around a better way of making and marketing an existing one. While many would argue that the idea stage is not a stage at all, it is actually a turning point. After this, you as a business builder must refine this idea into a money-making reality. Idea Researching In this stage, you are researching your idea. The object of your research is to find out who is marketing the same product or service in your area, and how successful the marketer has been. You can accomplish this by a Google search on the Internet, launching a test-marketing campaign, or conducting surveys. Also, you are attempting to find what the level of interest is in the products (or services) you wish to market. As part of the initial research process, it is important to consider the legal requirements of selling your product or service. According to the Biz Ed website, examine the legal ramifications of your business. Know the tax laws governing your business. If insurance is a requirement, prepare to budget for it. Also, be aware of any safety laws governing you as an employer. Business Plan Formulation You must write a business plan. As Pendrith points out, this is crucial if you want funding, such as a small business loan or grant, or if you wish to lease a building. At this stage, Pendrith advises, you need to consult with an attorney or business adviser for assistance. Financial Planning Financial planning involves thinking about the financial costs of starting and maintaining your business. According to the Biz Ed website, you should consider such issues as the costs of running the business; the prices you wish to charge your customers; cash flow control; and how you wish to set up financial reserves in case of an emergency or an event causing significant loss to the business. Advertising Campaign Decide how you will market your product. Consider your budget and your target audience. Make up business cards with your logo on it, your name and the name of your business. Make sure that they are of the most professional quality. Utilizing print, the newspaper, the Internet, radio or TV is also wise, considering, of course, the size of your advertising budget Preparing for Launch Advertise for employees. This also requires adequate planning. Think about what you look for in an employee. Be specific about the requisite skills and experience you are seeking. Then begin requesting resumes and setting up interviews, making hiring decisions based on the standards you have set. Summary
Not all businesses will progress through each of these stages. Some businesses are created just to be “flipped”. In other words, the business owner starts the business with the specific intention of selling it within the first couple of years. Some companies avoid the sunset stage by constantly repositioning their business. By developing or acquiring new products and entering new markets, a company can stimulate growth and revitalize the organization. 3. Explain the process of due Diligence and why it is necessary Ans. Due diligence is a program of critical analysis that companies undertake prior to making business decisions in such areas as corporate mergers/acquisitions or major product purchases/sales. The due diligence process, whether outsourced or executed in-house, is in essence an attempt to provide business owners and managers with reliable and complete background information on proposed business deals, whether the deal in question is a proposed acquisition of another company or a partnership with an international distributor, so that they can make informed decisions about whether to go forward with the business action. "The [due diligence] process involves everything from reading the fine print in corporate legal and financial documents such as equity vesting plans and patents to interviewing customers, corporate officers, and key developers," wrote Lee Copeland in Computerworld. The ultimate goal of such activities is to make sure that there are no hidden drawbacks or traps associated with the business action under consideration. Many companies undertake the due diligence process with insufficient vigor. In some cases, the prevailing culture views it as a perfunctory exercise to be checked off quickly. In other instances, the out-come of the due diligence process may be tainted (either consciously or unconsciously) by owners, managers, and researchers who stand to benefit personally or professionally from the proposed activity. Businesses should be vigilant against letting such casual or flawed attitudes impact their own processes, for an efficient due diligence process can save companies from making costly mistakes that may have profound consequences for the firm's other operational areas and/or its corporate reputation. Areas of Due Diligence The due diligence process is applied in two basic business situations: 1) transactions involving sale and purchase of products or services, and 2) transactions involving mergers, acquisitions, and partnerships of corporate entities. In the former instance, purchase and sales agreements include a series of exhibits that, taken in their entirety, form due diligence of the purchase. These include actual sales contracts, rental contracts, employment contracts, inventory lists, customer lists, and equipment lists. These various "representations" and "warranties" are presented to back up the financial claims of both the buyer and seller. The importance of this kind of due diligence has been heightened in recent years with the emergence of the Internet and other transformative technologies. Indeed, due diligence is a vital tool when a company is confronted with major purchasing decisions in the realm of information technology. "A due diligence investigation should answer pertinent questions such as whether an application is too bulky to run on the mobile devices the marketing plan calls for or
