ENT3003 exam 4

Third or mezzanine stage of financing

a profitable company may seek investment through the third or mezzanine stage of financing. This third stage is when a profitable company looks to go public through an initial public offering (IPO).

4 types of intellectual property

trade secrets, patents, trademarks, copyrights

corporate angels

usually former business executives: Often from big multinationals, looking to use their savings or current income to invest. a.While they primarily seek profit, many corporate angels want to play a larger part in the company, often seeking a paid position in the venture. b.Can become frustrated working in a small venture w/ limited resources. They can be too controlling often leading to a clash of interests, even leading ultimately to a breakdown of the investor-entrepreneurial relationship.

current marketing tools and trends

virtual reality:use of integrating VR into marketing strategies is becoming more popular; 75 percent of the world's biggest brands have launched VR campaigns. a.One of these brands includes California-based for-profit shoe company, Toms Shoes, which offers customers to give away a pair of shoes for every pair purchased. b.Thanks to a VR tool set up in-store, customers can experience what it is like to gift the shoes to someone in Peru. c.Offering an immersive, exciting experience is a powerful way to build an emotional connection with their customers. The demand for more AI tools such as the voice-enabled devices like Amazon Echo with Alexa is growing. a.Many companies are using AI technology as a live chat tool (Chatbots) on their websites, to enable their customers to receive faster responses and save the cost of hiring customer support staff. Honesty is still valued greatly: This trend may look a little out of place among all the latest technological advances, but honesty is more than just a passing craze. addressing any flaws or areas for improvement adds integrity to your brand, which may translate into loyalty and sales. b.Pizza restaurant chain Dominos on track to overtake its rivals by adopting a marketing strategy based on transparency. publishes realistic images of food: what you see is what you get. Influencer marketing: many brands are seeking the help of influencers on social media like Instagram, Facebook, Snapchat, Twitter, YouTube, and Pinterest. a.Pet foods company, Pedigree, used a group of influencers to promote its "Buy a Bag, Give a Bowl," campaign to showcase their mission to give a bowl of food to a dog in need in exchange for each bag of dog food bought at the store.--> surge in media value. c. Celebrities are strong influencers: Experiential marketing, or engagement marketing, is a marketing strategy that provides people with a hands-on experience Marketing through Education: The explosion of data has left many consumers harder to engage, which means marketers must also be educators to offer easy-to-understand engaging content consumers are looking for. Exploring new ideas, sharing information, and providing value are key to building your brand and fostering customer engagement.

types of business structures

1. sole proprietorship 2. general proprietorship 3. C-corporation 4. S-corporation 5. limited liability company/llc 6. limited partnership and limited liability partnership 7. benefit corporation 8. not-for-profit

when to use an NDA

1. when talking to competitors; 2. when disclosing patent information; 3. when discussing trade secrets; 4. when taking on a partner or an investor; 5. when discuss sale or licensing of product or tech; 6. when employees have access to proprietary and confidential info; 7. when sharing business info w/ prospective buyer

common legal mistakes made by startups

1. getting input through contacts: that cannot substitute professional guidance from a lawyer experienced in startups and expert in the legal areas that are most relevant to your business. 2. Choosing the wrong business structure could incur higher taxes: Choosing the wrong business structure could incur higher taxes than necessary or expose you to significant personal liabilities (also could risk financial penalties). Experienced investors generally invest only in C corporations: Experienced investors generally invest only in C corporations, so if you want to seek immediate external funding, you might be better off forming a C corporation rather than an LLC or an S-Corp. normally relatively easy and inexpensive to convert to a C corporation: If you don't plan to seek external financing until sometime down the road, be aware that it is normally relatively easy and inexpensive to convert to a C corporation from any of the pass-through entities. 3. not having a founders agreement: (clear agreement between founders on key issues business may face. short less technical & before formal written agreements) necessary regardless of the form of entity you have chosen. It may be a partnership agreement in a general or limited partnership, a stockholder agreement in an S or C corporation, or an operating agreement in an LLC, but the purpose of the agreement is the same. Failing to enter causes problems later. provides a useful overview of how your co-founder relationships will work, how the business structured, and how you and co-founders intend to tackle problems in the future. 4. not having right vesting schedule to protect cofounders: vesting = imposing equity forfeitures on cofounders over a certain period of time on a piecemeal basis should they not stay with the company. w/out formal vesting schedule in place, cofounder could walk away with a chunk of the equity, leaving the remaining co-founders working to increase the wealth of a noncontributing owner. similar concern when including equity in compensation package for employee

issues w the 4 Ps marketing model + the solution to it

4 Ps model overemphasizes product technology and quality: A five-year study conducted by Harvard Business School, involving 500 managers and customers across countries, concluded that the 4 Ps model overemphasizes product technology and quality, understates explaining the value of the product and why customers need it, and distracts businesses from promoting themselves as important sources of info and problem solving. because of the new relationships businesses have with customers, the traditional 4 Ps model is narrow and outdated and is not strictly relevant in a modern business environment. study inspired the S.A.V.E framework: Solution, Access, Value, Education, which transfers the emphasis from products to solutions, place to access, price to value, and promotion to education. Solution rather than product: all customers really want to know is how the product solves their problems: Researchers argue that businesses tend to get caught up in the features and functions of their product, when all customers really want to know is how the product solves their problems. a.S.A.V.E. advocates marketing a product based on how it meets customer needs, rather than emphasizing its features.

venture capitalist

A professional investor or company who/that invests in early-stage and emerging companies because of long-term growth potential. often former or current entrepreneurs, but unlike angels, they are mostly professional money managers. -look for opportunities likely to return 10 times their investment in five years. These money managers form a venture capital limited partnership fund that earns money through ownership of equity in different companies. The fund usually goes through a 10-year cycle before it dissolves and the assets are distributed to each of the partners. When considering investment, many VCs look for entrepreneurial ventures that have received seed funding in the early stages because it legitimizes the entrepreneur, helps to validate the idea, and shows an ability to stimulate belief among the entrepreneur's personal network.

