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 E

K U R AT KO
D O N A L D F. K U R A T K O

Entrepreneurship

Entrepreneurship
Theory, Process, Practice 11e

Theory, Process, Practice

11e

SE/Author/Author, Title, 5th Edition   ISBN -978-X-XXX-XXXXX-X ©20XX Designer: XXX

Text & Cover printer: Quad Graphics   Binding: PB   Trim: 8.5" x 10.875"   CMYK
 Contents  vii

3-4f Preparing Management 74

3-4g Developing I-Teams 75
3-5 Sustaining a Corporate Entrepreneurship Strategy 75
Summary 78
Key Terms 78
Review and Discussion Questions 78
Notes 79

4 Social Entrepreneurship and the Global Environment

for Entrepreneurship 83
4-1 Social Entrepreneurship 84
4-1a Defining the Social Entrepreneur 85
4-1b Defining the Social Enterprise 85
4-2 Social Enterprise and Sustainability 87
4-2a Sustainable Entrepreneurship 87
4-2b Ecopreneurship 89
4-3 Shared Value and the Triple Bottom Line 90
4-3a Bottom-Line Measures of Economic Performance 90
4-3b Bottom-Line Measures of Environmental Performance 90
4-3c Bottom-Line Measures of Social Performance 91
4-4  enefit Corporations: Promoting Sustainable Enterprises
B 91
4-5 The Global Marketplace 92
4-5a Global Entrepreneurs 92
4-5b Global Thinking 92
4-5c Diaspora Networks 92
4-5d Global Organizations and Agreements 93
4-5e Venturing Abroad 95
4-5f Methods of Going International 96
4-5g Researching Foreign Markets 99
Summary 101
Key Terms 102
Review and Discussion Questions 102
Notes 103

PART 2 Initiating Entrepreneurial Ventures  107

5 Innovation: The Creative Pursuit of Ideas 108
5-1 Opportunity Identification: The Search for New Ideas 109
5-1a Sources of Innovative Ideas 109
5-1b The Knowledge and Learning Process 110
5-2 Entrepreneurial Imagination and Creativity 111
5-2a The Role of Creative Thinking 111
5-2b The Nature of the Creative Process 111
5-2c Developing Your Creativity 113
5-3 A Creative Exercise 114

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 viii  Contents

5-4 A Creative Exercise 115

5-5 A Creative Exercise 116
5-5a Arenas of Creativity 119
5-5b The Creative Climate 119
5-6 Innovation and the Entrepreneur 120
5-6a The Innovation Process 120
5-6b Types of Innovation 120
5-6c The Major Misconceptions of Innovation 121
5-6d Principles of Innovation 121
Summary 123
Key Terms 123
Review and Discussion Questions 123
Notes 123

6 Assessment of ­Entrepreneurial Opportunities 126

6-1 The Challenge of New-Venture Start-Ups 127
6-2 Pitfalls in Selecting New Ventures 128
6-2a Lack of Objective Evaluation 128
6-2b No Real Insight into the Market 128
6-2c Inadequate Understanding of Technical Requirements 128
6-2d Poor Financial Understanding 128
6-2e Lack of Venture Uniqueness 129
6-2f Ignorance of Legal Issues 129
6-3 Critical Factors for New-Venture Development 129
6-3a Uniqueness 129
6-3b Investment 129
6-3c Growth of Sales 131
6-3d Product Availability 131
6-3e Customer Availability 131
6-4 Why New Ventures Fail 132
6-5 The Traditional Venture Evaluation Processes 136
6-5a Profile Analysis Approach 136
6-5b Feasibility Criteria Approach 136
6-5c Comprehensive Feasibility Approach 137
6-6 The Contemporary Methodologies for Venture Evaluation 139
6-6a The Design Methodology 139
6-6b Design-Centered Entrepreneurship 140
6-6c The Lean Start-Up Methodology 142
6-7 The Challenge of New Venture Legitimacy 144
Summary 146
Key Terms 146
Review and Discussion Questions 146
Notes 147

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 Contents  ix

7 Pathways to ­Entrepreneurial Ventures 155

7-1 Creating New Ventures 156
7-1a New-New Approach to Creating New Ventures 156
7-1b New-Old Approach to Creating New Ventures 156
7-1c A Newness Framework for New Ventures 158
7-1d Examining the Financial Picture When Creating
New Ventures 159
7-2 Acquiring an Established Entrepreneurial Venture 160
7-2a Personal Preferences 161
7-2b Examination of Opportunities 161
7-2c Advantages of Acquiring an Ongoing Venture 161
7-2d Evaluation of the Selected Venture 162
7-2e Key Questions to Ask 163
7-2f Negotiating the Deal 166
7-3 Franchising: The Hybrid 167
7-3a How Franchising Works 167
7-3b Advantages of Franchising 167
7-3c Disadvantages of Franchising 168
7-3d Franchise Law 171
7-3e Evaluating Franchising Opportunities 171
7-4 Incubators, Accelerators, and Entrepreneurial Ecosystems 175
Summary 176
Key Terms 177
Review and Discussion Questions 177
Notes 177

8 Sources of Capital for Entrepreneurs 180

8-1 The Search for Capital 181
8-2 Debt Versus Equity Financing 181
8-2a Debt Financing 182
8-2b Equity Financing 185
8-3 The Venture Capital Market 189
8-3a Recent Developments in Venture Capital 190
8-3b Dispelling Venture Capital Myths 191
8-3c Venture Capitalists’ Objectives 193
8-3d Criteria for Evaluating New-Venture Proposals 194
8-3e Evaluating the Venture Capitalist 198
8-4 Informal Risk Capital: Angel Financing 198
8-4a Types of Angel Investors 199
Summary 201
Key Terms 202
Review and Discussion Questions 202
Notes 202

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 x  Contents

PART 3 Developing the Entrepreneurial Plan 207

9 Legal Challenges for Entrepreneurial Ventures 208
9-1 Intellectual Property Protection: Patents 210
9-1a Securing a Patent: Basic Rules 210
9-1b Securing a Patent: The Application 210
9-2 Intellectual Property Protection: Copyrights 212
9-2a Understanding Copyright Protection 212
9-2b Protecting Ideas? 213
9-3 Intellectual Property Protection: Trademarks 213
9-3a Avoiding Trademark Pitfalls 214
9-3b Trade Secrets 216
9-3c Trademark Protection on the Internet 216
9-4 Legal Structures for Entrepreneurial Ventures 217
9-4a Sole Proprietorships 217
9-4b Partnerships 220
9-4c Corporations 221
9-5 Partnerships and Corporations: Specific Forms 224
9-5a Limited Partnerships 224
9-5b Limited Liability Partnerships 224
9-5c S Corporations 224
9-5d Limited Liability Companies 225
9-5e B Corporations 226
9-5f L3C 226
9-6 Final Thoughts on Legal Forms 227
9-7 Bankruptcy 227
9-7a The Bankruptcy Act 227
9-7b Chapter 7: Straight Bankruptcy 228
9-7c Chapter 11: Reorganization 228
9-7d Chapter 13: Adjustment of Debts 229
9-8 Minimizing Legal Expenses 229
Summary 230
Key Terms 231
Review and Discussion Questions 231
Notes 231

10 Marketing Challenges for Entrepreneurial Ventures 233

10-1 The New Marketing Concept for Entrepreneurs 234
10-2 Marketing Research 234
10-2a Defining the Research Purpose and Objectives 234
10-2b Gathering Secondary Data 235
10-2c Gathering Primary Data 235
10-2d Quantitative Versus Qualitative Marketing Research 236
10-2e Interpreting and Reporting Information 236
10-2f Marketing Research Questions 238

