Describe the entrepreneurial process from idea generation to the commercialization and implementation of the new business venture and discuss the attributes of successful entrepreneurs.
To Do or Not To Do
(An Entrepreneurial Case Study)
Dave was the chief real estate appraiser for a large financial institution (Bank A) that had just
been bought by another large financial institution (Bank B).
The “buying institution” did not need another chief appraiser and gave Dave a severance package
with their blessings for his success in the future. The local chief lending officer of Bank B indicated
that, if Dave went into business on his own, he (Dave) would receive considerable work from the
Dave considered going into business on his own but was also approached by another financial
institution (Bank C) in the same city to join their appraisal staff. Personnel at Bank C knew Dave
for over thirty years and trusted his work.
While a salary had not been solidified at Bank C, likely it would have been $60,000 plus or minus
a few percentage points plus the usual fringe benefits of vacation time, sick time, a partial
contribution of a retirement plan and some future stock options. It looked like a pretty good deal
for Dave and the offer of employment was firm after three meetings between Dave and Bank C.
Guaranteed, so to speak. But, Dave knew, to be an entrepreneur, you have to have an acceptance
of no guarantees.
But Dave was not sure if he really wanted to go corporate again. He did realize the benefits of
being corporate but he wanted it to be “his” corporation which he had been considering even
before Bank A was purchased by Bank B. What he had not considered was an offer by Bank C.
Dave now had a choice between joining an established corporation as a staff appraiser or forming
his own company. He was basically making a choice between being “on staff” or an entrepreneur.
He knew that being an entrepreneur meant that he would need to have a tolerance for risk taking.
Financially, Dave was personally OK with either option but liked the freedom of working on his
own schedule, which would be the entrepreneurial route. But, there are downsides to the
entrepreneurial route as opposed to the corporate offering he had received. Dave prepared a
“decision table” to assist him in making a quantitative decision. He realized that, whatever the
quantitative decision table results were, his own personal feelings would likely be what he did
unless there had been an overwhelming indication from the decision table. Entrepreneurs have
to make tough decisions.
Dave had to structure his decision table such that it would be free from his own biases so he met
with two other company owners, in separate luncheons, and asked them about their positive and
negative factors in owning their own business. Dave knew these two other appraisers since he
worked with them before going corporate and the other two appraisers had no problem knowing
Dave may soon be one of their competitors.
Dave prepared the following decision table, based on these meetings.
Dave’s Decision Table
1 Possibility of failure-an entrepreneurial negative x
2 Income potential limitless-entrepreneurial positive x
3 Giving up corporate opportunity x
4 Extended work hours-if a negative factor x
5 Responsible for own health insurance x
6 Responsible for own FICA x
7 Current availability of equipment x
8 Current availability of potential clients x
9 Acceptance of uncertainty x
10 Desire to be his “own boss” x
11 Freedom to choose assignments x
12 Freedom to pursue other income sources x
13 Potential “Corporate Power” in future x
14 Stability of fixed guaranteed income x
15 Having income when there is no work x
16 Potential for personal expansion x
17 Office location x
18 Entrepreneurial business structure x
19 Potential entrepreneurial start-up partners x
20 Personal confidence in ability x
When Dave constructed his decision table, he “brainstormed” it. He did not intend to group factors,
but instead, wrote down the first twenty factors that came to his mind. He felt that if some factor
did not immediately come to mind while constructing the table, it likely was not important and was
not included. Once the table had been constructed, he did not change any factors even if new
ones became evident as he felt the original list contained strong factors. Entrepreneurs have to
Dave knew that some factors would lead to going with an existing corporation (Bank C) and some
lead to his becoming an entrepreneur with his own corporation.
After preparing his decision table, Dave analyzed each factor, some more than others since some
were not important to him.
Dave felt that the possibility of failure was an important issue in his decision making since he felt
that, if his new venture failed, he may have a hard time getting a position like he had been offered
in the corporate world. If this were the most important factor in his decision making table, he would
not have considered any of the others.