early-stage financing

A stage of financing which involves larger funds provided for companies that have a team in place and a product or service tested or piloted, but has little or no revenue yet. -One of the most important factors to consider when you are seeking investment is to find investors who are most suitable for your stage of the company. Timing is also a factor. There is no use trying to raise funds when the venture is down to its last dollar. For one thing, it can take at least 6 months to raise money; in addition, a desperate early venture may give away far too much equity to investors, which can seriously dilute the position of its founders

reframing the 4Ps

Access rather than place: how accessible your company is to your target customer. a.The exact location where a person can purchase is not as important b.This approach considers the customer's journey from where they first hear of your company to actually making the purchase. c.Customers want to see that businesses care about customer feedback, and are available if they need advice and support. Value over price: customers are drawn to value more than to price. a.This means that entrepreneurs need to build a strong case for showing customers why their product offers superior value to the competition, rather than focusing on the actual price tag. Education rather than promotion: today's businesses are in a good position to educate customers by providing information that they want to read that is up to date and relevant. This helps to build a relationship of familiarity and trust before a purchase is even made. a.No matter how many marketing models there are, you need to take a broad approach to encompass all that is relevant to your business. b.Then, test them, tweak them, and adjust them where needed.

hiring employees: safety measures

All employers have a responsibility to their employees to maintain a safe and healthy workplace environment. This means training employees to do their jobs safely: Ensuring the workplace is free from hazards, maintaining safety records, and reporting any serious accidents at work to government administrators. You should also have provisions in place such as medical treatment and rehabilitation services to support employees who are injured on the job. a. To give your new employee what your business is about, it is useful to include a bit about the company background, its mission statement, position in the market, and who its customers are. Maintaining payroll records, filing tax returns on time, keeping your employees informed, and ensuring you are up to speed with federal reporting requirements go a long way toward running an efficient business.

promotion (marketing mix)

All the ways in which companies tell their customers about their offering. 1.may involve advertising online, through social networking, direct mail, in the press, or even on TV if you have the budget. It also includes public relations such as being featured in blogs, newspapers, magazines—all free aspects of promotion. Both large and small companies need to continually experiment with finding ways to promote their products and services in order to find out what works and what doesn't

hiring employees: employee benefits

As an employer, you will need to decide what sorts of benefits you plan to provide your employees. The law requires you to pay and withhold Social Security taxes and an additional rate for Medicare and to pay for unemployment insurance. For businesses with over 50 employees, you must also provide family and medical leave and health insurance. a.In some states, employers must give a certain number of paid sick days. b.You are not required by law to provide life insurance, retirement plans, or regular vacation leave; but by offering a competitive benefits program, you will have a better chance of attracting high-caliber employees. If you choose to provide these optional benefits, be aware that they are subject to many regulations; consultation with an accountant experienced in such benefits is a worthwhile investment.

convertible debt/convertible bond/convertible note

Because valuation is complicated, entrepreneurs and investors often opt for this. a short-term loan that can be turned into equity when future financing is issued; it is a middle ground between debt and equity financing. -In the context of seed financing, these early lenders will loan you the money to help you attract venture capital. But rather than get the money back with interest when you do receive investment from a VC, these lenders receive stock, instead , called a conversion event: entrepreneurs and investors may agree to set the conversion after a product reaches $100,000 in profit or achieves $1 million in revenue.

how to build a brand: always deliver on your brand promise

Customers are more likely to buy into your brand if it consistently meets and exceeds their expectations.

using creative content as a marketing tool

Creating content is not about advertising your business or self-promotion. Creative content aims to educate, inspire, and entertain people enough that they will grow to trust you and your brand. -way for your customers to get to know the human side of your business by injecting personality and authenticity into everything you produce. -Make your content about them, not you. a. 90% about them, and 10% (or less) about you: When presenting content, make sure it is relevant to your audience. -Develop a fresh point of view a.Rather than just talking about the industry in which you operate, try and broaden your scope to other areas. b.Trulia, the real estate search service, provides content on novel geographic data based on social trends and demographics. -Pick your battles: it is important to share your own point of view, but make sure you still come across as being likeable Using inflammatory language, becoming overly political, or taking divisive standpoints may put off some of your customers. be authentic: a.Social media is about building long-lasting relationships, which means being authentic from the get-go. b.This involves participating in your customers' conversations, commenting on their content, and sharing your own thoughts and opinions. As Unmarketing author Scott Stratten says, "Setting up an automated Twitter program to tweet for you and automatically add followers is a great way to say to people 'We don't actually care what you're saying, just buy from us.' It would be like sending a mannequin to a networking event with your company logo on it. Use your gut a.When reading over your content you need to ask yourself who it best serves, you and your company or the reader? b.If the answer isn't "the reader" then have another go. The effort will pay off in additional business and loyalty from your customer. Quality is the key: Creating content that is meaningful to your audience will mean they will share it through their own social networks. -It helps to get in touch with people in a similar market who already have a large number of followers, and build a relationship with them. a.If you have a product designed for mothers of young children, then you could get a list of the top mommy bloggers, send them

Cautions and Disadvantages of Convertible Debt issuance

Early lenders and risk: Early lenders may not want to take the risk of having their money tied up until the debt is converted into equity. They may be wary of losing money if the conversion event doesn't happen (i.e., if profits don't reach $100,000 or revenue does not reach $1 million) or if the company ends up filing for bankruptcy. A clause, however, can be added to address this possibility; the initial investment could remain as debt (which the entrepreneur must repay). Accumulating debt before the company takes off can be significantly risky. Similarly, if entrepreneurs fail to pay back the loan, they could be sued by the lenders. In addition, convertible debt requires a lawyer to draft the terms, which can be an expensive bill to pay early on in the life of a startup.

