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 new merger. 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 No. Factors Become an entrepreneur Accept the corporate position 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 be creative 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 them. 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 clients property as opposed to the client coming to the professionals 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 ones self as an entrepreneur. If you are not confident that you can be successful, with the skills you already possessnot 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. Daves 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. Please answer these two questions in paragraph form.

1. Description of the problem. What were Dave's alternatives?

2. Identification and analysis of alternatives in the decision making table.