Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Bus 401 > 401 final midterm] > Flashcards

401 final midterm] Flashcards

1
Q

What are the 2 reasons to write a business plan?

A
  1. Internal: Forces the team to systematically think through all aspects of the new venture
  2. External: Communicates the merits of the new venture to investors and bankers
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a common mistake on the part of the business owner when writing a business plan?

A

Trying to be too creative and departing from conventional business plan format

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a summary Business plan?

A

10 - 15 pages. Best for new ventures or businesses in the early stages of development to test the waters for investors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a Full Business Plan?

A

25-35 pages. Best for new ventures at the point where they need funding/financing. Big enough to be substantive to act as the business “blueprint”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is an Operational Business plan?

A

40 - 100 pages. Meant primarily for internal audience. Works best as a tool for creating a blueprint for new venture’s operations and providing guidance to managers. Not very common.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What does a strong ethical culture do for a firm?

A
  1. Potential avoidance of fines
  2. Better access to capital
  3. Decreased vulnurability
  4. Improved Customer Loyalty
  5. Improved Employee Commitment
  6. Improved Brand Reputation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is a founders agreement?

A

Written document between founders that deals with issues such as equity splits, compensationf for equity and minimum times they must wait before they sell. Contains items such as the nature of the business, IP identification, operations, buyback clauses etc.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is undercapitalization and why should it be avoided?

A

Not having enough cash to pay for everything. Can be avoided by selling equity in the venture.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What’s the difference between a non-dislcosure agreement and a noncompete agreement?

A

Non disclosure binds employee or supplier to not disclosing trade secrets where noncompete prevents an individual from competing against the employer

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the advantages of a sole proprietorship?

A
  • easy &inexpensive
  • complete control, owner retains all profits
  • Losses can be deducted against other sources of income
  • Not Subject to double taxation
  • Easy to quit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What are the disadvantages of a sole proprietorship?

A
  • Unlimited liability
  • Business relies of owners skillset
  • rasiing capital can be difficult
  • THe business ends with the owner
  • The liquidity of the owners investment is low
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are the advantages of a General partnership?

A
  • Cheap and easy
  • More than one skillset
  • easier to rais funds (than by yo self)
  • Losses can be deducted agianst owners other income
  • No double taxation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Disadvantages of General Partnership?

A
  • Liabilityfor partners is unlimited (if one screws up y’all screwed)
  • Business relies on skills of the partners
  • rasiing capital still different
  • Disagreements betweeen partners
  • business ends with the end of one of the parnters unless otherwise specififed
  • Low liquidiity of the investment = low
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Advantages of C Corp?

A
  • Owners only liable for the debts and obligations of the corporation up to the amount of their investment
  • The mechanics of raising capital easier
  • No restrictions exist on number of shareholders (different than S coprs)
  • Stock is liquid if traded on a major stock exchange
  • Ability to use stock as compensation fo remployees
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Dis-advantages of C Corp?

A

Setting up aND MAINTAINing one is more difficult than sole proprietorship or partnership

  • Business losses cannot be deducted from owners other income
  • Income subject to double taxation
  • Small shareholders have littel voice
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Whats the differences between a C corp and S corp?

A 
S corp has no double taxation, profits are passed to owners who are taxed at that point. (S copr must still file a informational tax return) 
- Because of all these advantages the S corp cannot be subsidized by another copr, Shareholders must be US citizens, Only one class of stock allowed to be issued, no more than 100 members, All shareholders must agree to form S-corp
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Whats advantages of LLC?

A
  • Members are only liable for their debts and obligations up to their investment
  • limited number of shareholders
  • can be taxed as sole proprietorship, S-corp, C- corp, partnership (very flexible)
  • No double taxation
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Disadvantages of LLC?

A
  • Setting up and maintaining difficult and expensive
  • Tax accounting complicated
  • Some of the regulations governing LLCs by state
  • Little legal precedent available to owners bc they are relatively new
  • Some states levy a franchise tax LLCs (essentially a fee in exchange for limited liability)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is Efficiency?

A

How productively a firm utilizes it’s assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is Stability?

A

Teh overall health of the financial structure of the firm particularly as it relates to debt-equity ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What are financial statements?

A

-written report that quantitatively describes the a firms financial health ie. income statement, Balance sheet, Statement of cash flows

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the steps in a firms financial membership?

A
  1. Prep of historic Financial Statements (income, balance, Statement of cash flows)
  2. Prep of Forecasts (income, expenses, Capital expenditures)
  3. Preparation of Pro Forma Financial Statements
  4. Ongoing Analysis of Financial Results
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are pro Forma Financial statements?

A

Projections for future periods based on forcasts for the next few years
- typically secret or only allowed to be viewed by investors or lenders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is the income statement?

A

reflects the results of the operations of a firm over specified time
- Records all the revenues and expenses for the period and shows whether there is a profit or loss

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Whats the difference between COGS and OPerating expenses?

A

COGS: cost of goods directly related to producing, delivering and materials
OPerating expenses: Include marketing, administrative, and other non-direct to sales expenses

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is the profit margin?

A

Net income/Net sales

27
Q

What is the balance sheet?

A

Snapshot of the company’s assets, liabilities and owners’ equity at a specific point in time

28
Q

Why are balance sheets sometimes deceiving?

A

Assets are recorded at costs regardless of appreciation/depreciation

29
Q

What is working capital?

A

Current assets - current liabilities

30
Q

What is the current ratios?

