PBMF Ch. 6
Mentor
someone with experience who can provide advice, suggestions, and ideas
Leadership
the ability to influence others to reach a goal. Honesty, competence, and self-confidence are qualities of effective __________
Name two sources of equity financing.
venture capitalists and angel investors.
Entrepreneurship
willingly risking resources to start and run a business in pursuit of profit
How does the US Small Business Administration define entrepreneur?
"a person who organizes and manages a business undertaking, assuming the risk for the sake of profit."
three resources an entrepreneur can use for business advice.
Entrepreneurs can turn to mentors, SCORE, SBA
How the US Small Business Administration define small business
For most industries, a small business is defined either in terms of the average number of employees over the past 12 months or average annual receipts over the past three years.
Pro forma income statement
financial statements; projects revenues and expenses to show whether or not a business is profitable.
Pro forma cash flow statement
financial statements; reports anticipated flow of income and expenses for the business.
Pro forma balance sheet
financial statements; reports the assets, liabilities, and net worth of the business.
Venture capital
money invested in a business by investors who form partnerships or groups to pool investments. In return for their investment, ___________ ____________ receive a portion of the business equity.
Angel investors
private investors who fund start-up businesses
List the three financial statements that should be included in the financial plans section of a business plan.
pro forma balance sheet pro forma income statement pro forma cash flow statement.
Capital structure
refers to the way a business is financed; determines who has control of the business and decision-making power.
Market research
the gathering and analyzing of information about a business. It helps analyze if the idea is feasible.
Start-up capital
the money necessary to start and open a business
Cash flow
the movement of money into and out of a business
Planning
the process of setting goals and deciding how to accomplish them.
Assets
the property or items of value a business owns.
Trait
a distinguishing characteristic or quality that makes each person unique.
Entrepreneur
a person who starts a new business or purchases an existing business
Mission statement
a sentence describing the purpose of the business
Business plan
a written statement of goals and objectives for a business with a strategy to achieve them
sections of a business plan.
In general, a business plan includes an executive summary, company description, market analysis, organization and management, service or product line, marketing and sales, funding request, financial projections, and an appendix.
Why is it important for entrepreneurs to know their market?
Knowing the market allows an entrepreneur to focus on the most effective way to develop, advertise, and deliver a product.
Reasons-Businesses-Fail
Lack of money, Lack of business experience, Poor management skills, Inefficient inventory control, Poor credit management and Poor location.
five Ps of entrepreneurship
Purpose, passion, persistence, people, and profit.
SCORE
Service Corps of Retired Executives, is a nonprofit association of more than 13,000 retired and active business people. These professionals volunteer their services to help small businesses succeed. Created in 1964
SBA
Small Business Administration
Pro forma financial statements
financial statements based on estimates of future business performance, sales, and expenses.
What is an advantage of buying a franchise?
The franchisee gets a proven business system and a business name that is already known in the market.
Market
all the people and organizations that might purchase a product.
Transferable-skills
also known as foundation skills, help an individual perform in the workplace or gain success in a career.
Collateral
an asset pledged that will be claimed by the lender if the loan is not repaid
Job-specific-skills
are necessary to perform the required work-related tasks of a position. AKA skills of the trade
Debt financing
borrowing money that must be repaid for use in the business
Equity financing
capital brought into the business in exchange for a percent of ownership in the business