This is a summary of the course SME's and Entrepreneurship at KU Leuven, campus Brussels. The summary is merged with class notes from all of the classes.
Corporate venturing: abt collaboration between established firms and startups
- CVC (corporate venture capital): money coming from corporates invested in equity of startups
More than 99% of companies in the EU and US are SMEs which means that they have a very important
impact on economies worldwide
Introduction
Types of entrepreneurship:
- Nascent entrepreneurship: ppl who are thinking abt entre and r taking some steps but haven’t
created/founded the company yet; eg still working on business plan, screening of market
- New entrepreneurship: new enterprise or take-over of an existing enterprise ; ppl that don’t have
experience yet in entre; buying an existing company is also entre -> ETA (entre through
acquisition)
- Serial: sb who started a company, sold it and then started another company
- Portfolio: several companies at the same time
- Habitual: have experience in entrepreneurship; group name of serial and portfolio
- Accidental: unintentionally
- Fuckupreneurs: entre is a lot abt fucking it up; lot of stories go nowhere; abt failure but ppl don’t
share it which is a shame bcs there’s a lot to learn from failure
- Authorpreneurs: ppl writing books and selling millions of them and creating services or tools
around it
- Large vs small: refers to SME landscape; large is usually the one we like to see but small also
happens a lot eg sb that quits job to become a freelancer photographer; would be a pity if we’d
only respect large entre
- Interpreneurship: used in family business setting; transferring entrepreneurial spirit from one
generation to the next
- Intrapreneurship: inside organisations; r working w other ppl’s money; entre is putting your own
money/value at stake w serious consequences also for ur own wealth
Corporate entrepreneurship:
- Strat renewal: eg product on service scope, geographic market; a strategy process is never
finished
- Innovation
- Corporate venturing:
o Internal: su is created within the
sme system eg intrapreneurship;
develop new ideas and turn
them into a separate business
o External: topic of this course bcs
the venture is coming from
outside (external) of the
organisation
Family business = a company where the majority of shares is owned by the family members (when talking
abt private companies); when public companies, the percentage is lower
SMEs perspective
Definition and importance of SMEs
,Criteria of micro, small and medium: #employees
(definitively) and either turnover or balance sheet
- Also relatedness to other organisations, look at the
ownership
Micro: the biggest part has no employees eg freelancers
don’t have employees
“small” firms = SMEs
Qualitative characteristics of SMEs:
- Often no separation between ownership and mgt
- Overlap between private and business issues; eg ppl live where they operate the company from
which makes it an important part of your private life as well
- More difficult access to finance
- Shares of SMEs are usually not publicly traded
- No developed management team – flat organisational structure
- More flexible and faster decision making
- More difficult to influence environment; hierarchical structure in pretty limited; middle mgt is
quite often lacking ; so it’s attractive for su to work together w because at large companies it
might take months to get an answer bcs in family businesses and smes, there’s one person that
decides bcs it’s his money
SME shareholder characteristics:
- Limited number
- Know each other
- Personal (lifelong) relationships
- Shares important part of wealth
- Difficult exit: eg two sisters that each have 50% in an SME, the options to step out are to sell to
the sis; “entrapped ownership”, you’re an owner but stepping out of it and selling it is easier said
than done ; you cannot force sb to sell their shares
- Different type of owners (active, passive(=not involved in mgt or board),...)
SME success and failure
Causes of failure among established SMEs
- Internal: under the control of mgt: lack of strategic mgt: not well-developed, not well thought
about
- External: beyond mgt control: customers’ default of payment: you go bankrupt when you don’t
have money on your bank account anymore to pay suppliers etc; “cash is king”; part of it is also
the internal responsibility
- Personal: characteristics of the business leader/owner: financial, conflict, leadership style etc;
eg conflicts between partners when not everybody has the same vision; divorce eg if your partner
does all the admin and she leaves you, it’ll be difficult to fix that
Causes of failure according to liquidators:
- Internal: lack of financial and strategic mgt; eg some ppl don’t know their turnover
- External: direct competition of large firms
- Personal: divorce and conflict between business partners
Final causes:
, - Lack of strat mgt: if you need help, you need to know where you need help etc; bcs they don’t
have the time and knowledge for it, they depend on others
- The chase for growth: now we see much more conscious growth; many ppl grow bcs of ego;
growing bcs “you owe it to your employees” bcs if not they are stuck in their position has much
more value and power than saying you want to grow just bcs you want to have the biggest market
share
- Importance of strategic change
- Lack of financial mgt and knowledge
- Importance of corporate governance: AC (advisory counsel) is a light version of BoD
SME main challenges
Most important reason why smes want to professionalise: freedom, sometimes it’s difficult to take a step
back and eg go on holidays bcs the whole company depends on them eg being in a relationship where
your whole identity depends on your partner; it would also allow them to be more engaged in the financial
and strategic mgt of the company which it deserves; it’s also helpful to have a board of directors (process
of professionalisation)
Main challenges:
- Finding staff
- Becoming more profitable
- Increasing turnover: many smes are looking how they can optimise this; the answer is often
creating economies of scale so that the company will become more profitable
- Innovation within sector: partly digitalisation; how to cope w it
- Strategical renewal in company: when companies are not performing very well it’s often bcs they
don’t have a strategy or don’t follow the strategy
- Increasing competition
- Increasing demand for sustainability
SME research Belgium
- Reducing cash problems
- E-commerce in company
- Getting access to finance
- Internationalisation of the firm
- Successfully transferring/selling the company
Competition and turbulence:
- If small smes try to compete at the level of eg efficiency, for most of them it’ll be a lost battle if
they focus solely on efficiency, the big firms will win
Governance
One-man show can be dangerous: no middle mgt; a team of employees who just execute their task
without decision power; everything depends on one person; not attractive for potential investors etc
Four D’s: death, disability, departing, divorce ; what would happen to the company? Abt 40% says they
don’t know what would happen, they don’t have a plan B ; abt 30% says they arranged things eg the bod
can govern things
Importance of corporate governance:
- Supports LT value creation
- Gives a company a professional image in the eyes of all parties concerned
- Is an advantage in the recruitment market
- Plays an important role in guaranteeing the continuity of a company
- Can contribute to increasing the profitability of a company: board wants to make the company
better, taking into account the interests of the different stakeholders
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