entrepreneurial/small business owner characteristics
You just received an email from your high school friend,
Bill Hudson. You went to college, and then business school, while Bill stayed
in your home town. Despite the differences in your paths, you are still very
good friends. Bill is considering a life-changing opportunity and needs your
help.
Bill was a real craftsman when it came to working with
machinery. Bill had learned almost all that he knew from Hugo Huffman, his
first and only employer. Bill was married and had three young children. He was
33 years old and had worked for Hugo ever since he finished his tour in the
army. In 12 years, Bill had polished his skills under the watchful and critical
eye of Hugo. Hugo was quick to recognize Bill’s talent for the trade. Bill had
a positive attitude about learning and displayed a drive for perfection that
Hugo admired.
Hugo’s Machine Shop was a successful small business. Its
success was based mostly on the reputation for quality that had been
established over its 42 years in operation. Hugo had come to this country with
his new wife, Hilda, when he was in his late twenties. Now, the business was a
success, but Hugo remembered the early years when he and Hilda had to struggle.
Hugo wanted the business to continue to produce the highest quality craftsman
products possible. On a Friday evening, he called Bill into his office at
closing time, poured him a cup of half-day-old coffee, and began to talk with
him about the future.
“Bill, Hilda and I are getting old and I want to
retire. It’s been 42 years of fun, but these old hands need a rest. In short,
Hilda and I would like you to buy the business. We both feel that your heart is
in this craft and that you would always retain the quality that we have stood
for.” Bill was taken aback by the offer. He, of course, knew Hugo was
getting older, but had no idea Hugo would retire. Bill and his wife, Anna, had
only $4,200 in the bank. Most of Bill’s salary went for the normal costs of
rearing three children. Hugo knew Bill did not have the money to purchase the
business in cash, but he was willing to take a portion of the profits for the
next 15 years and a modest initial investment from Bill.
Bill had, for the past four years, made most of the
technical decisions in the shop. Bill knew the customers and was well respected
by the employees. He had never been involved in the business side of the
operation. He was a high school graduate but had never taken business-oriented
courses. Hugo told Bill that even after deducting the percentage of the profits
he would owe under the sales agreement, he would be able to almost double his
annual earnings. Bill would have to take on all the business functions himself
because Anna had no business training either.
Send Bill an email addressing the following:
1- Which entrepreneurial/small business owner
characteristics does Bill have that may be important to his success? Which
characteristics could lead to his failure?
2- What steps should Bill take to avoid the pitfalls common
to a small business?
3- If you were Hugo, would you sell Bill the business under
the terms discussed in the case? Explain your reasoning backed by concepts
learned from the text and other sources.
Your report MUST include a reference list. All research
should be cited in the body of the paper
