Exam 2 Study Guide

Exam 2 Study Guide - Introduction to Entrepreneurship Exam...

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Introduction to Entrepreneurship Exam 2 Study Guide Chapters 6 – 10 Chapter 6 Elements of a New Venture Team *2 Obstacles with teams: Chemistry and Equal Partners Founder or Founders of a firm o The founder’s personality drives the operation conditions of the new venture o 50 – 70% of all new ventures have been started by more than 1 individual o Most founders have higher education, prior entrepreneurial experience and the ability to network. Key Employees o Complement your own skill set o Hire the smartest people you can find o Chemistry is key Board of Directors o If the new venture is a corporation it is legally required to have a board of directors o A panel of individuals who are elected by shareholders o Inside and outside directors o 3 Formal Responsibilities Appoint Officer of the firm Declare Dividends Oversee the affairs of the corporation o Meetings are usually 3 – 4 times a year o More likely to be paid in stock or on a voluntary basis Board of Advisors o A panel of experts who provide counsel and advice on an ongoing basis o Has no legal responsibility for the firm o Gives nonbinding advice o Staffing a board of advisors is easier because requires less time and no legal liability o Provides guidance and lends credibility Lenders and Investors o Your Partners – Lenders and investors have a vested interest in the companies they finance, often causing them to become very involved o Lenders and investors help your firm by providing guidance o Provide financial oversight Other Professionals o Attorneys, accountants, business consultants
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Management Team Chapter 7 Entrepreneurial Financial Management Purpose Setting clear goals consistent with entrepreneur’s aspirations Using financial statements to manage growing business Forecasting revenues, expenses Effectively managing cash Raising finds to support growth Planning the exit strategy Debt Verse Equity Debt o IOU which must be repaid o Principle, interest, fees, default penalities o Debt agreement o Non-diluting o Monthly obligation, reducing funds available to grow the business Equity o Exchange ownership in company for cash o Preferred or common stock o Advantage: investor shares risk o Disadvantage: dilution of company Types of Financial Goals Income: cash produced by the business to pay salary and expenses Wealth: value of the business itself To realize financial gain business must generate value To realize value, a firm must consistently product increasing profits Self Assessment Process Personal Aspirations Core Values Entrepreneurial Readiness Financial Management Raising money Managing a company’s finances in a way that achieves the highest rate of return Financial Objectives of a Firm Profitablity o The ability to earn a profit Liquidity o A company’s ability to meet its short-term financial obligations Efficiency
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o How productively a firm utilizes it assets relative to its revenue and its
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This note was uploaded on 04/18/2008 for the course ENTR 410 taught by Professor Meyer during the Spring '08 term at Kansas.

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Exam 2 Study Guide - Introduction to Entrepreneurship Exam...

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