common IP traps experienced by entrepreneurs: failure to assign ownership

In the early stages of a startup, a number of people may be formally involved in contributing to the innovation process. This is why It is best to make formal agreements regarding IP ownership: Prior to any further development to decide who owns and controls the innovation, and who doesn't. Ownership can even vest in people you haven't paid, people you have paid but who haven't signed a formal assignment of ownership or people who have otherwise made a valuable contribution to the innovation. a.For example, InBae Yoon invented a medical device used to withdraw fluid from a body cavity called the trocar, which he subsequently licensed to a larger organization. However, Yoon had originally collaborated with electronic technician Young Jae Choi to create the product. Yoon failed to pay Choi for his work or obtain an assignment of his rights. d.A rival competitor discovered the technician's involvement a few years later, amended the patent to assign him partial ownership, and won a court case to secure a separate licensing agreement with Choi to allow them to use the product. The same kinds of problems can arise with people who may have co-authored copyrighted material or helped to design a logo for a company's trademark.

how to build a brand: become your brand

Incorporate your brand into every aspect of your business. a.In an office environment, this includes how you greet people over the phone and what you and your employees wear. b.If your aim is to promote sophistication through your brand, then you may want your employees to choose a polite yet formal manner over the phone, and to dress smartly.

how to build a brand: know your customer

Knowing what your customer wants is key to building a successful brand. a.In order to achieve brand success, you need to know how your brand is perceived, who loves or hates it, who would recommend it, what would make it stronger, how customers feel about competitor brands, and the extent to which customers will emotionally connect with your brand. Can find out w surveys and keeping an eye on follow behavior over time

hiring employees vs independent contractors

Many startups and small businesses use independent contractors because it saves money, they don't require contributions toward health care, compensation insurance, or any other benefits like saving on office space and equipment. Working with independent contractors gives employers greater flexibility in terms of flexibility in hiring and letting go of workers. can also be valuable cost savings in hiring contractors who are experts in their field and are ready to hit the ground running, which means saving time and money on training. Independent contractors are not protected by the same laws as employees, which means there is less chance of dealing with the same legal claims that could be brought by employees. However, there are some disadvantages to hiring independent contractors. Because contractors have autonomy in what, when, and how they perform their job duties, you may feel you have less control over them. Also, independent contractors may be present for only a short period of time before leaving again, which might be disruptive to the other employees. be aware that the classification of workers as independent contractors or employees is not your choice. The classification is dictated by the facts of the relationship. State and federal agencies are very strict on workers who are classified as contractors versus employees, and you may risk facing government audits as a result. Misclassifying contractors and employees could have legal consequences that could be very costly. The most significant factor is the amount of control the employer has over the work being carried out: If you expect the person to show up at the same time every day and work a set period of hours, and closely oversee her duties, you will have hired an employee rather than retained a contractor.

newer marketing model (the 7Ps) adds what 3 new elements

People, which refers to the people responsible for every aspect of sales and marketing; packaging, which explores every single visual element of external appearance of an offering through the eyes of your customer; and positioning, which focuses on how customers think or talk about product and a company relative to competitors.

benefits of angel backing

Research shows that startups that have received angel backing are more likely to survive. With angel investment, entrepreneurs are able to scale sooner, hire employees, and generate greater revenue, which all leads to great potential for later-stage investment. Apple, Google, and Netscape are just a few well-known companies that have benefited from angel funding in the early stages. They can add significant value by providing skills, lucrative contacts, etc. experienced self-made entrepreneurs themselves, angel investors can add significant value by providing advice, skills, and expertise, as well as lucrative contacts.

difference between angel investors and venture capitalists

Seed-stage and startup entrepreneurs tend to seek out angel investors: Seed-stage and startup entrepreneurs tend to seek out angel investors when they are initially trying to grow and scale the organization. -VCs invest in companies in the early to third-stage of business: VCs also invest in startups, but they are more likely to invest in companies in the early to third-stage of business.

common IP traps experienced by entrepreneurs: Failure to Protect Product and Processes

Some inventors protect their products by building unique markers into them: Some inventors and scientists protect their products by building unique markers into them; for example, a unique chemical "thumbprint" can reveal through a simple test if someone else has copied their product. Another option is to license their innovation to a larger organization: Another option some entrepreneurs use is to license their innovation to a larger organization that has all the tools already in place to protect and commercialize the invention. The inventor then profits through a stream of royalties.

how entrepreneurs should build a brand

Successful entrepreneurs build a personal brand based on trust and authority: They attract more customers, gain more media exposure, and create a lasting platform that secures a loyal following of people they want to impact most.

building a brand: designing a logo

Your logo is the gateway to your overall brand image. Triggers people's emotions and perceptions of the brand a.When designing a logo, make sure it shows up well in different types of media, its design and message are clear, and it is instantly recognizable. b.Put your logo everywhere you can: on your company website, social media, packaging, email signature, and all written communication.