whether customers are right when they complain about a lack of scalability for a highend system," said Copeland. In cases of potential mergers and acquisitions, due diligence is a more comprehensive undertaking. "The track record of past operations and the future prospects of the company are needed to know where the company has been and where it’s potential may carry it," explained William Leonard in Ohio CPA Journal. In addition, observers note that the dramatic increase in information technology (IT) in recent years has complicated the task of due diligence for many companies, especially those engaged in negotiations to buy or merge with another company. After all, system incompabilities can require huge amounts of time, money, and personnel resources to integrate. Leonard notes that traditional due diligence practices in acquisition/merger scenarios called for detailed examination of financial statements, accounts receivable, inventories, workers compensation, employment practices and employee benefits, pending and potential litigation, tax situation, and intellectual property prior to signing on the dotted line. But in this dynamic business era, other areas should be looked at as well, including (if applicable): intellectual property rights, new products in the production pipeline, status of self-funded insurance programs, compliance with pertinent ordinances and regulations, competition, environmental practices, and background of key executives/personnel. Many business experts also caution that the due diligence process is incomplete if it does not incorporate an element of objective self-analysis. "Self-analysis is the fundamental first step to realistically determine whether the post-acquisition 'whole' will be greater than the sum of its part," wrote Aaron Lebedow in Journal of Business Strategy. A detailed assessment of the market that is the target of the proposed acquisition should also be undertaken prior to closing a deal. Both of these requirements can be completed in a reasonable period of time, even in today's fast-changing business environment, by companies that either 1) outsource the due diligence task to a reputable research firm or 2) build an efficient in-house program within their legal, marketing, or corporate security sectors. "Unquestionably, opportunities for growth through acquisition exist," stated Lebedow "Exploiting these opportunities has risks, but to those companies that acquire only after a comprehensive and systemic assessment of the marketplace and competition, the rewards justify the risks. Limiting due diligence to financial and managerial review is rarely enough. Successful acquisition strategy depends on the structure and depth of the due diligence process." Supplementing Due Diligence Growing numbers of business enterprises are pursuing additional legal protection for themselves so as to shield themselves from harm if their due diligence efforts fail to uncover a serious problem with a merger or purchase transaction. One means of mitigating the risks associated with such major business transactions that has become increasingly popular in recent years is to secure a form of insurance coverage known as "representations and warranties liability insurance." A growing number of insurance underwriters are providing these policies, which call for them to pay insured parties for losses resulting from various "wrongful acts." This umbrella term generally covers errors, misstatements, misleading information, etc., but underwriters do include exclusions, some of which should be noted by potential buyers. These include acts of "fraud" (if adjudicated in the courts), pollution (which is typically covered under separate policies),
or situations in which a party has received benefits—financial or otherwise—to which it is not entitled. One significant benefit of "representations and warranties liability" policies, however, is that the coverage can be used in place of reserves, escrow, or indemnity provisions that are included in purchase agreements. Premiums for such policies can be expensive, especially for small and mid-sized firms with limited financial resources. Moreover, securing such insurance is a time-consuming and painstaking process, for underwriters are putting themselves at considerable financial risk. "Premiums will be determined based on the risk and the comfort level of the underwriter," summarized Leonard. ""It is most important that the process start early and not be left to a time when someone gets a 'feeling' things may not be entirely up to snuff. Although this type of coverage can be purchased after the closing, understandably the most beneficial time to place the coverage is during the due diligence phase preceding the closing." 4. Corporate Social Responsibility necessary and how does it benefit a Company and its shareholders? Ans. Abstract Companies are, in a broad sense, a group of different agents that have a relationship with shareholders, citizens, providers, and customers. In other words, they are known as stakeholders. Corporate social responsibility may help to establish clear boundaries among the different interests of the groups described above. In this paper, the authors will describe, analyze, and formalize the critical responsibility parameters, as well as the variables that shape them. Corporate social responsibility is proposed as a new management tool and not as a fashionable concept. Furthermore, the advantages and limitations of corporate social responsibility will be analyzed in order to define a management model for achieving responsibility among organizations. Finally, the model limitations are presented, both in the verbal and the mathematical formalizations. Antecedents and Commitments Corporate social responsibility is becoming a relevant subject, and it appears repeatedly in the vast majority of academic and professional journals. Most of them have dedicated a special issue to it, and an increasing number of articles have been published concerning corporate social responsibility. In this paper, the authors ask themselves whether this is simply a new fashionable concept, as many others within the business argot, or, on the other hand, is it becoming a leading principle of top management and entrepreneurs' behavior. In the first part of this paper, different dilemmas concerning corporate social responsibility are analyzed, and the authors' perception about it is depicted. Then, the authors will describe a method for measuring and evaluating corporate social responsibility, as well as its limitations. Corporate Social Responsibility Understood as a New Management Tool In order to develop this proposal, it is necessary to define corporate social responsibility. It is very important to thoroughly understand the concept of company, not from a macroeconomic point of view as the economic science does (specially the neo liberal trend), but from the business economy point of view.