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 Contents  xi

10-3 Inhibitors to Marketing Research 238

10-3a Cost 238
10-3b Complexity 239
10-3c Strategic Decisions 239
10-3d Irrelevancy 239
10-4 Social Media Marketing 240
10-4a Key Distinctions of Social Media Marketing 240
10-4b Developing a Social Media Marketing Plan 241
10-4c Mobile Marketing 242
10-5 Entrepreneurial Tactics in Market Research 243
10-6 The Components of Effective Marketing 245
10-6a Marketing Philosophy 245
10-6b Market Segmentation 246
10-6c Consumer Behavior 246
10-7 Developing a Marketing Plan 248
10-7a Current Marketing Research 248
10-7b Current Sales Analysis 249
10-7c Marketing Information System 249
10-7d Sales Forecasting 249
10-7e Evaluation 249
10-7f Final Considerations for Entrepreneurs 249
10-8 Pricing Strategies 251
10-8a Views of Pricing 251
10-8b Product Life Cycle Pricing 252
10-8c Pricing in the Social Media Age 252
Summary 253
Key Terms 254
Review and Discussion Questions 254
Notes 255

11 Financial Preparation for Entrepreneurial

Ventures 257
11-1 The Importance of Financial Information for Entrepreneurs 258
11-2 Understanding the Key Financial Statements 259
11-2a The Balance Sheet 259
11-2b The Income Statement 265
11-2c The Cash-Flow Statement 268
11-3 Preparing Financial Budgets 269
11-3a The Operating Budget 269
11-3b The Cash-Flow Budget 272
11-4 Pro Forma Statements 275
11-5 Capital Budgeting 277
11-5a Payback Method 278
11-5b Net Present Value 279
11-5c Internal Rate of Return 280

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 xii  Contents

11-6 Break-Even Analysis 281

11-6a Break-Even Point Computation 281
11-7 Ratio Analysis 284
Summary 287
Key Terms 287
Review and Discussion Questions 287
Notes 288

12 Developing an Effective Business Plan 289

12-1 Pitfalls to Avoid in the Venture Planning Process 290
12-1a Pitfall 1: No Realistic Goals 290
12-1b Pitfall 2: Failure to Anticipate Roadblocks 290
12-1c Pitfall 3: No Commitment or Dedication 290
12-1d Pitfall 4: Lack of Demonstrated Experience
(Business or Technical) 290
12-1e Pitfall 5: No Market Niche (Segment) 290
12-2 Business Model Canvas: Initiating the Venture Formation Process 291
12-3 What Is a Business Plan? 292
12-4 Benefits of a Business Plan 292
12-5 Developing a Well-Conceived Business Plan 293
12-5a Who Reads the Plan? 293
12-5b Putting the Package Together 294
12-5c Guidelines to Remember 295
12-5d Questions to Be Answered 297
12-6 Elements of a Business Plan 298
12-6a Executive Summary 298
12-6b Business Description 298
12-6c Marketing Segment 300
12-6d Market Niche and Market Share 300
12-6e Research, Design, and Development Segment 301
12-6f Operations Segment 301
12-6g Management Segment 302
12-6h Financial Segment 303
12-6i Critical-Risks Segment 304
12-6j Harvest Strategy Segment 304
12-6k Milestone Schedule Segment 304
12-6l Appendix and/or Bibliography Segment 304
12-7 Updating the Business Plan 313
12-7a A Practical Example of a Business Plan 313
12-8 Presentation of the Business Plan: The “Pitch” 313
12-8a Suggestions for Presentation 314
12-8b What to Expect 314
Summary 334
Key Terms 334
Review and Discussion Questions 334
Notes 334

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 Contents  xiii

PART 4 Growth Strategies for Entrepreneurial

Ventures 373
13 Strategic Entrepreneurial Growth 374
13-1 Strategic Planning and Emerging Firms 375
13-2 The Nature of Strategic Planning 375
13-2a The Lack of Strategic Planning 376
13-2b The Value of Strategic Planning 377
13-2c Fatal Visions in Strategic Planning 377
13-2d Entrepreneurial and Strategic Actions 378
13-2e Strategic Positioning: The Entrepreneurial Edge 379
13-2f An Entrepreneurial Strategy Matrix Model 380
13-3 Managing Entrepreneurial Growth 382
13-3a Venture Development Stages 382
13-3b Transitioning from Entrepreneurial to Managerial 383
13-3c Understanding the Growth Stage 386
13-3d Managing Paradox and Contradiction 387
13-3e Confronting the Growth Wall 387
13-4 Building an Entrepreneurial Company in the Twenty-First
Century 389
13-4a The Entrepreneurial Mind-Set 389
13-4b Key Elements for an Entrepreneurial Firm 390
13-5 Unique Managerial Concerns of Growing Ventures 391
13-5a The Distinctiveness of Size 392
13-5b The One-Person-Band Syndrome 392
13-5c Time Management 392
13-5d Community Pressures 393
13-5e Continuous Learning 393
13-6 Achieving Entrepreneurial Leadership
for the Future 393
Summary 395
Key Terms 396
Review and Discussion Questions 396
Notes 396

14 Valuation of Entrepreneurial Ventures 400

14-1 The Importance of Business Valuation 401
14-2 Underlying Issues When Acquiring a Venture 401
14-2a Goals of the Buyer and the Seller 401
14-2b Emotional Bias 401
14-2c Reasons for the Acquisition 401
14-3 Due Diligence 402
14-4 Analyzing the Business 406
14-5 Establishing a Firm’s Value 410
14-5a Valuation Methods 410
14-6 Term Sheets in Venture Valuation 415

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 xiv  Contents

14-7 Additional Factors in the Valuation Process 417

14-7a Avoiding Start-Up Costs 417
14-7b Accuracy of Projections 417
14-7c Control Factor 417
Summary 418
Key Terms 418
Review and Discussion Questions 418
Notes 419

15 Harvesting the Entrepreneurial Venture 429

15-1 Harvesting the Venture: A Focus on the Future 430
15-2 The Management Succession Strategy 430
15-3 Key Factors in Succession 431
15-3a Succession Pressures and Interests Inside the Firm 431
15-3b Succession Pressures and Interests Outside the Firm 432
15-3c Forcing Events 434
15-3d Sources of Succession 434
15-3e Legal Restrictions 436
15-4 Developing a Succession Strategy 437
15-4a Understanding Contextual Aspects of Succession 437
15-4b Identifying Successor Qualities 438
15-4c Writing a Succession Strategy 438
15-5 The Exit Strategy: Liquidity Events 439
15-5a The Initial Public Offering (IPO) 439
15-6 Complete Sale of the Venture 444
15-6a Steps for Selling a Business 444
Summary 446
Key Terms 446
Review and Discussion Questions 446
Notes 447

Glossary 449

Name Index 463

Subject Index 467

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 Preface

Entrepreneurship is the most powerful economic force known to humankind! The Entre-
preneurial Revolution that captured our imagination during the last three decades has now
permeated every aspect of business thinking and planning. As exemplified by the dynasty
builders of the previous decades, such as Sam Walton of Walmart, Fred Smith of FedEx, Bill
Gates of Microsoft, Herb Kelleher of Southwest Airlines, Steve Jobs of Apple, Andy Grove
of Intel, Larry Page and Sergey Brin of Google, Mark Zuckerberg of Facebook, Peter Thiel
of PayPal, and Elon Musk of Tesla and SpaceX, the applications of creativity, risk taking,
­innovation, and passion led the way to economic development far greater than anyone could
imagine. Today we witness the immense impact of entrepreneurial companies such as Google,
Amazon, Facebook, Twitter, Instagram, Snapchat, LinkedIn, Uber, and Airbnb, which have
produced technological breakthrough after breakthrough. As the third decade of the twenty-
first century begins, we continue to encounter newer and sometimes more complex challeng-
es and pressures than ever before in the form of green technologies, social entrepreneurship,
sustainability, health care, and disruptive technological change. The entrepreneurial drive
and determination of yet-to-be-discovered dynasty builders will be our greatest solution to
all of these challenges.
The process of transforming creative ideas into commercially viable businesses continues
to be a major force in today’s global economy. Successful entrepreneurship requires more
than merely luck and money. It is a cohesive process of creativity, risk taking, and planning.
Students today need courses and programs that set forth a basic framework for understand-
ing the process of entrepreneurship. I wrote this textbook to structure and illustrate the
discipline of entrepreneurship in a manner that is as unique and creative as entrepreneurship
itself. The text and online materials included in Entrepreneurship: Theory, Process, Practice,
11th edition, to bring together in one place the most significant resources for exploring the
development of new and emerging ventures and to present them in an exciting, organized,
and challenging manner.