getting the most from social media

Start with research: a.note the kind of content your competitors share with their customers and followers + the language they use to engage followers b.Also helps to read blogs and join convos abt subjects relevant to your business. Contributing to conversations helps you learn more about what is important to your customers, and helps to boost your profile and showcase your knowledge about a particular area. -Think about your goals: Do you want your social media presence to attract customers, increase recognition of your brand, or both? a.Many companies use social media to provide efficient customer service. b.Online food ordering company Seamless provides round-the-clock customer service on Twitter, and American Airlines tweets if there are airline delays and responds quickly to tweets from frustrated passengers. c.Since over 70 percent of Twitter users surveyed expect a response from a brand within an hour, it is worthwhile for companies to make the effort to provide excellent customer service as it could increase customer satisfaction to almost 20 percent. -Design your strategy: a.Think about how to measure online presence. b.You can catalog the number of visits to your site, the number of followers, the types of comments people make about your business, and who they share them with. c.It helps to design your strategy around your target audience; choose one or two social media sites to begin with that fit in with your industry and your target market. -Post regular updates: a.Followers will expect to see quick messages on Twitter several times a day, and longer blog posts or articles on Facebook at least a couple of times a week. -Monitor your social media: a.Every day, check for new followers, any feedback, questions, or complaints; be vigilant about monitoring your social media. b.Address them all and also check out who your new followers are and how many of them have retweeted your posts. c.Also keep close watch on competitors' sites d.Posting interesting content online regularly is one of the best ways of getting feedback and growing your online community. e.If you are a confident public speaker, then videos are also a powerful way to build trust with potential customers by letting them get to know yo

withholding taxes and employee forms (w-4 and 1-9)

To comply with IRS regulations, you will need to withhold part of your employees' income and keep records of employment taxes for at least the most recent 4 years. You will need to report these wages and taxes every year. There may also be a requirement to withhold state income taxes, depending on the state in which your employees are located. Set up personnel files containing important documents for each employee: Make sure you set up personnel files containing important documents for each employee that you hire. Each employee must fill out a W-4 form: That lets you, as the employer, know how much money to withhold from their paychecks for federal tax purposes. a.You can ask employees to fill out this form every year if they wish to change the withholding amount. *DOES NOT have to be filed w/ IRS* The Form 1-9 needs to be completed within three days: You need to complete this within three days of hiring your new employee; this requires employers to verify the new employee's eligibility to work in the U.S. You must also file IRS Form 940 every year: In addition, you must file IRS Form 940 every year to report federal unemployment tax, which provides payment of unemployment compensation to employees who have lost their jobs.

who typically invests in startups (equity financing)

Typically, the 3 Fs (family, friends, and fools) either invest cash in exchange for equity in the business, provide a loan, or lend money in the form of a loan that can later be converted to equity (called convertible debt). Entrepreneurs generally raise from $1,000 to $100,000 through the 3 Fs.

marketing tools: building your website

Websites with crisp, clean designs with a clear description of your product or service together with simple, uncluttered pages that flow well in relation to each other are the most successful. It is particularly important that your website be quick and easy to navigate on both a large computer screen and a mobile device. Make sure you are SEO. Because Google search results also take into account the number of times websites are shared on social media, it is also important that your site includes links to your social media pages and vice versa, in order to boost Google search rankings. Attracting an audience takes time: Simply building a website will not encourage visitors to flock immediately to your site. It will evolve over time in line with industry fluctuations: It won't be perfect from the very start, but will evolve over time in line with industry fluctuations and the response you get from your audience.

Pass-through taxation

When an owner's share of business profits is reported on his or her individual tax return.

how to build a brand: write a tagline

While it can be difficult to capture the essence of brand in one statement, a tagline is important for communicating your brand message. a.Keep your tagline short, simple, clear, and memorable. b.Approaches: describe literally, leverage labels, adopt your customers' attitude, make it a metaphor, stake your claim

how to build a brand: be consistent w your brand

While it is possible to tweak a logo or a tagline, make sure you always retain the brand voice and deliver on your brand promise.

building a brand: choosing a name

a.Experts believe that a strong brand can be created by just using one word: a concept first introduced by marketing professional and author, Al Ries, who believed it made the brand easier for consumers to remember. b.Many top companies such as Google, Salesforce, Uber, and Hubspot have adopted this approach. c.could be a family name, which can add credibility to the business, or an obscure name that has nothing to do with the actual product. d.The Starbucks logo has incredible brand recognition around the world but it has no relationship to coffee whatsoever, yet its name is unique and memorable. e.Or you could go with an edgy name that carries shock value, such as UK-based clothing retailer, FCUK (which actually stands for French Connection UK). f.Whatever name you choose, make sure it passes the SMILE test first. g.Alexandra Watkins, founder of San Francisco-based Eat my Words, a company that specializes in creating catchy brand names, believes that brand names should make people smile rather than scratch their heads.

product (marketing mix)

describes anything tangible or intangible (such as a service) offered by the company. 1.this includes the features, the brand, how it meets customer needs, how and where it will be used, and how it stands out from competitors. A good way of assessing your product is to look at it objectively—as if you were someone seeing it for the first time. Then ask yourself some critical questions, such as, "Is this product or service suitable for my target market?" and "Is this something today's customers will want or need?" and "How can I market this product better than my competitors?" By repeatedly asking these questions, you will have a better understanding of your product or service and how it fits into the marketplace. -Important questions can be answered using the 4 Ps framework: a.What are the benefits and features of my product? (Product) b.What is the value of my offering, and what are customers willing to pay? (Price) c.How will they know my business exists? (Promotion) d.How will the customers be reached? Where will they buy my product or service? (Place) -marketing mix is constantly changing; you don't simply develop it and move on. By continually reviewing and tweaking your marketing mix, you will be better able to adjust to an ever-changing competitive environment

professional angels

doctors, lawyers, dentists, accountants, consultants, etc.: Who use their savings and income to invest in entrepreneurial ventures. a.They are silent investors, but some of them like consultants may wish to be taken on by the company as paid advisers.

patent

grant of property rights on inventions through the U.S. government. a.It excludes others from making, using, selling, or importing the invention without the patent owner's consent. b.In order to be granted a patent, the product or process must present a new or novel way of doing something, be nonobvious, or provide some sort of solution to a problem. c.In the U.S., the invention must not have been made public one year prior to the filing application date. d.Laws of nature, physical phenomena, mathematical equations, scientific theories, the human body or human genes, and abstract ideas cannot be patented, but possible for a mobile app to be patented if it meets the criteria of the U.S. Patent and Trademark Office (PTO). e.The duration of a patent is generally 20 years from the filing date of application, and it can be costly to file a patent. f. there is no way to protect or patent an idea. Of course, the whole innovation must begin with an idea, but an idea must be turned into an invention before it can qualify for patenting. This does not necessarily mean creating a prototype, but you must be able to meaningfully describe the invention, how it is made, and how others could use it.

business angels

have different objectives and styles of operating. They range from silent investors to those who want full involvement in the operations of the company, either as a consultant or as a full-time partner in the business.

entrepreneurial angels

have successfully started and operated their own businesses: Which they may or may not still be running. a.They generally have a steady flow of income that allows them to take higher investment risks. b.They are the most valuable to early ventures as they are knowledgeable about the industries in which they invest and from personal experience are in a great position to advise and mentor entrepreneurs.

