Jim Boothe has invented dozens of different products in his 25 years as an engineer in a large research and development lab. For some time, he has been thinking of leaving his current company and starting his own but has never seemed to have the nerve to do so. Jim felt that with his children grown and on their own, now would be a good time to start his own business.

Having been an avid bicyclist for many years, Jim had invented an automatic derailleur for a 15-speed bike. This derailleur can be easily attached to any bicycle. The user does no shifting as the bicycle shifts the gears of the bicycle automatically (depending on terrain) much like the automatic transmission on an automobile. Jim feels that this invention has significant market potential, particularly since he has observed a rapid growth in the bicycling industry. This growth has been related to increased interest in physical fitness and technological improvements in derailleurs, allowing for off-road travel. as well as, more comfort for long-distance riding. In his cycling club alone, the membership has doubled in the past 2 years and to his knowledge is consistent with the national trend.

Jim feels that all he needs to do is write a business plan and submit it to his bank to obtain the estimated$100,00 to get started. He is willing to support this by taking a second mortgage as collateral. Jim feels he can subcontract the manufacturing of the derailleur and the bicycle separately; then upon receiving the items, he can complete the final fabrication functions before shipping to customers.

Jim's wife Nora is a little skeptical about him leaving a good job for the purpose of fulfilling one of his many fantasies or lifelong dreams. She is the more practical of the two and is concerned about their financial future and the commitment that will be required of Jim in the first few months of the startup. Taking a second mortgage on the house makes her uncomfortable. She is also not sure if Jim is the entrepreneurial type.

In spite of all concerns, Jim has prepared a business plan that he expects to submit to his banker in the next few days. The business plan consists of six parts: a one-page summary of the plan, a detailed description of his invention, a one-year profit and loss statement, forecasts of growth for the bicycle market, a plan for the manufacturing and fabrication of the derailleur and the bicycle, and an appendix that contains surveys with some of his friends who own 10-speed bikes.

1. Jim is an inventor but does he have the entrepreneurial traits to start his own business?

2. What risks is he facing other than financial?

3. What kind of market research did he do? Is it sufficient?