Organization
The chapter sequence in Entrepreneurship: Theory, Process, Practice, 11th edition, is sys-
tematically organized around the initiation, planning, growth, and development of new and
emerging ventures. Each major part of the text contains chapters that specifically address these
pertinent concepts of entrepreneurship.
Part 1 (Chapters 1–4) introduces the entrepreneurial mind-set and examines the Entre-
preneurial Revolution that has taken root across the globe. In it, we address the individual
characteristics that shape entrepreneurs and their thinking, the “dark side” of entrepreneur-
ship, and the ethical perspective that impels entrepreneurs in the development of morally
conscious approaches to business. From an organizational perspective we introduce the con-
cept of corporate entrepreneurship as a strategy to foster innovation within larger domains.
Finally, and perhaps increasing in significance, we focus on social entrepreneurship and the
global environment.
Part 2 (Chapters 5–8) examines the initiation of entrepreneurial ventures. We begin with
the pursuit of ideas, opportunity recognition, creativity, and innovation. We then examine the
methods for assessing new ventures and business opportunities (including the Lean Start-Up
methodology and design thinking), and the pathways to ventures, whether starting a brand
new venture, acquiring an existing firm, or purchasing a franchise. This part concludes with
a thorough examination of the sources of capital formation available to entrepreneurs.

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 xvi  Preface

Part 3 (Chapters 9–12) focuses on the development of entrepreneurial plans. We begin

with the legal perspective, the critical legal issues (proprietary protections, patents, copyrights,
trademarks, and bankruptcy laws), and the structures of organizations (sole proprietorships,
partnerships, and corporations). We then discuss the marketing issues that affect the prepar-
ing, planning, and operating of entrepreneurial start-ups (including social media marketing
and mobile marketing) as well as the financial tools that entrepreneurs need. Finally, the
development of a clear and comprehensive business plan is examined. A complete sample
business plan appears in the appendix following Chapter 12.
Part 4 (Chapters 13–15) focuses on the growth, valuation, and harvesting of entrepre-
neurial ventures. The need for strategic planning, the challenge of managing entrepreneurial
growth, and understanding the transition from the entrepreneurial to managerial are all dis-
cussed in this part. We then present the valuation process for an entrepreneurial venture as
well as effective methods for valuation that need to be considered. Finally, we look at harvest-
ing strategies available to entrepreneurial firms.

Distinguishing Features
Entrepreneurship: Theory, Process, Practice presents an organized, systematic study of entre-
preneurship. Certain distinguishing features enhance its usefulness for both students and
professors. Each chapter contains these specific learning items:
• Opening Quotations. Thought-provoking quotes titled “Entrepreneurial Thought” at the
beginning of each chapter capture students’ interest about the basic idea for the chapter.
• Objectives. A clear set of learning objectives provides a preview of the chapter material and
can be used by students to check whether they have understood and retained important
points.
• Figures and Tables. Numerous charts and tables illustrate specific text material, expand
chapter ideas, or refer to outside source material.
• Summary and Discussion Questions. Each chapter closes with a summary of key points to
be retained. The discussion questions are a complementary learning tool that will enable
students to check their understanding of key issues, think beyond basic concepts, and
determine areas that require further study. The summary and discussion questions help
students discriminate between main and supporting points and provide mechanisms for
self-teaching.
• Key Terms. The most important terms appearing in each chapter are shown in boldface
where they first appear. A list of the key terms appears at the end of each chapter, and a
complete glossary appears at the end of the book.

Innovative Content In the 11Th Edition

Producing a new edition is always an ambitious undertaking, but we always welcome the
opportunity to refocus and, if necessary, redefine content that makes entrepreneurship clear
and engaging for learners and future entrepreneurs.
• MindTap Digital Learning Suite. This digital learning solution helps instructors engage
and transform today’s students into critical thinkers. As a student using MindTap® you’ll
explore up-to-the-minute entrepreneurial methodologies with hands-on learning experi-
ences. Find out what it’s like to be an entrepreneur while building key skills you’ll need
to invent and launch your brilliant idea. All activities are written exclusively by author
“Dr. K,” as author Dr. Donald F. Kuratko’s students call him, and are designed for you to
experience his famous “Spine Sweat” firsthand. Implement Design Methodology, the Lean
Start-Up methodology, the Business Model Canvas, and other frameworks within our
exclusive learning suite, and gain an understanding of the most contemporary methods
being employed in the marketplace.
• The Entrepreneurial Process. Short vignettes about the entrepreneurial process are included
throughout the text to show how practicing entrepreneurs handle specific challenges and

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 Preface  xvii

opportunities. Newer and updated process boxes reflect some of the more interesting stories
on the various roads traveled by entrepreneurs, including entrepreneurial passion and entre-
preneurial fear in Chapter 2, Procter and Gamble’s entrepreneurial engine in Chapter 3, social
enterprising and incentivizing entrepreneurs in Chapter 4, the Franchise Disclosure Docu-
ment in Chapter 7, guerrilla marketing in Chapter 10, and valuing a venture in Chapter 14.
• New Topics, Models, and Processes. This edition contains the most recent topics, ­models,
and processes developed by scholars in the entrepreneurship field. Some examples include
cognition, metacognition, and grief recovery with failure, and ethical challenges for entre-
preneurs (Chapter 2); new illustrations and a training program for corporate entrepre-
neurship (Chapter 3); sustainable entrepreneurship, shared value and triple bottom line
thinking, benefit corporations, global entrepreneurs, and diaspora networks (Chapter 4); a
“Newness Framework” (Chapter 7); franchise disclosure documents (Chapter 7); incuba-
tors, accelerators, and entrepreneurial ecosystems (Chapter 7); bootstrapping and crowd-
funding as sources of capital (Chapter 8); parody, issues with mobile devices, and other
new legal concepts (Chapter 9); social media marketing, mobile marketing, and pricing
in the social media age (Chapter 10); new tips on business plans and effective “pitches”
(Chapter 12); strategic entrepreneurship (Chapter 13); and harvesting issues (Chapter 15).
• New References and Citations. In an effort to make Entrepreneurship: Theory, Process,
Practice the most comprehensive text available, every chapter contains a wealth of endnotes
located at the end of each chapter. These references have been carefully selected to provide
professors and students with a thorough background of the latest research that relates
to the entrepreneurship material being presented. The focus here is on the “theoretical”
component of entrepreneurship.
• Online Ethical Dilemmas in E-Commerce
Questions concerning the ethical challenges that now confront entrepreneurs in the social
media age strike at the potential venture success, which is at stake in the hands of the social
media reputation management sites. How should entrepreneurs proceed?
• Incubators, Accelerators, and Entrepreneurial Ecosystems
When examining the pathways to entrepreneurial ventures, it is important to understand
the rise of incubators, accelerators, and entrepreneurial ecosystems because they may be
an important pathway for an entrepreneur to pursue.
• New Venture Legitimation
New venture legitimacy is a major challenge for every entrepreneurial start-up. Legitimacy
is a resource that enables new ventures to overcome the “liability of newness,” thereby
allowing for the acquisition of other resources such as financial capital, human resources,
and strategic relationships.
• Social Impact Investing
This type of investing has started to bring opportunities to harness entrepreneurial ideas
and capital markets to finance social initiatives. Increasing the funding capability of social
entrepreneurship will increase the likelihood of more efficient, sustainable, and effective
social initiatives.
• The Contemporary Methodologies for Venture Evaluation
With newer movements taking shape in the ever-changing entrepreneurial world, we pro-
vide sections that highlight some of the more contemporary methodologies being utilized
for concept assessment and new-venture evaluation.
• Design Methodology: Design is now a hot topic in the business world. The demand
is becoming so great that universities are now building programs that take a general
approach to design rather than concentrating it in just technical schools like architecture
and engineering. We present sections on the following:
• Design and Learn
• Design is a learning process that shapes and converts ideas into form, whether that is a
plan of action, experience, or physical thing. Learning from qualitative research—­Learning
from prototyping—Learning from feedback are all presented in this edition of the text.