Employer Identification Number (EIN)

number assigned to employer for identification by the IRS. Before you hire your first employee, make sure you get an _______ _________ __________ You will need to use this on documents and tax returns for the IRS; it is also necessary when reporting employee information to state agencies. There is also a requirement to register your newly hired employee with your state directory within 20 days of the hire date; it is a regulatory requirement.

branding

process of creating a name, term, design, symbol, or any other feature that identifies a product or service and differentiates it from others. Your brand is a promise to your customers, letting them know what they can expect from your offering and how it differentiates you from among your competitors. The face of your brand is your logo, which should be integrated into your website, packaging, and promotional materials to communicate your message. -Ppl more likely to invest in brands they have an emotional connection to, are trustworthy, worth spending money on, fashionable, and adept at meeting their needs.

benefits of getting a lawyer who understands startups well

provide legal counsel but will also add value for many years as your business grows. They will have experience with early-stage startups, know the industry, and be up front with their fee structure. They may also have an impressive list of contacts, which can be very useful in connecting you with investors and advising you on fundraising. What's more, a good lawyer will be a person you can actually relate to. The best way to hire legal experts is the same way you would hire an employee

entrepreneurial marketing

set of processes adopted by entrepreneurs based on new practices to gain traction and attention in competitive markets. actually requires fewer resources than traditional marketing. Word-of-mouth is now called social media marketing and if one person says something about your business or product, thousands if not millions hear about it almost instantaneously. EM is not about chasing sales; it's about chasing reputation, credibility, and buzz; the sales follow. Methods have moved mostly online; the web has changed the rules of marketing. -main features of ___ _____: Innovation, risk taking, resourcefulness, value creation, and proactivity

second- or later-stage financing occurs when ____

the business grows and starts to take in more revenue, entrepreneurs

equity financing

the sale of shares of stock in exchange for cash: Although bootstrapping may be good to begin with, as the company begins to grow and show potential entrepreneurs begin to look at the possibility of ____ ______ gives entrepreneurs the capital, which are financial resources to run the business including producing and selling the product. a.Sometimes just raising the finances becomes a full-time job for the founders. ● The rule is to secure a better deal with investors at a later stage: Generally, avoid seeking investment for as long as possible to give your enterprise time to grow and build value so that you can secure a better deal with investors later on. Balancing growth while preserving equity = a challenge At times, the competition will drive you to seek investment quickly or some businesses are more capital-intensive than others. For example, if you have proprietary technology that has a proven market but you need additional funds to get the next version of the technology produced to reach a larger market, then ____ _____ is a logical next step.

post-money valuation definition

the value of a company AFTER an investment has been made.

Bridge Financing is used _____

to cover the expenses associated with the IPO

how entrepreneurs can value their companies

-usually value their companies based on its potential in the market: Entrepreneurs usually value their companies based on the firm's potential in their chosen market; the easiest way is to check out similar companies operating in the same industry. -a.Sites such as BizBuySell and BizQuest will help you to find out how much businesses are worth in your industry and how much they have been valued at when they have reached profitability. b.A company that's currently valued at $10 million at profitability after 5 years could mean that it was a fraction of that price at the startup stage. c. You can also seek advice from lawyers and accountants who can help to determine the market rates for companies like yours. d.Overvaluing is dangerous: it puts investors off and puts the company and the entrepreneur's reputation at risk. Entrepreneurs typically have their valuation calculation and investors have their own. The true valuation falls somewhere in the middle!

how to build a brand

1. Choose a name: A successful brand all starts with a name. 2.Design a logo: Your logo is the gateway to your overall brand image. Triggers people's emotions and perceptions of the brand 3.Spread the word: Get your brand out into the world. 4. know your customer 5.become your brand 6. always deliver on your brand promise 7. be consistent w your brand

marketing tools: building a fan base

According to cofounder of Wired magazine Kevin Kelly, building a lasting, sustainable business is based on 1,000 true fans True fans are people that will buy anything you produce: They will wait in line for your products; drive for hours to attend of your events; and preorder your next product without even knowing what it looks like. a.If you added only one true fan a day, it might only take a few years to reach 1,000, which is more realistic than trying for half a million fans. b.A thousand fans paying $100 for your product or service on an annual basis amounts to $100,000. c.Given that there are over 7 billion people in the world, capturing 1,000 of them is much more achievable. d.Entrepreneur and blogger Yaro Starak is a good example of someone who successfully garnered 1,000 true fans. e.He started his blog Entrepreneurs-Journey.com in 2005, with the intention of using it as a platform to share his own experiences of being an internet entrepreneur (Starak used to run a proofreading business and a card game website). f.Yet, over a decade later, it has now become his main source of income, generating over a million dollars. Megabrands such as Levi and Gap have slowed down or are on the decline: Many megabrands such as Levi, Gap, and Lee Jeans have either slowed down or are on the decline; this phenomenon is known as the long tail theory, first introduced by journalist, Chris Anderson. It means the focus is shifting from mainstream products and services offered by big brands, positioned on the vertical axis at the head of the tail, toward a wide variety of smaller niche markets at the horizontal axis at the bottom of the tail. Because the Internet has given rise to unlimited numbers of retail sites offering easily accessible, cheaper products