A

current assets/current liabilities

31
Q

What is the statement of cash flows?

A

Summarizes changes in a firms cash position for a specified time and details why changes occured

32
Q

What are Operating activities?

A

Include net income, dep, changes in working capital (minus cash and short-term debt),

33
Q

What are investing activities?

A

Include purchase, sale, investment in fixed assets

34
Q

What are financing activities?

A

Include cash raised during the period by borrowing money or selling stock and/or cash used for paying dividends, buying outstanding stock or outstanding bonds

35
Q

What is liability of newness?

A

Companies often falter because people cannot adjust quickly enough to their new roles and because th efirm lacks a track record with suppliers and buyers.

36
Q

What are the 3 main reasons young firms need to raise funds?

A
  1. Cash flow challenges - inventory, payroll, advertising etc
  2. Capital Investments - equipment, real estate etc
    .3 Lengthy Product development cycles
37
Q

What is burn rate?

A

The rate at which a company spends capital until it reaches profitability.

38
Q

What are the 3 most common versions of seed money?

A
  1. Personal Funds
    2, Friends and Family (Love Money)
  2. Bootstrapping - Finding ways to avoid need for external financing through creativity, thriftiness, cost cutting, grants etc
39
Q

What is sweat equity?

A

Time and effort the entrepreneur puts into the business

40
Q

What are 3 steps involved in prepping to raise debt or equity financing?

A
  1. Determine precisely how much money is needed
  2. Determine the most appropriate type of financing
  3. Develop a strat for engaging potential investors or bankers
41
Q

What are limited partners?

A

Partners in a venture capital firm whos commitment is limited to monetary investment.

42
Q

What are general partners?

A

They manage Venture capitalist firms

43
Q

What is carry?

A

% of profits that venture capitalists get

44
Q

What are the 6 rounds of venture capitalist funding?

A
  1. Seed funding - for funding prototype/feasability analysis
  2. Start up funding - Made to firms exhibiting few if any commercial sales, business model firmly established, funding used to start production
  3. First stage funding - commercial production started but need to ramp it off
  4. Second stage - When a firm is successfully selling but needs to expand both capacity and it’s markets
  5. Mezzanine financing - for further expansion or to bridge its’ financing needs to expand capaccity or marjets
  6. Buyout funding - Funding provided to help one company acquire another
45
Q

What is a prospectus?

A

describes offering to the public. Can be either preliminary or final

46
Q

What is vendor credit? (trade credit)

A

credit for goods ordered. Typically paid back over 30 days

47
Q

What is factoring?

A

Where a company sells its’ accounts receivables

48
Q

What are the 3 step process to determining your customers?

A
  1. Segmenting the Market - groups of customers that are similar enough
  2. Selecting a target market - which group wants yo product?
  3. Crafting a Unique positioning strategy - What position will my firm occupy in the minds of my customers that will be differentiated from my competitors?
49
Q

What considerations are required to make a segement differentiatable?

A
  • Homogeneity of needs and wants appears within the segment.
  • Heterogeneity of needs and wants exists between the segments.
  • Differences within the segment should be small compared to differences across segments.
    The segment should be distinct enough so that its members can be easily identified.
  • It should be possible to determine the size of the segment.
  • The segment should be large enough for the firm to earn profits
50
Q

What is brand?

A

Set of attributes that people associate with a company

51
Q

What are 4 common IP mistakes Entrepreneurs make?

A
  1. Not using IP as part of their overall plan for success
  2. Not properly identifying all their IP
  3. Not fully recognizing the value of their IP
  4. Not legally protecting their IP
52
Q

What are the primary rules of thumb for deciding if IP should be protected?

A
  1. IP should be directly related do competitive advantage

2. Is valuable in the marketplace (dont patent untested ideas)

53
Q

What are the 4 forms of IP?

A

Patent, trademarks, copyrights and trade secrets

54
Q

What is a patent?

A

a grant from the federal government conferring the rights to exclude others from making, selling, or using an invention for the term of the patent

55
Q

What are the 3 basic requirements for a patent to be granted?

A
  1. Must have utility
  2. Must be novel from what came before it
  3. Must not be obvious to a person of ordinary skill in the field
56
Q

What is a utility patent?

A

may be granted to anyone who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof. Recently made to include business method patents

57
Q

What’s a trademark?

A

any word, name, symbol, or device used to identify the source or origin of products or services and to distinguish those products or services from others. Renewable every 10 years

58
Q

What’s a servicemark?

A

imilar to trademarks; are used to identify the services or intangible activities of a business, rather than a business’s physical products.

59
Q

What’s a collective mark?

A

Trademarks or service marks used by the members of a cooperative, association, or other collective group

60
Q

What’s a certififcation mark?

A

Marks, words, names, symbols, or devices used by a person other than its owner to certify a particular quality about a good or service

61
Q

What is copyright?

A

is a form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work

62
Q

What are excluded from copyrights?

A

Ideas essentially. Only the specific expression of an idea.

63
Q

What is a trade secret?

A

is any formula, pattern, physical device, idea, process, or other information that provides the owner of the information with a competitive advantage in the marketplace

64
Q

What qualifies a Trade secret from protection?

A

-Is not known outside the company
-Is known only inside the company on a “need-to-know” basis
-Is safeguarded by stringent efforts to keep the information confidential
-Is valuable and provides the company a compelling competitive advantage
Was developed at great cost, time, and effort
-Cannot be easily duplicated, reverse engineered, or discovered

Bus 401 (1 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions