Prelims

Half Title Page

EUROPEAN VENTURE TOOLBOX

Series Page

ENTREPRENEURIAL BEHAVIOUR

Series Editors:

Dr Andrea Caputo, University of Lincoln, UK

Dr Massimiliano Pellegrini, University of Rome Tor Vergata, Italy

This series is dedicated to communicating innovative and multi-disciplinary new research that advances theory and practice in Entrepreneurial Behaviour. The series is focused on expanding the scope of Entrepreneurial Behaviour theory and analysis and enriching practice by encouraging multi-theoretical, multi-cultural and multi-disciplinary approaches.

Key issues explored in Entrepreneurial Behaviour include cognition, decision-making, organisational behaviours, and identifying, creating, and exploiting opportunities concerning new products, services, processes, innovations or ventures from an entrepreneurial perspective.

The primary focus is on the study of entrepreneurs, small and medium enterprises, and family businesses, with a secondary focus on entrepreneurial and innovative behaviours in other forms of organisations, such as non-profits, corporations, and public administrations.

Editorial Page

EDITORIAL ADVISORY BOARD

• Andrea Caputo

  University of Lincoln (Editor)

• Massimiliano M. Pellegrini

  University of Rome Tor Vergata (Editor)

• Afsnahe Bagheri

  University of Tehran

• Matteo Cristofaro

  University of Rome Tor Vergata

• Sally Dibb

  Coventry University

• Mohammad Fakher

  University of Rome Tor Vergata

• Marina Dabic

  University of Zagreb and Nottingham Trent University

• Leo-Paul Dana

  Dalhousie University

• Giulia Flamini

  University of Rome Tor Vergata

• Laëtitia Gabay-Mariani

  CERAG - Grenoble-Alpes University

• Anibal Lopez

  Nova School of Business and Economics

• Luca Gnan

  University of Rome Tor Vergata

• Charlott Menke

  Fraunhofer Center for International Management and Knowledge Economy IMW, Germany

• Damiano Petrolo

  University of Rome Tor Vergata

• Marco Romano

  University of Catania

• Yi Ruan

  University of Nottingham Ningbo China

• Sid Hanna Saleh

  Colorado School of Mines

• Anna Souakri

  ESCP Europe

• Marzena Starnawska

  University of Warsaw

• Matthias Raith

  Otto-von-Guericke-Universität Magdeburg

• Giuseppe Valenza

  Mediterranea University of Reggio Calabria

• Cizhi Wang

  Capital University of Business and Economics

Title Page

EUROPEAN VENTURE TOOLBOX

The Path for SMEs to Grasp and Defend Opportunities

BY

NICHOLAS H. KIRK

University of Florence, Italy

AND

LAMBERTO ZOLLO

University of Milan, Italy

United Kingdom – North America – Japan – India – Malaysia – China

Copyright Page

Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2021

Copyright © 2021 Nicholas H. Kirk and Lamberto Zollo. Published under an exclusive license by Emerald Publishing Limited.

Reprints and permissions service

Contact: permissions@emeraldinsight.com

No part of this book may be reproduced, stored in a retrieval system, transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without either the prior written permission of the publisher or a licence permitting restricted copying issued in the UK by The Copyright Licensing Agency and in the USA by The Copyright Clearance Center. Any opinions expressed in the chapters are those of the authors. Whilst Emerald makes every effort to ensure the quality and accuracy of its content, Emerald makes no representation implied or otherwise, as to the chapters’ suitability and application and disclaims any warranties, express or implied, to their use.

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

ISBN: 978-1-80117-319-3 (Print)

ISBN: 978-1-80117-318-6 (Online)

ISBN: 978-1-80117-320-9 (Epub)

Contents

List of Figures

List of Tables

Preface

Dear reader,

This book is written by a theoretician and a practitioner in Europe. Despite all the manuals around, many first time entrepreneurs don’t bring practicality into their passion, and fail for so many reasons. There are patterns to these, and many are avoidable, generic pitfalls, while others are very Europe-specific.

We bring experience into the equation and try to explain all the basics to go for, as well as all that has to be avoided. No matter if you are a student, first year entrepreneur, or practitioner in the field: in the following pages you’ll find many strategic “tools” which, both in theory and practice, will help you better understand how to grasp and defend the entrepreneurial opportunities present in your market of choice.

Our objective is to:

1. Increase chances of success of first time European entrepreneurs via a practical guide to new venture creation tailored to today’s context in Europe

2. Enable the reader to understand practice directly via emblematic case studies

3. Provide insights on the entrepreneurship phenomenon as a whole, mainly applied to European markets in crisis, via new theoretical advances mixed with practitioner experience.