Dave felt the potential for limitless income to be important and would be curtailed if he took the
corporate position and he was not really sold on going corporate if there was an entrepreneurial
alternative, which there was.
While working extended hours, as an entrepreneur was a negative, it was not that much of a
negative but he felt that this factor was a positive in the corporate world. Likewise, health
insurance and FICA favored the corporate decision even though, if he had been successful in his
entrepreneurial venture, these would be taken care of. The health insurance issue was considered
more important than the FICA issue.
Dave knew enough about taxation that he could, as an entrepreneur; take a good deal of net
income as dividends, thus avoiding FICA taxes on those funds. As an entrepreneur, it is necessary
to have at least a working knowledge of several business disciplines.
Dave already had all the equipment he needed to start his own business and he was well known
in the community having been in the business over 40 years.
One of the major factors Dave considered was the ability to be his own boss and take only the
assignments he wanted to take. Some appraisal assignments are very complicated and being a
single-person entrepreneur at the start would limit the amount of market data he could acquire as
opposed to the extensive research and marketing tools corporate appraisers have available to
He felt that it is better to pass on an assignment that he was not equipped to complete. The
successful entrepreneur knows when to accept or decline a possible business venture.
Dave felt that the ability to pursue other income sources to be important which include teaching
real estate courses through one of the largest real estate schools in the state located in Orlando.
If he had been a staff corporate appraiser, these assignments would not be available to him. As
an entrepreneur. Dave could take on these other income assignments. The successful
entrepreneur will make himself or herself available to diversity of income streams.
Dave did not consider the “Corporate Power” structure as being particularly attractive to him but
it would lead to deciding on the corporate position if it had been.
Stability of fixed income and having income when there is no work is definitely an advantage in
the corporate world. When there are no assignments, as an entrepreneur, there is no income.
Generally, when there is no work in the corporate world, there is still a payday especially if the
bank (like Bank C) does their own internal appraising for loans from their own customers. It is like
a guaranteed income.
The successful entrepreneur has to have a high degree of acceptance of uncertainty.
The potential for personal expansion does not mean Dave would be trying to expand his business
rather his personal expansion factor would be he would be expanding his experience to being
appraiser, review appraiser, bookkeeper, marketing director, public relations director, and many
other jobs. The successful entrepreneur is a self-starter.
He liked the idea of not having to be the human resources director since the business would
include only him. At least at the onset of the entrepreneurship.
A corporate office location is nice but not necessary for entrepreneurship. In the real estate sales
or appraisal business, the professional goes to the client’s property as opposed to the client
coming to the professional’s office. Dave had enough equipment and room in his own home for
his office so this was a positive for the entrepreneurial decision.
Selecting an appropriate entrepreneurial business structure was important but Dave knew how to
form a corporation and that would be the least of his concerns at start-up.
Finally, Dave had a high degree of personal confidence in his professional abilities and this is
perhaps one of the foremost considerations in going into business for one’s self as an
entrepreneur. If you are not confident that you can be successful, with the skills you already
possess—not those you plan to learn—you are destined to fail as an entrepreneur.
Dave made his decision after carefully considering his decision table, speaking with other
entrepreneurs, and having faith in himself.
While it appears that most of the choices in the above decision table favor entrepreneurship, some
are not as important as others in the corporate position. An example is health insurance and
almost guaranteed income. So, Dave did not make a decision based solely on quantitative, but
rather both quantitative and qualitative decision making criteria.
Given all the factors, Dave had to decide which were the most important.
Dave’s decision was to open his own business and become an entrepreneur.
Please prepare a paper addressing the following questions. While specific answers to each
question are not required, these questions are a guide to the elements in your paper. They should
all be considered.
Was Dave’s decision table a legitimate way to make an entrepreneurial decision?
2: Do you think the factors adequately relate to a decision between being an entrepreneur or accepting the corporate position?
3: What factors do you think should not have been included? Why?
4: What additional factors do you think should have been included? Why?
5: Do you think a decision making table is a valuable tool? If not, why not?
6: What would you have decided if you were Dave given only the information in the decision making table?
7: What are some characteristics possessed by entrepreneurs which were included in this case study?