common IP traps experienced by entrepreneurs: Publicly Disclosing Your Invention

Disclosing your new product or service in public before you have filed a patent application means in most countries you will not be permitted to patent it at all. a.A professor at Imperial College London, Robert Perneczky, discovered a protein that had the potential to significantly improve the chances of spotting the onset of Alzheimer's disease. b.However, Perneczky failed to qualify for a patent because of a detailed article he had written about his discovery that had been published in an academic paper. Because Perneczky's idea had been disclosed to the public, he was prevented from patenting it. File a provisional patent application: One way of protecting your IP that works in the United States is to file a provisional patent application before you make your idea public. This secures your rights as the inventor and gives you 12 months to complete the research and develop your idea into a working prototype. You need to file a full patent application within 12 months: You will have to file a full patent application as soon as the 12 months is up; otherwise the knowledge it holds will become publicly available. Also, your invention cannot have changed substantially from the date of the initial filing. Bear in mind that the United States has changed from being a "first to invent" to a "first to file" country--If you fail to file you might lose out: If an inventor waits too long to file a patent application, he or she may lose out to someone else who is working on a similar innovation.

worker rights: equal employment opportunity

Employers in the U.S. need know that federal laws prohibit discriminating against employees on the basis of race, sex, creed, religion, color, national origin, or age. Workers with disabilities are also protected, though employers can refuse to hire on the basis of a disability if it prevents the worker from fulfilling job tasks. Some states forbid discrimination on the basis of sexual orientation. a.The global rights index provided by the International Trade Union Confederation (ITUC) shows that while Austria, Finland, Netherlands, Norway, and Uruguay score the highest for equality at work, the level of inequality in other countries is rising. b.It showed that countries like China, Belarus, Egypt, Colombia, and Saudi Arabia are among the worst for equal opportunities and workers' rights.

common IP traps experienced by entrepreneurs: Failure to Protect IP in Global Markets

Entrepreneurs hoping to sell in different territories need to get the right legal advice: And carry out due diligence before even starting their business, in order to understand how to navigate any obstacles up front. They can face some serious legal problems along the way if they fail to do so: a.For example, in China, Apple Inc. lost a court battle with Chinese technology firm Proview International Holdings, which claimed it owned the iPad trademark in the Chinese market. The case seriously threatened Apple's ability to sell the iPad in China. Apple finally agreed to pay $60 million in 2012 to settle the two-year dispute.

common IP traps experienced by entrepreneurs: Inability to Determine Originality

Entrepreneurs often build on existing products to create their innovations, tools, and techniques. The outcome must be both novel and useful for IP protection: If it is to qualify for IP protection. Products and services must contain enough features to improve the way they are used: Ensure that products and services contain enough features to significantly improve the way they are used by others with the intention of solving a problem. a.When Jeffrey Percival and his research team developed the Star Tracker 5000 (a device that determines a space rocket's altitude and tracks stars) it was not original enough, as it was formed using standard components. b.To make his product more original, Percival added an algorithm that rapidly transmits digitized images. c.By enhancing the features of the product, Percival was able to license it to NASA for its space missions.

T/F: legal costs for all startups are the same

F; Startup legal costs vary, depending on the type of business you are setting up. In general, a business attorney will charge at least $200 per hour, but a simple startup may only need 1 or 2 hours of work to draw up the required documents. Some legal practices provide a free 1-hour consultation for new clients and/or payment plans for startups. Before you decide on a lawyer, do some research and compile a list of four or five possible candidates, their qualifications, and their rates

main differences between entrepreneurial and traditional marketing

For the entrepreneur, marketing and sales are not separate units. a.Until there is enough traction and enough customers, marketing and sales are very much about finding, acquiring, and keeping customers. b.It focuses on building trust, finding out customer preferences, and creating ongoing value c.entrepreneurial marketing requires an interactive approach. Entrepreneurs create a dialogue and build long-term relationships, adapting the business to meet their customers' needs can do this bc interacting directly w/ customers on socials and giving them important info. to paraphrase Seth Godin, the goal is not to find customers for your products, but to find products for your customers. Also allows the ent to highlight the company's strengths while showing ways the product adds value d.Maine-based surfboard manufacturer, Grain Surfboards is an excellent example of a company that does a great job engaging its customers. It applies boatbuilding techniques to make wooden, eco-friendly boards.Not only does the website share the history of wooden board-building, but it provides details of how the boards are made; something that most companies are wary of for fear competitors will steal their ideas. However, sharing information to educate is one of the best ways of building customer loyalty and growing your business. its fans help spread the company's ideas through their own social media, which has helped to cement its number one position in the marketplace. h.Thanks to its innovative and entrepreneurial approach to marketing, Grain Surfboards has achieved something that would have been considered impossible in the past: a way to reach its buyers directly without investing in expensive ads, hiring teams of salespeople, or begging the media to showcase the company. Entrepreneurial marketing tools are not just reserved for entrepreneurs; more and more large, established companies are using same tools in different ways to draw attention to their products. Although these industry giants may have a bigger budget and enormous resources, that should not stop new entrepreneurs from waging their own successful campaigns. these tools level the playing field: With a bit of knowledge, imagination, and ingenuity, entrepreneurs can

SCORE Association

a group of businesspeople who volunteer their services to small businesses through the Small business administration. Business counselors throughout the U.S. and its territories, who serve as counselors, advisors, and mentors to aspiring entrepreneurs and business owners. incredibly useful in finding out the different legal requirements for your venture. Armed with this information, you will have a better chance of finding the right legal help when the time comes.