The concept of a company as many business economists see it: this is a company understood as a transforming organ, thanks to social agents (people) and technical and technological means, all of them working in a global and competitive context. By looking at this concept of a company, the following is always present: • • People/human beings: employees, shareholders, providers, collaborators, customers, competitors, and public agents (local, state, or federal). Context: the company develops its economic activity in a geographical area, within an economic, social, and political context.
At this point, a question emerges: does the company, or even better, the company's top management have any responsibility--implication or commitment--concerning the people and the context where they develop its activity? It is fair and reasonable--following the trend of those who consider shareholders as the main human collective concerned--that top management within the company has to work driven by shareholders interests, mainly focusing on the profit and loss account, trying to maximize profits. In other words, "If management would accept the idea that they have a social responsibility different from achieving the maximum profit for shareholders, it would be undermining the foundation of our free society" This point of view can be confusing for two reasons: 1. It does not take into account the fact that in order to make a profit, all the people described before have to cooperate and perform their activities within a geographical space, regardless of its size. If certain aspects are not attended to and if there is no responsibility toward these collectives, a sustainable profit will not be reachable. Furthermore, competitive advantages will not be achieved either. 2. Maximum profit is simply a mathematical concept. The formula can measure the quantity but, in the real world, there is always the possibility of achieving a higher performance. What if fewer salaries had been paid? What if training investment had been cut? What about misbehavior concerning taxation? Probably the axiom of "cutting expenses or increasing turnover by increasing prices will improve long term profits" is not always true. In the current business context--extremely competitive, with a lot of information moving quickly--companies have to treat every one of their human collectives responsibly, and the context in which it is located, in order to grow and make profits. In other words, having a corporate social policy and a responsible attitude toward stakeholders is necessary to achieve great results. The World Business Council for Sustainable Development (WBCSD) defines corporate social responsibility as "the commitment of the company to contribute to the sustained economic development by working with employees, their families, the local community, and the entire society in order to improve life quality" Corporate social responsibility can be defined as the assumption of rights and obligations due to the economic, political, and social activity performed by organizations. In other words, this is to create and develop values, such as protection, sustainability, compromise, and acting responsibly and economically as far as the environment is
concerned. This is also applicable to the people and society in general, both short and long term, and independently of the distance (here it applies "thinking locally and globally at the same time"). The final goal has to be the increase of the humanity welfare. If the WBCSD definition is accepted, and also the concept just depicted, a new proposition emerges. This is different from former propositions, basically because of its extension--the number of human collectives taken into account and the consideration of the physical context--over which there is an interest to expand corporate social responsibility. In the past, there was a concern about corporate social responsibility, but it is only recently that this concern strongly emerged. Mainly because of globalization, environment catastrophes, several known business misbehaviors that occurred previously by multinational corporations. It is at that point when the issue of corporate social responsibility came out, and the media started to create an opinion related to the necessary revision of the commitment companies have with the human collectives and environment. Currently, several laws concerning this issue already exist. The starting point was the OECD guidelines, and also a high degree of social consciousness that acts and organizes itself wherever an important meeting related to business is organized. The Fashion Concept or Management Tool to Remain The hypothesis establishing that corporate social responsibility (considering the WBCSD definition and the authors' concept) appearing at the beginning of the 21st century as a management tool, which will remain through time, is posed by the authors. This hypothesis is supported by the following facts: 1. The globalization process is emphasized after the Berlin wall fell in December 1989. The three zones of economic influence emerged: the US and its influential area; the European Union; and Southeast Asia, including China and India. This phenomenon creates a certain social concern. 2. Despite the focus on different aspects, there is a huge law development within developed countries. So, there is still a long way to go in order to find a common and universal criterion about corporate social responsibility. Moreover, it is necessary to develop a formal and measurable model that is widely accepted. 3. The larger companies are increasingly writing behavior codes and corporate social responsibility memoranda. In Spain, the 35 companies included in the IBEX index are obliged to write an annual report about the applied good corporate governance practices. 4. Financial markets have also adopted corporate social responsibility by developing tools which permit to reflect this concept within the price of shares. For instance, the concept of socially responsible investment appears. This is to evaluate which is the position of the company, as far as social and environmental behavior is concerned. With this information, investors may make a better decision about which companies to invest in.
There are also several rating agencies which evaluate companies' commitment related to social and environmental behavior. In Spain there are several mutual funds that are taking corporate social responsibility aspects into account. Currently, 12 of this kind exist, despite one of them representing 83.5% of the total amount managed by mutual funds. However, globally, it only represents 0.56% of the total amount. Therefore, it seems that Spain is still at a starting point at investing into companies with ethical behaviors. 5. There is an increasing consciousness among human collectives in general. Non governmental organizations (NGO's), fair trading organizations, as well as the media materialize this consciousness. At the same time, information technology makes it widely visible. 5. Distinguish between a Financial Investor and a Strategic Investor explaining the role they play in a Company. Ans. Investors of all colors sought to safeguard their investment by taking over as many management functions as they could. Additionally, investments were small and shareholders few. A firm resembled a household and the number of people involved – in ownership and in management – was correspondingly limited. People invested in industries they were acquainted with first hand. As markets grew, the scales of industrial production (and of service provision) expanded. A single investor (or a small group of investors) could no longer accommodate the needs even of a single firm. As knowledge increased and specialization ensued – it was no longer feasible or possible to micro-manage a firm one invested in. Actually, separate businesses of money making and business management emerged. An investor was expected to excel in obtaining high yields on his capital – not in industrial management or in marketing. A manager was expected to manage, not to be capable of personally tackling the various and varying tasks of the business that he managed. Thus, two classes of investors emerged. One type supplied firms with capital. The other type supplied them with know-how, technology, management skills, marketing techniques, intellectual property, clientele and a vision, a sense of direction. In many cases, the strategic investor also provided the necessary funding. But, more and more, a separation was maintained. Venture capital and risk capital funds, for instance, are purely financial investors. So are, to a growing extent, investment banks and other financial institutions. The financial investor represents the past. Its money is the result of past - right and wrong - decisions. Its orientation is short term: an "exit strategy" is sought as soon as feasible. For "exit strategy" read quick profits. The financial investor is always on the lookout, searching for willing buyers for his stake. The stock exchange is a popular exit strategy. The financial investor has little interest in the company's management. Optimally, his money buys for him not only a good product and a good market, but also a good management. But his interpretation of the rolls and functions of "good management" are very different to that offered by the strategic investor. The financial investor is satisfied with a management team which maximizes value. The price of his shares is the most important indication of success. This is "bottom line" short termism
which also characterizes operators in the capital markets. Invested in so many ventures and companies, the financial investor has no interest, nor the resources to get seriously involved in any one of them. Micro-management is left to others - but, in many cases, so is macro-management. The financial investor participates in quarterly or annual general shareholders meetings. This is the extent of its involvement. The strategic investor, on the other hand, represents the real long term accumulator of value. Paradoxically, it is the strategic investor that has the greater influence on the value of the company's shares. The quality of management, the rate of the introduction of new products, the success or failure of marketing strategies, the level of customer satisfaction, the education of the workforce - all depend on the strategic investor. That there is a strong relationship between the quality and decisions of the strategic investor and the share price is small wonder. The strategic investor represents a discounted future in the same manner that shares do. Indeed, gradually, the balance between financial investors and strategic investors is shifting in favour of the latter. People understand that money is abundant and what is in short supply is good management. Given the ability to create a brand, to generate profits, to issue new products and to acquire new clients - money is abundant. These are the functions normally reserved to financial investors: Financial Management The financial investor is expected to take over the financial management of the firm and to directly appoint the senior management and, especially, the management echelons, which directly deal with the finances of the firm. 1. To regulate, supervise and implement a timely, full and accurate set of accounting books of the firm reflecting all its activities in a manner commensurate with the relevant legislation and regulation in the territories of operations of the firm and with internal guidelines set from time to time by the Board of Directors of the firm. This is usually achieved both during a Due Diligence process and later, as financial management is implemented. 2. To implement continuous financial audit and control systems to monitor the performance of the firm, its flow of funds, the adherence to the budget, the expenditures, the income, the cost of sales and other budgetary items. 3. To timely, regularly and duly prepare and present to the Board of Directors financial statements and reports as required by all pertinent laws and regulations in the territories of the operations of the firm and as deemed necessary and demanded from time to time by the Board of Directors of the Firm. 4. To comply with all reporting, accounting and audit requirements imposed by the capital markets or regulatory bodies of capital markets in which the securities of the firm are traded or are about to be traded or otherwise listed. 5. To prepare and present for the approval of the Board of Directors an annual budget, other budgets, financial plans, business plans, feasibility studies, investment memoranda and all other financial and business documents as may be required from time to time by the Board of Directors of the Firm.
6. To alert the Board of Directors and to warn it regarding any irregularity, lack of compliance, lack of adherence, lacunas and problems whether actual or potential concerning the financial systems, the financial operations, the financing plans, the accounting, the audits, the budgets and any other matter of a financial nature or which could or does have a financial implication. 7. To collaborate and coordinate the activities of outside suppliers of financial services hired or contracted by the firm, including accountants, auditors, financial consultants, underwriters and brokers, the banking system and other financial venues. 8. To maintain a working relationship and to develop additional relationships with banks, financial institutions and capital markets with the aim of securing the funds necessary for the operations of the firm, the attainment of its development plans and its investments. 9. To fully computerize all the above activities in a combined hardware-software and communications system which will integrate into the systems of other members of the group of companies. 10. Otherwise, to initiate and engage in all manner of activities, whether financial or of other nature, conducive to the financial health, the growth prospects and the fulfillment of investment plans of the firm to the best of his ability and with the appropriate dedication of the time and efforts required. Collection and Credit Assessment 1. To construct and implement credit risk assessment tools, questionnaires, quantitative methods, data gathering methods and venues in order to properly evaluate and predict the credit risk rating of a client, distributor, or supplier. 2. To constantly monitor and analyse the payment morale, regularity, non-payment and non-performance events, etc. – in order to determine the changes in the credit risk rating of said factors. 3. To analyse receivables and collectibles on a regular and timely basis. 4. To improve the collection methods in order to reduce the amounts of arrears and overdue payments, or the average period of such arrears and overdue payments. 5. To collaborate with legal institutions, law enforcement agencies and private collection firms in assuring the timely flow and payment of all due payments, arrears and overdue payments and other collectibles. 6. To coordinate an educational campaign to ensure the voluntary collaboration of the clients, distributors and other debtors in the timely and orderly payment of their dues. The strategic investor is, usually, put in charge of the following: Project Planning and Project Management
The strategic investor is uniquely positioned to plan the technical side of the project and to implement it. He is, therefore, put in charge of: 1. The selection of infrastructure, equipment, raw materials, industrial processes, etc. 2. Negotiations and agreements with providers and suppliers; 3. Minimizing the costs of infrastructure by deploying proprietary components and planning; 4. The provision of corporate guarantees and letters of comfort to suppliers; 5. The planning and erecting of the various sites, structures, buildings, premises, factories, etc.; 6. The planning and implementation of line connections, computer network connections, protocols, solving issues of compatibility (hardware and software, etc.); 7. Project planning, implementation and supervision. Marketing and Sales 1. The presentation to the Board an annual plan of sales and marketing including: market penetration targets, profiles of potential social and economic categories of clients, sales promotion methods, advertising campaigns, image, public relations and other media campaigns. The strategic investor also implements these plans or supervises their implementation. 