CHAP 5 Flashcards
is a comprehensive overview of your financial goals and the steps you need to take to achieve them
financial plan
gives a clear vision of the overall operating income and expenses of the business to distinguish if the company will gain profit and will be successful in the business world
financial plan
is the process of estimating the capital required and determining its competition. It is the process of framing financial policies in relation to procurement, investment and administration of funds of an enterprise
Financial Planning
This will depend upon factors like cost of current and fixed assets; promotional expenses and long-range planning.
Determining capital requirements
Capital requirements have to be looked with both aspects
short-term and long-term requirements
is the composition of capital, i.e., the relative kind and proportion of capital required in the business. This includes decisions of debt-equity ratio, both short-term and long-term
Determining capital structure
with regards to cash control, lending, borrowings, etc.
Framing financial policies
A finance manager _______________________________________at least cost in order to get maximum returns on investment
ensures that the scarce financial resources are maximally utilized in the best possible manner
is process of framing objectives, policies, procedures, programs and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies
Financial planning
individuals willing to make high-risk investments in early-stage ventures. Typically, these individuals have had successful entrepreneurial experience in the areas of investment they consider. They usually are motivated by their desire to stay engaged in their past area of success but are not willing to follow the tough lifestyle they experienced during their entrepreneurial days.
Angel investors
with the mandate and authority to fund business ventures to achieve economic development, environmental, cultural, or social policy objectives formulated by policy makers at various levels of government are good sources of funding, particularly at the early stage
Public funding agencies
These are specifically established to invest in high-risk ventures that offer potentially high returns. Their investors entrust them to identify investment opportunities matching specific criteria and expectations, which govern the fund managers’ investment decisions.
Venture capital companies
These are specifically established to invest in relatively mature ventures that have at least a modest financial or operational track record while still offering relatively attractive terms in an intermediate time frame (i.e., one to five years).
Private equity (PE) firms
They are defined by their investment intentions more than any other factors. They could be a member of any of the previous types of investors we have discussed; however, more often they are larger companies operating or investing in the same industry or a complementary one or market as your venture.
Strategic investors
If you have reached a position to deal with banks, you have reached financial nirvana, as banks offer the lowest costs of capital.
Banks
This way of raising funds is the most common among startup’s early stages. Putting your money in the project
Funding your own idea
It is an excellent way to gather funds for startups with artistic projects or even to raise capital to finance the manufacturing of new technology at a large scale.
Crowdfunding
types of crowdfunding
rewards
equity-based
One of the best places t o raise funds is from your own house. As your family is well aware of your talents, they will be willing to support you regardless of what you want to do. are the only ones who know your potential and will be willing to give money to start your business.
Friends and Family
It is one way of keeping the initial control of the business in your own hand.
Taking A Loan
Entering theses contests will be vey helpful to you as, in one hand if you win the competition you will get a source of finance, and on the other hand, you gain publicity for your product and people will be waiting for it to hit the market (it acts as advertisements).
Enter Competitions