C Corporation (def + pros and cons)

a separate legal entity created by the state government and owned by an unlimited number of shareholders. The corporation is legally liable for its actions: This means that the corporation is legally liable for its actions; the most money shareholders can lose is their personal investment: the value of their stock. Another advantage is transferable ownership: Another advantage is transferable ownership, which means it can issue shares of stock to investors in exchange for capital. It benefits from continuous existence: Because the corporation is a separate entity, it benefits from continuous existence, which means it will still survive after the demise of its owners allowing it to plan for the future. In reality, corporations normally are not very time-consuming or expensive to set up. Many corporations are owned by only one or a few stockholders who elect themselves as directors and officers. An alleged disadvantage is double taxation: The corporate profit is taxed twice—first on the profit it makes, and second, the shareholders are taxed on the dividends. Corporate profits are often paid out to the owners: In a startup, corporate profits are often paid out to the owners as additional compensation (which means that corporate tax is eliminated on nonexistent corporate profits). Otherwise these profits are often retained to fund the growth of the startup, thus eliminating any current tax on dividends The corporate tax is calculated at a rate without adding the additional income of stockholders and their spouses: The corporate tax is calculated at a rate without adding the additional income of stockholders and their spouses, which means there is no double taxation really.

seed stage financing

a stage of financing in which small or modest amounts of capital are provided to entrepreneurs to prove a concept

Startup Financing

a stage of financing in which the money is provided to entrepreneurs to enable them to implement the idea by funding product research and development

unicorn

a tech startup that has received a $1-billion-dollar valuation. in the venture capital industry, originally coined by Aileen Lee, founder of Cowboy Ventures, refers to any tech startup company that has received a $1-billion-dollar valuation as determined by private or public investment. - are rare, but becoming common: While unicorn startups are rare (there is a less than 1% chance of startups becoming one after raising venture capital), they are becoming more common. Example: Juul Labs, Epic Games, DoorDash, Roblox, Discord

building a brand: spreading the word

a.Social media is a great way for cash-strapped entrepreneurs to spread the word about their brand. b.Keep track of your online followers, and listen to what they have to say about your brand. c.Engage with your followers, be responsive to their needs, and reward them for following your brand.

why important to choose the right kind of legal structure for your company

affects the authorities you need to notify regarding your business, tax and other contributions, records and documentation you need to maintain, and how decisions are made about the business. Depending on your situation, there are several structures to choose from (vary by state and country), and it is important to understand the differences among them. If, after research, you are unsure which one suits your business, paying a few hundred dollars for a legal consultation can be a worthwhile investment.

trade secrets

any confidential information that provides companies with a competitive edge and is not publicly known or accessible, such as formulas, patterns, customer lists, compilations, programs, devices, methods, techniques, or processes. a.Famous examples of trade secrets allegedly include the recipe for Coca-Cola's beverages, KFC's ingredients, and the formula for WD-40. b.Companies can protect their trade secrets by having their employees and contractors sign nondisclosure, work-for-hire, and noncompete agreements or clauses.

trademark (and service mark)

any word, name, symbol, or device used in business to identify and promote a product (service mark = counterpart for service business). . Although the law affords some limited protection to trademarks without registration, a federally registered trademark generally lasts 10 years and, if still in use, can be renewed every 10 years thereafter. Trademarks and service marks are the legal basis of most branding campaigns a.Under Armour, the third largest sports the U.S. has sued apparel company Armor & Glory, fishing apparel firm, Salt Armour, shock-absorbing shorts retailer, Ass Armor, and sports-drink company Bodyarmor Superdrink for trademark infringement due to the use of "armour" or "armor" in their company names bc "confusion or deception in connection of the 2 companies.

Benefit Corporation (B Corp) (def + pros and cons)

certified by the nonprofit B Lab, which ensures that strict standards of social and environmental performance, accountability, and transparency are met. It ensures that the for-profit company fulfills its social mission: B Lab certification ensures that the for-profit company fulfills its social mission. It is available to businesses operating as any one of the business entities mentioned above (not just corporations). In addition to the B Lab certification, many states have enacted statutes creating a new form of business entity also called a B or Benefit corporation that is not subject to the fiduciary obligations of other business corporations. Most business corporations must justify all their actions as contributing ultimately to increased shareholder wealth On the contrary, it declares in its charter one or more social benefit goals: A statutory B corporation declares in its charter one or more social benefit goals, which protects it and its managers from lawsuits from shareholders claiming that the company is spending more time or resources on social issues than on maximizing profit. A B-Corp's managers need to balance between profit and social benefit goals: The difference between a B-Corp and a corporation is that a B-Corp's managers are responsible to ensure a balance between pure profit and declared social benefit goals.

Limited Liability Company (LLC) (def + pros and cons)

combines the pass-through taxation aspects of a partnership with the limited liability benefits of a corporation without being subject to the eligibility requirements of an S corporation. Profits and losses are reported on individual tax returns: Profits and losses are reported on individual tax returns (double taxation N/A) and there is potential tax sheltering from losses while personal assets are protected. Modern limited liability company statutes allow LLCs to have continuous existence, similar to corporations. And just as with partnerships and corporations, it is advisable for the LLC's owners (called "members") to enter into ownership agreements, often contained within an operating agreement that serves the combined purposes of bylaws and stockholder agreements in corporations. LLCs are rapidly replacing S corporations as the entity of choice for many startup businesses.