2. The strategic investor is usually possessed of a brandname recognized in many countries. It is the market leaders in certain territories. It has been providing goods and services to users for a long period of time, reliably. This is an important asset, which, if properly used, can attract users. The enhancement of the brandname, its recognition and market awareness, market penetration, co-branding, collaboration with other suppliers – are all the responsibilities of the strategic investor. 3. The dissemination of the product as a preferred choice among vendors, distributors, individual users and businesses in the territory. 4. Special events, sponsorships, collaboration with businesses. 5. The planning and implementation of incentive systems (e.g., points, vouchers). 6. The strategic investor usually organizes a distribution and dealership network, a franchising network, or a sales network (retail chains) including: training, pricing, pecuniary and quality supervision, network control, inventory and accounting controls, advertising, local marketing and sales promotion and other network management functions. 7. The strategic investor is also in charge of "vision thinking": new methods of operation, new marketing ploys, new market niches, predicting the future trends and market needs, market analyses and research, etc.
The strategic investor typically brings to the firm valuable experience in marketing and sales. It has numerous off the shelf marketing plans and drawer sales promotion campaigns. It developed software and personnel capable of analysing any market into effective niches and of creating the right media (image and PR), advertising and sales promotion drives best suited for it. It has built large databases with multi-year profiles of the purchasing patterns and demographic data related to thousands of clients in many countries. It owns libraries of material, images, sounds, paper clippings, articles, PR and image materials, and proprietary trademarks and brand names. Above all, it accumulated years of marketing and sales promotion ideas which crystallized into a new conception of the business. Technology 1. The planning and implementation of new technological systems up to their fully operational phase. The strategic partner's engineers are available to plan, implement and supervise all the stages of the technological side of the business. 2. The planning and implementation of a fully operative computer system (hardware, software, communication, intranet) to deal with all the aspects of the structure and the operation of the firm. The strategic investor puts at the disposal of the firm proprietary software developed by it and specifically tailored to the needs of companies operating in the firm's market. 3. The encouragement of the development of in-house, proprietary, technological solutions to the needs of the firm, its clients and suppliers. 4. The planning and the execution of an integration program with new technologies in the field, in collaboration with other suppliers or market technological leaders. Education and Training The strategic investor is responsible to train all the personnel in the firm: operators, customer services, distributors, vendors, sales personnel. The training is conducted at its sole expense and includes tours of its facilities abroad. The entrepreneurs – who sought to introduce the two types of investors, in the first place – are usually left with the following functions: Administration and Control 1. To structure the firm in an optimal manner, most conducive to the conduct of its business and to present the new structure for the Board's approval within 30 days from the date of the GM's appointment. 2. To run the day to day business of the firm. 3. To oversee the personnel of the firm and to resolve all the personnel issues. 4. To secure the unobstructed flow of relevant information and the protection of confidential organization.
5. To represent the firm in its contacts, representations and negotiations with other firms, authorities, or persons. This is why entrepreneurs find it very hard to cohabitate with investors of any kind. Entrepreneurs are excellent at identifying the needs of the market and at introducing technological or service solutions to satisfy such needs. But the very personality traits which qualify them to become entrepreneurs – also hinder the future development of their firms. Only the introduction of outside investors can resolve the dilemma. Outside investors are not emotionally involved. They may be less visionary – but also more experienced. They are more interested in business results than in dreams. And – being well acquainted with entrepreneurs – they insist on having unmitigated control of the business, for fear of losing all their money. These things antagonize the entrepreneurs. They feel that they are losing their creation to cold-hearted, mean spirited, corporate predators. They rebel and prefer to remain small or even to close shop than to give up their cherished freedoms. This is where nine out of ten entrepreneurs fail - in knowing when to let go.