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 xviii  Preface

• Design Development and Design Methodology

• Design development is taking an initial concept idea and developing a proof of concept
that elicits feedback from relevant stakeholders. To accomplish this, several criteria must
be met, including concept feasibility, concept desirability, and concept viability.
• Design-Centered Entrepreneurship
• Researchers Michael G. Goldsby, Donald F. Kuratko, Matthew R. Marvel, and Thomas
Nelson have introduced the concept of design-centered entrepreneurship with a con-
ceptual model.
• The Lean Start-up Methodology: Similar to design methodology, the Lean Start-Up
methodology provides a scientific approach to creating early venture concepts and deliv-
ers a desired product to customers’ hands faster. The Lean Start-Up methodology was
first developed in 2011 by Eric Ries, founder of IMVU Inc., as a way to prevent waste
in start-ups and ensure that the business plan remains a living document. We include key
Lean Start-Up terminology in this section.
• Peer-to-Peer Lending (P2P)
Peer-to-peer lenders are Internet-based sites that pool money from investors willing to lend
capital at agreed-upon rates.
• Equity Crowdfunding
This practice seeks equity funding for a venture by raising money from a large number
of people via the Internet. In the United States, legislation is mentioned in the 2012 JOBS
Act that allowed for a wider pool of small investors with fewer restrictions following the
implementation of the act. SEC exemptions were enacted into law in 2015, and investments
began in May 2016.
• Updated Information on IPOs, Venture Capitalists, Angel Investors, B Corporations,
and LC3s
• Business Model Canvas
The essential elements of the Business Model Canvas are presented and discussed in
­Chapter 12.

Updated and Enhanced Supplementary Materials

The following resources and ancillaries have been created to support users of Entrepreneur-
ship, 11th edition:
• MindTap Digital Learning Suite. Through paths of dynamic assignments and applications
that you can personalize, real-time course analytics, and an accessible reader, MindTap
helps you turn cookie cutter into cutting edge, apathy into engagement, and memorizers
into higher-level thinkers. As an instructor using MindTap, you have at your fingertips
engaging, challenging, rigorous learning activities written exclusively by Dr. Kuratko. Stu-
dents learn firsthand what it’s like to be an entrepreneur as they complete challenges that
develop their creative and critical thinking skills. Give your students a powerful learning
experience while saving time planning lessons and course structure using our exclusive
interface designed to improve your workflow. All activities are written and produced exclu-
sively by Dr. Donald F. Kuratko to help students and instructors experience his innovative
teaching methodology firsthand.
Self-Assessments engage students by helping them make personal connections to the con-
tent presented in the chapter.
Reading Quizzes assess students’ basic comprehension of the reading material to help you
gauge their level of engagement and understanding of the content.
Video Case Activities engage students by presenting everyday businesses facing manage-
rial challenges, placing concepts in real-world contexts, and making for great points of
discussion.

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 Preface  xix

Experiential Exercises challenge students to work in teams in our one-of-a-kind collabora-

tive environment to create their own venture from concept to investor pitch. Carry out
Dr. K’s famous Spine Sweat Experience in your course for an extra challenge.
• Instructor’s Manual. The Instructor’s Manual contains chapter outlines, lecture outlines,
answers to review and case questions, teaching notes for the comprehensive part cases, and
similar content, as well as methods for incorporating the MindTap digital learning suite
into your course. It is available on the text website at www.cengagebrain.com.
• Cognero. Cengage Learning Testing Powered by Cognero™ is a flexible, online system that
allows you to author, edit, and manage test bank content from multiple Cengage Learning
solutions; create multiple test versions in an instant; and deliver tests from your LMS, your
classroom, or wherever you want. The Cognero™ test bank contains the same questions
that are in the Microsoft® Word test bank.
• Test Bank. Thoroughly revised and enhanced, test bank questions are linked to each chap-
ter’s knowledge objectives and are ranked by difficulty and question type. An ample num-
ber of challenging questions are provided that are tagged according to learning objectives,
difficulty, and Bloom’s Taxonomy.
• LivePlan Business Software. Students can create robust, polished business plans worthy of
the most distinguished investor using the LivePlan business software.
• PowerPoint® Slides. PowerPoint presentations for instructors and students are colorful and
varied, designed to hold students’ interest and reinforce all of each chapter’s main points.
The PowerPoint presentations are available on text website at www.cengagebrain.com.

Acknowledgments
Many individuals played an important role in helping to write, develop, and refine the
text, and they deserve special recognition. First, my wife, Debbie, and daughters, Christina
and Kellie, always deserve my deepest love and appreciation. Appreciation is extended to
the staff at Cengage Learning, in particular Senior Product Manager Vicky True, Learning
Designer Sarah Huber, and Content Manager Conor Allen. The professionals who reviewed
the manuscript and offered copious suggestions for improvement played a decisive role in the
final result. I would first like to acknowledge the reviewers whose comments and suggestions
have helped to shape this and all previous editions of Entrepreneurship. Solochidi Ahiarah,
SUNY College at Buffalo (Buffalo State College); Mary Allender, University of Portland;
James Almeida, Fairleigh Dickinson University; Jeffrey Alves, Wilkes University; Joseph S.
Anderson, Northern Arizona University; Lawrence Aronhime, Johns Hopkins University;
Kenneth M. Becker, University of Vermont; Ted Berzinski, Mars Hill College; Thomas M.
Box, Pittsburg State University; Stephen Braun, Concordia University; Martin Bressler,
Houston Baptist University; Debbi Brock, Berea College; John Callister, Cornell University;
Don Cassidy, Inver Hills Community College; A. A. Farhad Chowdhury, Mississippi Valley
State University; James J. Chrisman, Mississippi State University; John E. Clarkin, College
of Charleston; Teresa A. Daniel, Marshall University; Judy Dietert, Texas State University–
San Marcos; Barbara Frazier, Western Michigan University; Barry Gilmore, University of
Memphis; Michael Giuliano, University of Maryland University, College Asia; James V. Green,
University of Maryland, College Park; Judith Grenkowicz, Kirtland Community College;
Stephanie Haaland, Linfield College; Peter Hackbert, Sierra Nevada College; David M. Hall,
Saginaw Valley State University; Barton Hamilton, Olin School of Business, Washington
University; Brenda Harper, Athens State University; Tim Hatten, Mesa State College; Daniel
R. Hogan, Jr., Loyola University; Kathie K. Holland, University of Central Florida; Frank
Hoy, University of Texas–El Paso; Rusty Juban, Southeastern Louisiana University; Ronald
Kath, Life University; James T. Kilinski, Purdue University Calumet; Michael Krajsa, DeSales
University; Stewart D. Langdon, Spring Hill College; Karl LaPan, Indiana University-
Purdue University Fort Wayne; Hector Lopez, Hostos Community College/CUNY; Louis
Marino, University of Alabama; Charles H. Matthews, University of Cincinnati; Todd Mick,

33180_fm_hr_i-xxviii.indd 19 9/7/18 11:05 AM

 xx  Preface

Missouri Western State College; Angela Mitchell, Wilmington College; David Mosby, UTA;
Lynn Neeley, Northern Illinois University; Charles Nichols, Sullivan University; Terry W.
Noel, California State University–Chico; John H. Nugent, Montana Tech of the University of
Montana; Don Okhomina, Alabama State University; Joseph C. Picken, University of Texas
at Dallas; Paul Preston, University of Montevallo; J. Harold Ranck, Jr., Duquesne University;
Christina Roeder, James Madison University; William J. Rossi, University of Florida; Jonathan
Silberman, Arizona State University West; Cynthia Simerly, Lakeland Community College;
Ladd W. Simms, Mississippi Valley State University; Marsha O. Smith, Middle Tennessee
State University; Richard L. Smith, Iowa State University; Marcene Sonneborn, Syracuse
University; Timothy Stearns, California State University–Fresno; Charles Stowe, Sam Houston
State University; Michael Stull, California State University San Bernardino; Jeffrey S. Sugheir,
Boise State University; Thomas C. Taveggia, University of Arizona; Jill Thomas-Jorgenson,
­Lewis-Clark State College; Judy Thompson, Briar Cliff University; Charles N. Toftoy, George
Washington University; Monica Zimmerman Treichel, Temple University; Henry T. Ulrich,
Central Connecticut State University; Randall Wade, Rogue Community College; Michael
Wasserman, Clarkson University; Joan Winn, University of Denver; Amy Wojciechowski, West
Shore Community College; Nicholas Young, University of St. Thomas; Raymond Zagorski,
Kenai Peninsula College/University of Alaska; and Anatoly Zhuplev, Loyola Marymount
University.
I would also like to express my deepest appreciation of my colleagues at the Kelley School
of Business at Indiana University–Bloomington for their tremendous support. In particular,
I thank the staff at the Johnson Center for Entrepreneurship & Innovation at the Kelley
School of Business, Indiana University–Bloomington, especially the assistant director, Sandy
Martin, and the program manager, Mandy Priest. A special thanks to Patricia P. McDougall,
the ­Haeberle Professor of Entrepreneurship and former associate dean at the Kelley School of
Business, Indiana University, and Jeffrey G. Covin, the Glaubinger Professor of Entrepreneur-
ship at the Kelley School of Business, Indiana University, both of whom have always supported
my efforts immensely. Finally, my continued respect and appreciation to Idalene (Idie) Kesner,
dean of the Kelley School of Business, Indiana University, for her outstanding leadership and
enthusiastic support.
Dr. Donald F. Kuratko
The Kelley School of Business
Indiana University–Bloomington

33180_fm_hr_i-xxviii.indd 20 9/7/18 11:05 AM

 About the Author

Dr. Donald F. Kuratko (known as “Dr. K”) is the Jack M.

Gill Distinguished Chair of Entrepreneurship; Professor of Entre-
preneurship; and Executive and Academic Director of the Johnson
Center for Entrepreneurship & Innovation at the ­Kelley School
of Business, Indiana University–Bloomington. Dr. ­Kuratko is con-
sidered a prominent scholar and national leader in the field of
­entrepreneurship. He has published over 200 articles on aspects
of entrepreneurship, new-venture development, and ­ corporate
­entrepreneurship. His work has been published in journals such
as Strategic Management Journal, Academy of Management
­Executive, Journal of Business Venturing, Entrepreneurship Theory
& Practice, Journal of Operations Management, Journal of Prod-
uct Innovation Management, Small Business Economics, Journal
of Small Business Management, Family Business Review, Business
Horizons, and the Journal of Business Ethics. He has r­eceived
­numerous awards for his published articles, including the Acad-
emy of Management 2017 Entrepreneurship Practice Award for
the Best Journal Article Advancing Entrepreneurship Practice, and
the inaugural Journal of Operations Management Ambassador
Award for Best Interdisciplinary Journal Article published between
2011 and 2016 and based on citation count (awarded in 2016 at Academy of Management).
­Professor Kuratko has authored 30 books, including one of the leading e­ ntrepreneurship
books in universities today, Entrepreneurship: Theory, Process, Practice, 11th edition
­(Cengage Learning, 2020), as well as Corporate Entrepreneurship & Innovation, 3rd edi-
tion (Cengage Learning, 2011), Corporate Innovation (Routledge Publishers, 2019), and
New Venture Management (Routledge Publishers, 2018). In addition, Dr. Kuratko has been
consultant on corporate innovation and entrepreneurial strategies to a number of major cor-
porations, such as Anthem Blue Cross/Blue Shield, AT&T, United Technologies, ­Ameritech,
Walgreens, McKesson, Union Carbide Corporation, ServiceMaster, SPX Corp., Molex Corp.,
and TruServ. Dr. Kuratko was co-founder of the Global Consortium of Entrepreneurship
Centers (GCEC), an organization comprising over 300 top university e­ ntrepreneurship cen-
ters throughout the world. He served as the inaugural Executive Director for 20 years.
Under Professor Kuratko’s leadership and with one of the most prolific entrepreneurship
faculties in the world, Indiana University’s Entrepreneurship Program has consistently been
ranked as the #1 university for entrepreneurship research in the world by a major 10-year
research study in the Journal of Small Business Management, the #1 University Entrepreneur-
ship Program in the United States (public universities) by Fortune, the #1 Graduate Business
School (Public Institutions) for Entrepreneurship, and the #1 Undergraduate Business School
for Entrepreneurship (Public Institutions) by U.S. News & World Report. In addition, Indiana
University was awarded the National Model MBA Program in Entrepreneurship for the
MBA Program in Entrepreneurship & Innovation developed by Dr. Kuratko. Before coming
to Indiana University, he was the Stoops Distinguished Professor of Entrepreneurship and
Founding Director of the Entrepreneurship Program at Ball State University. In addition, he
was Executive Director of the Midwest Entrepreneurial Education Center. Dr. Kuratko was
the first professor ever to be named a Distinguished Professor for the College of Business at
Ball State University and held that position for 15 years. The Entrepreneurship Program that
Dr. Kuratko developed at Ball State University continually earned national rankings, including
top 20 in Business Week and Success magazines, top 10 business schools for entrepreneurship

33180_fm_hr_i-xxviii.indd 21 9/7/18 11:05 AM

 xxii   About the Author

research by the Journal of Management, top 4 in U.S. News & World Report (including the
#1 public university for entrepreneurship), and the #1 Regional Entrepreneurship Program
by Entrepreneur.
Dr. Kuratko’s honors include earning Entrepreneur of the Year for the state of Indiana
(sponsored by Ernst & Young and Inc. magazine) and being inducted into the Institute of
American Entrepreneurs Hall of Fame. He has been honored with the George Washington
Medal of Honor, the Leavey Foundation Award for Excellence in Private Enterprise, the NFIB
Entrepreneurship Excellence Award, and the National Model Innovative Pedagogy Award
for Entrepreneurship. In addition, he was named the National Outstanding Entrepreneur-
ship Educator by the U.S. Association for Small Business and Entrepreneurship, and he was
selected one of the top entrepreneurship professors in the United States by Fortune. He has
been honored with the Thomas W. Binford Memorial Award for Outstanding Contribution
to Entrepreneurial Development by the Indiana Health Industry Forum, and he was named a
21st Century Entrepreneurship Research Fellow by the Global Consortium of Entrepreneur-
ship Centers. In his years at Ball State University, he earned the College of Business Teaching
Award for 15 consecutive years and was the only professor in the history of the university
to achieve all four of the university’s major lifetime awards, which included the Outstanding
Young Faculty Award, Outstanding Teaching Award, Outstanding Faculty Award, and Out-
standing Researcher Award. Dr. Kuratko was honored by his peers in Entrepreneur magazine
as one of the Top Entrepreneurship Program Directors in the nation for three consecutive
years, including the #1 Entrepreneurship Program Director in the nation. The U.S. Association
for Small Business & Entrepreneurship honored him with the John E. Hughes Entrepreneurial
Advocacy Award for his career achievements in entrepreneurship and corporate innovation,
and the National Academy of Management honored Dr. Kuratko with the Entrepreneurship
Advocate Award for his career contributions to the development and advancement of the
discipline of entrepreneurship. Professor Kuratko has been named one of the top 10 entre-
preneurship scholars in the world and was the recipient of the Riata Distinguished Entrepre-
neurship Scholar Award. He was the inaugural recipient of the Karl Vesper Entrepreneurship
Pioneer Award for his career dedication to developing the field of entrepreneurship, and he
was honored by the National Academy of Management with the Entrepreneurship Mentor
Award for his exemplary mentorship to the next generation of entrepreneurship scholars and
professors.

33180_fm_hr_i-xxviii.indd 22 9/7/18 11:05 AM

 In Remembrance

Dr. Richard M. Hodgetts (1942–2001)

On November 17, 2001, Dr. Richard M. Hodgetts passed away after a three-and-a-half-year
battle with bone marrow cancer. The field of Management lost one of its most significant
scholars and teachers.
Dr. Hodgetts earned a PhD from the University of Oklahoma, an MBA from Indiana
University, and a BS from New York University. A prolific scholar and author, Dr. Hodgetts
published more than 125 articles on a variety of topics ranging from entrepreneurship to
strategic management to total quality management. His articles appeared in a host of leading
journals, including the Academy of Management Journal, Academy of Management Execu-
tive, Organizational Dynamics, Business Horizons, Personnel, Personnel Journal, and Journal
of Small Business Management. He was also the editor of Journal of Leadership Studies and
served on a number of editorial boards. He was the author or coauthor of 49 books. Some of
the most recent include International Business, International Management, Modern Human
Relations at Work, Measures of Quality and High Performance, and Entrepreneurship,
A Contemporary Approach, which he wrote with Dr. Kuratko.
Dr. Hodgetts was an active Academy of Management member his whole career, serving as
program chair in 1991, chair of the Management History Division, editor of the New Time
special issue of Academy of Management Executive, and member of the Board of Governors
from 1993 to 1996. For all of his dedicated service, he was inducted into the prestigious
Academy of Management Fellows.
Besides his tremendous contributions to the knowledge base of management, Dr. Hodgetts
was a truly outstanding teacher. He won every distinguished teaching award offered at both
his first job of 10 years at the University of Nebraska and his home school for 25 years at
Florida International University, including Faculty Member of the Year by the Executive MBA
students in the year of his passing. Some of his more notable honors included the Outstand-
ing Educator Award from the National Academy of Management in 1999, the John F. Mee
Management Contribution Award from the Management History Division of the Academy of
Management in 1998, the Professor Excellence Program Award from FIU in 1997, a Teaching
Improvement Program Award from FIU in 1996, and an Excellence in Teaching Award from
FIU in 1995.
Dr. Hodgetts consulted for a number of Fortune 500 firms and provided training for a
wide variety of companies, including AT&T, Delco Electronics, Eastman Kodak, GE, IBM,
Motorola, Texas Instruments, and Walmart. He has also lectured in Mexico, Venezuela, Peru,
Chile, Jamaica, Trinidad, Denmark, Kuwait, and at a host of U.S. colleges and universities.
He developed literally thousands of students at all levels—undergraduate, MBA, executive
development, and doctoral—and millions across the world were influenced by his texts and
innovative distance education materials and courses. Simply put, he was the ultimate scholar
and educator!
Dr. Hodgett’s distinguished career as a scholar and educator was exemplified in his humor,
dedication to research, genuine interest in his students, compassion, and true courage. Mil-
lions of students and practicing leaders have been, and will continue to be, influenced by his
teaching and publications. His legacy will live forever!

33180_fm_hr_i-xxviii.indd 23 9/7/18 11:05 AM

33180_fm_hr_i-xxviii.indd 24 9/7/18 5:41 PM
Another random document with
no related content on Scribd:
Charles S. Grossman
In the old days, housekeeping in the Smokies allowed
few if any frills. Aunt Rhodie Abbott, and most other
women, worked as hard as any man as they went
about their daily chores keeping their families fed and
clothed.
 Part 2

