Mgmt 310 Exam 1 ISU

Describe the process of financial management as used in entrepreneurial firms.

- Understand the types of financial statements Forecasts - determining income and expenses based from past performance - new business base it off the industry average Budgets - forecasts of company's income, expenses, and capital needs

Identify the four main financial objectives of entrepreneurial ventures.

-profitability -liquidity -Efficiency -Stability

three main reasons people decide to become entrepreneurs.

1. Be their own boss (ambition, frustration) 2. Pursue their own ideas (innovate and implement new ideas) 3. Pursue financial rewards (secondary goal)

four main characteristics of successful entrepreneurs.

1. Passion for their business 2. Product/customer focus 3. Tenacity despite failure 4. Execution intelligence

Three types of start-up firms.

1. Salary Substitute Firms: earn similar income as would in conventional job 2. Lifestyle Firms: Allow customers to pursue particular lifestyle while earning a living. 3. Entrepreneurial firms: bring new products and services to market by creating and seizing opportunities.

Explain the difference between opportunities and ideas.

An idea is a thought, an impression, or notion. However, not all ideas are opportunities as there may or may not be a need the idea fufills or meets the criteria of an opportunity. An opportunity is a favorable set of circumstances that creates for a new product/service/business.

Corporate Entrepreneurship

Behavior orientation exhibited by established firms with an entrepreneurial emphasis that is proactive, innovative, and risk taking

discuss the positive effects of entrepreneurship and entrepreneurial firms on economiesand societies.

Creative destruction - keep technology moving forward Innovation Job Creation

Learn about the importance of understanding the financial management of an entrepreneurial firm.

Entrepreneurs must be aware of how much money they have in the bank and if its sufficient enough for financial obligations must anticipate if the funds will be generated through the business or the the firm has to look for investment capital or borrow cash

Describe a new-venture team and discuss the primary elements that form such a team.

Founders, key employees, advisors. Move idea to functioning firm, don't join all at once, only when can financially handle to add more, involves more than just paid employees (board of directors, board of advisors, professional rely on for advice)

Explain the difference between historical and pro forma financial statements.

Historical financial statements - reflects past performance and prepared quarterly and annual basis Pro forma financial statements - projects for future periods based on forecasting

Describe what a financial feasibility analysis is(overall financial...), explain its importance, and discuss the most critical issues to consider when completing this analysis.

Importance: A preliminary financial assessment is sufficient. Total start up cash needed, Financial performance of similar businesses, Overall financial attractiveness of venture

Explain the concept called liability of newness.

New business = high probability to fail People involved can't adjust fast enough to their new roles & / or firm lacks a track record of success.

Describe the three general approaches entrepreneurs use to identify opportunities.

Observing trends - seeing what's evolve and what else can be added, solving a problem - see a problem find a solution, finding gaps in the market place - marketing to a specfic group of people that isn't large enough to attract mainstream retailers.

Identify professional advisers and explain their role with a new-venture team.

Panel of experts that give advice throughout the business journey. Could be as board of directors or board of advisors

Discuss the personal characteristics of entrepreneurs that contribute to their ability to recognize business opportunities.

Prior experience - wish you would have had a product or service/knowledge to make product or service Cognitive Factors - "sixth sense" to recognize problems and opportunities Creativity - process of creating a useful or novel idea Social Networks - be exposed to more business ideas

Describe an industry/market feasibility analysis, explain its purpose, and discuss the two primary issues to consider when completing this analysis.

Purpose: Assess appeal of the industry and the target market for the proposed business. if the industry is large enough for your idea, what's the industry attractiveness, along with target market attractiveness.

Explain what an organizational feasibility analysis is and its purpose and discuss the two primary issues to consider when completing this analysis.

Purpose: Determine whether a proposed business has sufficient management expertise, organizational competence, and resources to successfully launch a business. Management prowess and Resource suffienceny

Describe a product/service feasibility analysis, explain its purpose, and discuss the two primary issues that a proposed business should consider in this area.

Purpose: Is product or serivece viable: is it in demand, is it desirable?

Discuss the role of forecasts in projecting a firm's future income and expenses.

Sales Forecast - projects of firm's sales for a specified period it is based off of: - record of past sales - current production capacity and product demand - factors that affect future production capacity and demand

Explain the entrepreneurial process.

Step 1: Deciding to become an entrepreneur.Step 2: Developing successful business ideas. Step 3: Moving from an idea to an entrepreneurial firm. Step 4: Managing and growing the entrepreneurial firm.

Explain why a new-venture team might use consultants to obtain advice.

They would have various opportunities and experiences that would allow them to give different advice then the team. They may also be able to provide a non bias view of the idea.

Describe entrepreneurship,

implement new ways to solve problems and create value, taking an idea and transform it to a repeatable and scalable business.

Describe the different historical financial statements and their purposes.

incomes statement balance sheet statement of cash flows