Many European entrepreneurs, given the abundance of influential American companies and books, are prone to the rhetoric of company building based on the following factors, among others later discussed:

• –

  fast-growing startup survivorship bias: seeing a few companies scale does not imply a general possibility for many

• –

  abundance of circulating capital bias: both end customers and investors do not have the budget magnitude that American ecosystems developed

• –

  market addressability restrictions: due to language and regulatory aspects, the market your service can access is not the Europe-wide ecosystem

• –

  difference in European fiscal systems: location of company founding and its ecosystem is fundamental for the business viability in the first years from launch.

Let us define European entrepreneurship: given its internal diversity, as it currently stands it can be mainly defined in contrast to US theory and practice on the points mentioned above. However, what we can do is talk about the European objective, which is to maintain and expand upon its current points of leverage, such as being the largest Gross Domestic Product (GDP) block in the world.¹ In order to do this, the major backbone of EU entrepreneurship, currently Small-to-Medium Enterprises (SMEs), needs to find novel structures to survive and thrive in crises. For this, we provide frameworks for the European entrepreneur, to let her/him focus on consolidating strategies, and only then to proceed toward grasping wider financial opportunities.

Our unique value:

• 1)

  Part I: a series of conceptual chapters comprising examples, giving you an overarching understanding of what business value actually is, how it is created, and how it is conveyed. In particular:

  • Chapter 1: The rationale for entrepreneurship, why this is close to us, and what model can navigate us through structured business opportunity discovery and implementation

  • Chapter 2: customer-orientation and problem-scouting for formulating a business idea

  • Chapter 3: identifying value gaps, what solutions exist and which are feasible with the current team and resources, describing the characterized value in a narrative

  • Chapter 4: the importance of testing for payment with a first product prototype to probe for value perception according to the customer

  • Chapter 5: how can we structure our business in terms of who is the perceived value for, when, and in which context?

  • Chapter 6: how do the concepts of entrepreneurship learned so far compare in Europe and US in detail?

• 2)

  Part II: a deep case study on a practical business idea and all the questions that come to mind, narrated from the perspective of two fictional characters who are young first year entrepreneurs, as well as how to go about beating the initial mental fog and proceed to execution; in other words, all the pro and cons related to turning an initial business idea into practice

• 3)

  Part III: several “practitioners’ notes,” which discuss pitfalls and hands-on wisdom. Concise as possible, they are meant as off-the-shelf references readable when necessary, on different sequential topics, specifically:

  • Practitioners’ note 1: why people start companies; what impact is intended; company aim characterization

  • Practitioners’ note 2: understanding where to start the iterative business development process in the market; the comparison between solution-first, problem-first, and niche-first approaches

  • Practitioners’ note 3: identifying what value actually is; aiming for its quantification in time-cost factor reductions; the importance of focusing on high-billable priorities

  • Practitioners’ note 4: understanding people as the central element of any business, and how relationships are built; the importance of rapport creation and responsiveness; the first 3Cs filter for hiring

  • Practitioners’ note 5: the importance of a financial urgency sense; estimating business viability on the basis of customer acquisition costs and customer lifetime value; understanding KPI construction

  • Practitioners’ note 6: understanding return and risk as the fundamental inseparable pair to be estimated in all business decisions; concept of opportunity cost

  • Practitioners’ note 7: the basics of selling, identifying the main decision makers in a sale; the importance of customer qualification

  • Practitioners’ note 8: the traditionally known phases of investment and its prerequisites

  • Practitioners’ note 9: the mental models and approaches necessary to drastically improve decision-making quality and quantity.

May you enjoy reading as we enjoyed writing. And above all, may you proceed to execution and create a successful European venture.

Yours faithfully,

Nicholas Kirk & Lamberto Zollo

Acknowledgments

This book has widely benefited from the knowledge and insights of many of our current and former colleagues, namely Cristiano Ciappei, Maria Carmen Laudano, Riccardo Rialti, and Vincenzo Zampi (University of Florence). We would like to especially thank Floris A. S. Engelhardt (MIT) for her extremely valuable comments on the first drafted version of this book, and for coming up with proactive suggestions on the structure and readability, as well as for the title.

A strong acknowledgement for contributing to the brainstorming for the practitioners’ notes goes to Simon Kaltenbacher and Shahrom Hosseini Sohi.

The investors Masoud Kamali, Fabian Leipelt, Alexander Kölpin, and Roel Bergsma provided unique and relentless mentorship that strongly influenced the mindset expressed in this book.

We thank all the survey participants who enabled the response-driven construction of the fictitious case study presented, namely Marco Lazzeretti, Marco Esposito, David Iorio, Fausto Milletarì, Konstantin Ivanov, Fabio Lopez, Philipp Walter, Alessandro Pecori, Vipul Khatana, and Elisa Baeckmann.

Last but not least, a big acknowledgement to Anthony Kirk for having revised the entire book from a linguistic perspective to a very deep extent.

We are very grateful to all our friends and family who provided moral support and preliminary interest toward this book: we hope to meet and exceed your expectations.