Highland Homeland
 A home in the Smokies usually meant a simple log
house nestled in the hills among the trees and amidst
the haze.
National Park Service
 Homecoming
It is summer now, a time for coming home. And on an August
Sunday in the mountain-green valley they call Cataloochee, the
kinfolk arrive. They come from 50 states to gather here, at a one-
room white frame Methodist church by the banks of the Big
“Catalooch.” The appearance of their shiny cars and bulky campers
rolling along the paved Park Service road suggests that they are
tourists, too, a tiny part of the millions who visit and enjoy the Great
Smoky Mountains each year. Yet these particular families represent
something more. A few of them were raised here; their ancestors
lived and died here.
They are celebrating their annual Cataloochee homecoming. Other
reunions, held on Sundays throughout the summer, bring together
one-time residents of almost every area in the park. Some of the
places instantly recall bits of history: Greenbrier, once a heavily
populated cove and political nerve-center; Elkmont, where a
blacksmith named Huskey set out one winter to cross the Smokies
and was discovered dead in a bear trap the next spring; and
Smokemont on the beautiful Oconaluftee River, at one time the
home of the Middle Cherokee and the very heart of that Indian
Nation.
These are special days, but they observe a universal experience as
old as Homer’s Ulysses, as new as the astronauts’ return from the
moon: homecoming. It is an experience particularly significant in the
Great Smoky Mountains National Park. Here, at different times and
in different ways, people of various races and heritage have
reluctantly given up hearth and farm so that today new generations
can come to this green kingdom of some 209,000 hectares (517,000
acres) and rediscover a natural homeland which is the heritage of all.
Beginning on Canada’s Gaspé Peninsula as a limestone finger only
2.5 kilometers (1.5 miles) wide, the Appalachian mountain system
that dominates eastern America slants about 5,000 kilometers (3,000
miles) southwest across New England and the Atlantic and border
states into northern Georgia and Alabama, culminating in the
grandeur and complexity of the Great Smoky Mountains. This range,
which marks the dividing line between Tennessee and North
Carolina, is high; its 58-kilometer (36-mile) crest remains more than
1,500 meters (4,900 feet) above sea level. It is ancient—the Ocoee
rocks here are estimated to be 500-600 million years old—and its tall
peaks and plunging valleys have been sculpted by nature through
the action of ice and water during long, patient centuries. The odd
and fantastic courses of the rivers here indicate that they are older
than the mountains. The Great Smokies are a land of moving waters;
there is no natural lake or pond in this area, but there are some
1,000 kilometers (620 miles) of streams with more than 70 species of
fish. A generous rainfall, averaging as much as 229 centimeters (90
inches) per year in some localities and 211 centimeters (83 inches)
atop Clingmans Dome, nourishes a rich variety of plantlife: more
than 100 species of trees, 1,200 other flowering plants, 50 types of
fern, 500 mosses and lichens, and 2,000 fungi. The mixed hardwood
forest and virgin stands of balsam and spruce are the special glories
of the Smokies.
Many of the species of birds that make the Smokies their home do
not have to leave to migrate; by migrating vertically, from the valleys
to the mountaintops in summer and back down in winter, they can
experience the equivalent of a journey at sea level from Georgia to
New England. Animals large and small find this a congenial home,
and two, the wild boar and the black bear, are especially interesting
to visitors. The former shuns people, but the latter is occasionally
seen along trails and roadsides throughout the Smokies.
When the Great Smoky Mountains were added to the National Park
System in 1934, a unique mission was accomplished: more than
6,600 separate tracts of land had been purchased by the citizens of
Tennessee and North Carolina and given to the people of the United
States. Previously, most national parks had been created from lands
held by the Federal Government. The story of the Great Smokies is,
therefore, most especially and significantly, a story of people and
their home. Part of that story is captured in microcosm on an August
Sunday in a secluded northeastern corner of the park: Cataloochee.
History is what the homecoming is about. The people of Cataloochee
worship and sing and eat and celebrate because they are back. And
being back, they remember. They walk up the narrow creeks,
banked by thick tangles of rhododendron and dog-hobble, to the
sites of old homesteads. They watch their small children and
grandchildren wade the water and trample the grass of once-familiar
fields. They call themselves Caldwell, Palmer, Hannah, Woody,
Bennett, Messer. For exactly a century—from the late 1830s and the
coming of the first permanent white settlers to the later 1930s and
the coming of the park—men and women with these names lived
along Cataloochee Creek. But these pioneers were not the first to
inhabit a valley that they called by an Indian name.
By “Gad-a-lu-tsi,” the Cherokees meant “standing up in ranks.” As
they looked from Cove Creek Gap at the eastern end of the valley
across toward the Balsam Mountains, they used that term to
describe the thin stand of timber at the top of the distant range.
Later, the name became “Cataloochee,” or the colloquial
“Catalooch,” and it referred to the entire watershed of the central
stream.
The Cherokees liked what they saw. They hunted and fished
throughout the area and established small villages along one of their
main trails. The Cataloochee Track, as it came to be known, ran from
Cove Creek Gap at the eastern edge of the present-day park up over
the Smokies and down through what is now the Cosby section of
eastern Tennessee. It connected large Indian settlements along the
upper French Broad River in North Carolina with the equally
important Overhill Towns of the Tennessee River.
By the early 1700s, Cataloochee formed a minor portion of the great
Cherokee Nation whose towns and villages extended from eastern
Tennessee and western North Carolina into northern Georgia. But as
time went on, and as the white settlements pushed westward from
the wide eastern front, the Cherokees lost dominion over this vast
area. In 1791, at the treaty of Holston, the Cherokees gave up
Cataloochee along
with much of what is
now East
Tennessee. Five
years later the state
of North Carolina
granted 71,210
hectares (176,000
acres), including all
of Cataloochee, to
John Gray Blount—
brother to William
Blount, governor of
the Territory South
of the Ohio River, as
Tennessee was then
called. Blount kept
the land for
speculation, but it
eventually sold for
less than one cent
per hectare. Now
that the Cherokees
had relinquished the
land, no one else
seemed to want it.
Even the famous
Methodist Bishop
Francis Asbury, first
sent as a missionary Alan Rinehart
to America in 1771, With their trusty mule and
apparently wavered sourwood sled, Giles and Lenard
in his spirit when Ownby haul wood for making
confronted with the shingles.
Cataloochee
wilderness. In his
journal in 1810 he lamented:
“At Catahouche I walked over a log. But O the mountain height after
height, and five miles over! After crossing other streams, and losing
ourselves in the woods, we came in, about nine o’clock at night....
What an awful day!”
During the 1820s, only a few hunters, trappers, and fishermen built
overnight cabins in the area. Then in 1834, Col. Robert Love, who
had migrated from Virginia, fought in the Revolutionary War, and
established a farm near the present city of Asheville, purchased the
original Blount tract for $3,000. To keep title to the land, Love was
required to maintain permanent settlers there. He encouraged cattle
ranging and permitted settlers choice locations and unlimited terms,
and by the late 1830s several families had moved into Cataloochee.
Probably the first settler to put down roots was young Levi Caldwell,
a householder in his early twenties seeking a good home for his new
family. The rich bottomlands and abundant forests of Cataloochee
offered that home, and before Levi Caldwell died in 1864 at the age
of 49, he and his wife “Polly” (Mary Nailling) had 11 children. Levi
was a prisoner during the Civil War, and two of his sons, Andrew and
William Harrison, fought on different sides. Because he had tended
horses for the widely feared band of Union soldiers called Kirk’s
Army, Andy received a $12 pension when the war was over. William,
who might have forgiven and forgotten his differences with the Union
as a whole, was never quite reconciled to his brother’s pension.
Although he was older than Levi Caldwell by a full 21 years, George
Palmer arrived later at Catalooch. The Palmers had settled further
northeast in the North Carolina mountains, on Sandy Mush Creek,
and seemed content there. But when George decided to start over,
he and his wife, also named Polly, took their youngest children,
Jesse and George Lafayette, and crossed the mountains south into
Cataloochee. They began again.
Other families trickled in. As elsewhere in Southern Appalachia,
buffalo traces and old Indian trails and more recent traders’ paths
gradually became roads and highways penetrating the thick forests
and mountain fastnesses. In 1846, the North Carolina legislature
passed an act creating the Jonathan Creek and Tennessee Mountain
Turnpike Company, which was to build a road no less than 3.7
Edouard E. Exline
Cataloochee and Caldwell—the names are nearly
synonymous. The Lush Caldwell family once lived in
this sturdy log house with shake roof and stone
chimneys on Messer Fork. At another time, this was
the home of the E. J. Messers, another of
Cataloochee’s predominant families.

