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Entrepreneurship > Final > Flashcards

Final Flashcards

1
Q

3 important perspectives for the business plan

A

entrepreneur’s, marketing, investor’s

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2
Q

what is the executive summary section of a business plan?

A

2-3 pages summarizing complete business plan, should stimulate investors’ interest and address issues the reader might have

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3
Q

environmental analysis

A

assessment of external uncontrollable variables that may impact the business plan

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4
Q

industry analysis

A

reviews industry trends and competitive strategies

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5
Q

description of venture

A

provides complete overview of products, services, and operations of new venture

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6
Q

production plan

A

details how the products will be manufactured

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7
Q

operations plan

A

describes flow of goods and services from production to customer

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8
Q

marketing plan

A

describes market conditions and strategy related to how the products and services will be distributed, priced, and promoted

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9
Q

organizational plan

A

describes form of ownership and lines of authority and responsibility of members of new venture

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10
Q

assessment of risk

A

identifies potential hazards and alternative strategies to meet business plan goals and objectives

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11
Q

financial plan

A

projections of key financial data that determine economic feasibility and necessary financial investment commitment

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12
Q

main reasons for business plan failure

A

goals are not reasonable or measurable
not enough commitment to venture
no experience
no customer need established for product or service

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13
Q

business plan

A

written document prepared by entrepreneur that describes all relevant external and internal elements involved in starting a new venture

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14
Q

3 basic legal forms of business formation

A

proprietorship, partnership, corporation

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14
Q

proprietorship

A

single owner who has unlimited liability, ,controls all decisions, and receives all profits

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14
Q

partnership

A

2 or more individuals having unlimited liability who have pooled resources to own a business

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15
Q

C corporation

A

most common form of corporation, treated as a separate legal entity

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16
Q

tax advantages for propietorship

A

no double tax on profits; no capital stock tax or penalty for retained earnings

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17
Q

limited partners liability in general partnership

A

only liable for the amount of their investment

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18
Q

corporation tax advantages

A

corporate tax rate may be lower than individual tax rate, also gets more deductions

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19
Q

corporate tax disadvantage

A

double taxation

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20
Q

S corporation

A

special type of corporation where profits are distributed to stockholders and taxed as income

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21
Q

limited liability company

A

partnership-corporation hybrid that has members instead of stockholders

22
Q

management teams must be able to accomplish what 3 functions?

A

execute business plan
identify changes in the business as they occur
make adjustments to plan based on changes

23
Q

functions of the board of directors

A 
reviewing budgets
develop long term strategies for growth
support day-to-day activities
resolve conflicts
ensure proper use of assets
develop network of information sources for entrepreneur
24
Q

board of advisors

A

more loosely tied to organization and serve only in advisory capacity

25
Q

pro forma income

A

projected net profit calculated from projected revenue minus projected costs

26
Q

cash flow

A

difference between actual cash receipts and cash payments

27
Q

pro forma cash flow

A

projected cash available calculated from projected cash accumulations minus projected cash disbursements

28
Q

pro forma balance sheet

A

summarizes projected assets, liabilities, and net worth of venture

29
Q

when is the balance sheet prepared?

A

at periodic intervals (quarterly, annually)

30
Q

owner’s equity

A

amount owners have invested and/or retained from the venture

31
Q

penetration strategy

A

encouraging existing customers to buy more of the firm’s current products

32
Q

market development strategy

A

selling the firm’s existing products to new groups of customers

33
Q

new groups of customers in market development strategies

A

geographical, demographic, product use

34
Q

product development strategy

A

developing and selling new products to people who are already purchasing the firm’s existing products

35
Q

diversification strategy

A

selling a new product to a new market

36
Q

backward integration

A

step back (up) in value-added chain toward raw materials

37
Q

forward integration

A

step forward (down) on value-added chain toward customers

38
Q

horizontal integration

A

occurs at the same level of the value-added chain but involves a different, complementary, value-added chain

39
Q

major areas of pressure during growth

A

existing financial resources, human resources, management of employees, and entrepreneur’s time

40
Q

managing cash flow drivers

A

accounts receivable, inventory, accounts payable

41
Q

participative style of management

A

manager involves others in decision-making process

42
Q

how to institute a more participative style of management

A 
establish team spirit
communicate with employees
provide feedback
delegate some responsibility to employees
provide continuous training
43
Q

informal risk-capital market

A

consists mainly of individuals (angel investors)

44
Q

venture-capital market

A

consisting of formal firms of investors

45
Q

public equity market

A

consisting of publicly owned stocks of companies

46
Q

equity participation

A

taking an ownership position through stock, warrants, and/or convertible securities

47
Q

SBIC

A

small business investment company

48
Q

types of venture capital organizations

A

SBIC, private venture, corporate, state-sponsored, university-sponsored

49
Q

what 3 things does a venture capitalist expect before investing?

A

strong management team
unique product or market opportunity
significant capital appreciation

50
Q

factors in valuation

A 
nature & history of the business
outlook of economy
overall financial condition
future earning capacity
future dividend-paying capacity 
assessment of goodwill/intangibles
previous stock sales
market value of similar companies' stock
51
Q

present value of future cash flow

A

valuing a company based on its future sales & profits

52
Q

earnings approach

A

determining the worth of a company by looking at its present & future earnings, using a price-earnings multiple; most widely used to compute ROI

53
Q

liquidation value

A

worth of a company if everything was sold today

Entrepreneurship (2 decks)

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