meters (12 feet) wide and no steeper than a 12 percent grade. Tolls
would range from 75 cents for a six-horse wagon down to a dime for
a man or a horse and one cent for each hog or sheep. After a full five
years of deliberation and examining alternatives, the company
selected a final route and constructed the highway with minor
difficulty. The road fully utilized the natural contours of the land and
was at the same time a generally direct line. It followed almost
exactly the old Cherokee Trail.
The Cataloochee Turnpike was the first real wagon road in the
Smokies. It opened up a chink in the area’s armor of isolation. Travel
to and from the county seat still required the better part of three
days, however. Two of the rare 19th century literary visitors to these
mountains—Wilbur Zeigler and Ben Grosscup, whose book The
Heart of the Alleghanies, appeared in 1883—entered Cataloochee
along this road. Their reaction provides a pleasant contrast to that of
Bishop Asbury; they speak of the “canon of the Cataluche” as being
“the most picturesque valley of the Great Smoky range:”
“The mountains are timbered, but precipitous; the narrow, level lands
between are fertile; farm houses look upon a rambling road, and a
creek, noted as a prolific trout stream, runs a devious course through
hemlock forests, around romantic cliffs, and between laureled
banks.”
During the 1840s and 1850s, some 15 or 20 families built their sturdy
log cabins ax-hewn out of huge chestnuts and poplars, and then built
barns, smokehouses, corncribs, and other farm shelters beside the
rocky creeks. George Palmer’s son Lafayette, called “Fate” for short,
married one of Levi Caldwell’s daughters and established a large
homestead by the main stream. Fate’s brother, Jesse, married and
had 13 children; 6 of these 13 later married Caldwells.
 Pages 22-23: These proud people all dressed up in
their Sunday best are members of the George H.
Caldwell family.
H. C. Wilburn
They ate well. The creek bottomlands provided rich soil for tomatoes,
corn and beans, cabbage and onions, potatoes and pumpkins. Split
rail fences were devices to keep the cattle, hogs, and sheep out of
the crops; the animals themselves foraged freely throughout the
watershed, fattening on succulent grasses and an ample mast of
acorns and chestnuts. Corn filled the cribs, salted pork and beef
layered the meathouse, and cold bountiful springs watered the
valley.
The Civil War erupted in 1861. Although Cataloochee lay officially in
the Confederacy, this creek country was so remote, so distant from
the slave plantations of the deep South, that no government
dominated. Raiding parties from both sides rode through the valley,
killing and looting as they went. Near Mt. Sterling Gap at the
northern end of the watershed, Kirk’s Army made a man named
Grooms play a fiddle before they murdered him. The people of
Catalooch kept his memory alive throughout the century by playing
that ill-starred “Grooms tune.”
But the war was only an interlude. Five years after its end,
Cataloochee was estimated to have 500 hogs, sheep, milch cows,
beef cattle, and horses; some 900 kilograms (2,000 pounds) of
honey; and about 1,250 liters (1,320 quarts) of sorghum molasses.
Sizable apple crops would begin to flourish during the next decade,
and by 1900 the population of the valley would grow to over 700.
Producing more than they themselves could use, these farmers
began to trade with the outside world. They took their apples,
livestock, chestnuts, eggs, honey, and ginseng to North Carolina
markets in Fines Creek, Canton, and Waynesville, and to Tennessee
outlets in Cosby, Newport, and Knoxville. With their cash money,
they changed forever the Cataloochee of the early 1800s.
They sold honey and bought the tools of education. Using the tough,
straight wood of a black gum or a basswood, a farmer hollowed out a
section of the trunk with a chisel. He then slid a cross-stick through a
hole bored near the bottom. Upon transplanting a beehive into the
trunk and leaving an entrance at the bottom, he covered the top with
a solid wooden lid and sealed it airtight with a mixture of mud and
swamp-clay. In August, especially after the sourwoods had bloomed
and the bees had built up a store of the delicately flavored honey, the
beekeeper took a long hooked honey knife, broke the sealing, and
cut out squares of the light golden comb to fill ten-gallon tins. He
never went below the cross-stick; that honey was left for the bees.
An enterprising family might trade 10 tins of honey in a season. And
at the market, they would turn that honey into school supplies for the
coming year: shoes, books, tablets, and pencils.
 Like many others in the Smokies, Dan Myers of Cades
Cove kept a few bees. He apparently was a little more
carefree than some about the tops of his bee gums, or
hives. Some old boards or scraps of tin, with the help
of a couple of rocks, sufficed, whereas most people
sealed their wooden tops with a little mud.
Charles S. Grossman
There were too few families on Big Cataloochee for both a Methodist
and a Baptist church. In 1858 Colonel Love’s son had deeded a
small tract there for the Palmers, Bennetts, Caldwells, and Woodys
to use as a Methodist meetinghouse and school. Since then, the
Messers and Hannahs and several others had formed a community
of their own 8 kilometers (5 miles) north, across Noland Mountain,
along the smaller valley of the Little Cataloochee. They built a
Baptist church there in 1890.
But the differences were not great. One of the Big Cataloochee’s
sons became and remained the high sheriff of sprawling Haywood
County with the well-nigh solid support of the combined Cataloochee
vote. Running six times in succession and against a candidate from
the southeastern part of the county, he was rumored to have waited
each time for the more accessible lowlands to record their early
returns. Then he simply contacted a cousin, who happened to be the
recorder for Cataloochee, who would ask in his slow, easy voice,
“How many do you need, cousin?”
The preacher came once a month. He stayed with different families
in the community and met the rest at church. More informal
gatherings, such as Sunday School and singings, took place each
week. And during late summer or fall, when crops were “laid by” and
there was an interval between spring’s cultivation and autumn’s
harvest, there came the socializing and fervor of camp meeting. A
one-week or ten-day revival was cause for school to be let out at 11
o’clock each morning. The children were required to attend long and
fervent services. But between exhortations there were feasts of food,
frolicking in nearby fields and streams, and for everyone an
exchange of good fellowship.
Besides these religious gatherings, women held bean-stringings and
quilting bees, men assembled for logrollings or house-raisings to
clear new lands and build new homes. One of the few governmental
intrusions into Cataloochee life was the road requirement. During the
spring and fall, all able-bodied men were “warned out” for six days—
eight if there had been washout rains—to keep up what had become
the well-used Cataloochee Turnpike. If a man brought a mule and a
bull-tongue plow instead of the usual mattock, he received double
time for ditching the sides of the road. This heavy work gave the men
both a chance to talk and something to talk about. But any of them
would still have said that the hardest job of the year was hoeing corn
all day on a lonely, stony hillside.
By the early 1900s, Cataloochee had become a mixture of isolation
from the outside world and communication with it. Outside laws had
affected the valley; in 1885 North Carolina passed the controversial
No Fence law, which made fences within townships unnecessary
and required owners to keep cattle, sheep, horses, and hogs inside
certain bounds. But other laws were less heeded; local experts have
estimated that 95 percent of Cataloochee residents made their own
whisky. Several families subscribed to a newspaper—“Uncle Jim”
Woody took The Atlanta Constitution—and almost everyone
possessed the “wish-book:” a dog-eared mail order catalog. But no
one in Little Cataloochee bought an automobile.
The valley thrived on local incidents. A man shot a deputy sheriff and
hid out near a large rock above Fate Palmer’s homestead; Neddy
McFalls and Dick Clark fed him there for years. Will Messer, a
master carpenter and coffinmaker over on Little Catalooch, had a
daughter named Ola. Messer was postmaster, and the post office
acquired her name. Fate Palmer’s shy son, Robert, became known
as the “Booger Man” after he hid his face in his arms and gave that
as his name to a new teacher on the first day of school.
George Palmer, son of Jesse and brother to Sheriff William, devised
a method of capturing wild turkeys. He first built a log enclosure,
then dug a trench under one side and baited it with corn. The next
morning 10 turkeys, too frightened to retrace their steps through the
trench, showed up inside the enclosure. But when George stepped
among them and attempted to catch them, the turkeys gave him the
beating of his life. Thereafter he was called “Turkey George.” And his
daughter, Nellie, lent her name to one of the two post offices on Big
Catalooch.
 “Turkey George” Palmer of Pretty Hollow Creek in
Cataloochee used to tell people that he had killed 105
bears. Most of them he trapped in bear pens.
Edouard E. Exline
Yet the simplicity of life could not insulate the Cataloochee area from
“progress.” As the 20th century unfolded, scattered individual loggers
gave way to the well organized methods of large company
operations. Small-scale cutting of yellow-tulip poplar and cherry
boomed into big business during the early 1900s. Suncrest Lumber
Company, with a sawmill in Waynesville, began operations on
Cataloochee Creek and hauled out hardwood logs in great
quantities. Although the spruce and balsam at the head of the
watershed were left standing, the logging industry, with its capital,
manpower, and influence, vastly altered the valley.
With the late 1920s came an announcement that the states of North
Carolina and Tennessee had decided to give the Great Smoky
Mountains to the nation as a park. The residents of Cataloochee
were incredulous. They were attached to this homeplace; they still
referred to a short wagon ride as a trip and called a visit to the
county seat a journey. But the park arrived, and the young families of
the valley moved away, and then the older ones did the same.
Gradually they came to understand that another sort of homeland
had been established. And the strangers who now visit their valleys
and creeks can look about and appreciate the heritage these settlers
and their descendants left behind.
The old families still come back. They return to this creek on the
August Sunday of Homecoming. In the early morning hours they fill
the wooden benches of tiny Palmer’s Chapel for singing and
preaching and reminiscing; at noon they share bountiful food spread
on long plank tables beside clear, rushing Cataloochee Creek; in the
mellow afternoon they rediscover the valley. For what lures the
stranger is what lures the old families back. They come to sense
again the beauty and the permanence and even the foggy mystery of
the Great Smokies. And this that beckons them back is that which