S corporation (def + pros and cons)

corporation whose stockholders elect special treatment for income tax purposes; it must be a U.S. domestic corporation to qualify as an S-Corp. for all other purposes identical to a C corp. It must have no more than 100 shareholders: It must have no more than 100 shareholders, who in most cases must be individual U.S. citizens or legal immigrants (not corporations, partnerships, or trusts) all of whom must own only one class of common stock (ordinary shares). Unlike the C-corp, the S-corp does not have to deal with double taxation, as there is only one level of tax to pay. Income and losses are passed through to the company's shareholders' tax returns: Like a partnership, income and losses are passed through to the company's shareholders' tax returns and taxed at individual rates, after a 20% deduction. Losses will act as a "tax shelter": This is attractive for corporations expecting to lose money in the short term, as losses will offset other income earned by shareholders, acting as a "tax shelter." a.S-Corps often consider a switch to C-Corp because their growth may be limited by the restricted number and types of shareholders permitted. b.Another reason is that an S-Corp's future retained earnings would be taxed to stockholders as so-called "phantom income"—earnings are taxed but not received by the individual.

price(marketing mix)

covers the amount that the customer is expected to pay for the product, its perceived value, and the degree to which the price can be raised or lowered depending on market demand and how competitors price rival products. Make sure to continually examine pricing structure to make sure appropriate for target market and also frequently look at competitors' pricing

micromanagement angels

entrepreneurs who have achieved success in their own companies: And want to be involved in the ventures they invest in. a.Many of them demand directorship or a position on the board of advisors and expect regular updates on the running of the company. b.They will intervene in the running of the business if it does not perform to their expectations. They will want to know your level of expertise in your chosen area of business, the extent of the market opportunity for your product or service, the estimated valuation of your business, the current state of your finances, and your expenses and projections for the future.

marketing mix

framework that helps define the brand and differentiate it from the competition + crystalize the offering and how to take it to market. The four Ps: Product, Price, Promotion, and Place. Each should be considered in relation to the others for the best overall ent marketing strat.

downsides of IP theft

has negative impacts on businesses: IP theft costs the United States between $225 and $600 billion every year. It has a huge negative impact on legitimate businesses. a.Imagine you launched your T-shirt business with a trademarked brand, and sales are really taking off, but a few months later you come across another website set up in a different country that is selling counterfeit versions of your T-shirts for a fraction of the price. b.You start losing sales, your brand becomes tainted, investors think twice about investing in your company, and your reputation becomes damaged: all because someone has stolen your unique trademark and copied it for financial gain. Global online piracy is rife in the area of digital content: Recent statistics show that global online piracy is rife in the area of digital content such as movies, music, software, games, and e-books. Most counterfeited items: nike, rolex, louis vuitton IP rights are territorial: IP rights are territorial, which means that while your rights may be protected in the United States, they are not necessarily protected in a different country. Entrepreneurs who are seeking to sell their innovations abroad must first conduct a search to ensure their company's name and brand can be used in the foreign country. They must register for local IP ownership within that country or extend US registrations to foreign countries at the beginning of the process. Good to seek proper IP counsel to protect IP abroad. Don't rely on your patent for business strategy: Finally, don't rely on your patent for business strategy; build customer relationships, promote your trademarked brand, provide quality, and implement rapid innovation to guard against the effects of IP theft.

intellectual property definition (+ rights)

intangible personal property created by human intelligence, such as ideas, inventions, slogans, logos, and processes. legally protect inventions (includes copyright, trademark, trade secret, and patent protections for physical and nonphysical property that is the product of original thought and that can, in some sense, be owned). IP is essential to the survival of small businesses/startups, regardless of industry. "backbone of innovation all over world" - significant role in economic growth and development. -IP rights are the basis for every single business: without them, entrepreneurs would be less likely to risk bringing new innovations to the marketplace; investors would not invest; and customers would end up with less choice. h. Fewer businesses means more unemployment and less economic growth.

General Proprietorship (def + pros and cons)

involves two or more people who have made a decision to manage and share in the profits and losses of a business. Relatively low cost and straightforward. Taxes are paid at your personal income tax rates: As each partner reports profits and losses on individual tax returns rather than the corporate level, a process called pass-through taxation, taxes are also paid at your personal income tax rates (after the previously mentioned 20% deduction). Although partnership arrangements can be quite flexible, it is wise to have a formal agreement drafted by a legal expert to lay out the terms of the partnership. Typically, this agreement will cover the percentage of shares you are each entitled to, your individual rights and duties, and the consequences of one of you leaving the business for any reason Each partner is still personally liable for the company's financial obligations: Running the business with a partner can be a great asset, but like the sole proprietorship legal structure, in a general partnership each partner is still personally liable for the company's financial obligations. a.This means that if one partner is responsible for running the company into the ground, the other partner will still be liable. b.If the offending partner cannot pay, the other partner would be liable for the full amount. A high level of trust is needed between two partners: It is crucial therefore to have a high level of trust before entering into a partnership.

benefits and downsides of IP

is a valuable asset: If the IP is usable and owned by the startup, investors will be more comfortable in investing, and it can increase the valuation of the new venture. Protecting your IP also prevents competitors from trying to copy your products and services. provides opportunities for others to invest or collaborate and allows the founders to license, exchange, or even franchise their IP. downside in employee contracts: complicated if you start working to create IP for a venture while still employed at another or when you have just left a job, as per contracts and the law of most jurisdictions, rights to inventions that substantially relate to the employee's old job description belong to the company. a startup may use an independent contractor or a third party to help develop an innovation or trademark. Without a formal agreement in place, that third party may have a right to a portion of any IP that results from her contribution, even though she may have been paid to create it. fundamental in the early stage of a startup that you seek legal advice from an IP attorney and review employee contracts and applicable law to determine whether anything might prevent you from getting IP ownership. hackathon IP issues: When organizations hold internal hackathons whose participants are their own employees, they automatically own the IP of whatever creative innovations arise. However, taking part in an external hackathon is not so clear-cut, especially if you are already an employee at a tech organization. Developing a proof-of-concept prototype product at a hackathon and then disclosing it could destroy any chance of patenting it in the future. Even worse, with so many people involved, it is not clear who can claim IP ownership of the innovation. Similar issues can arise in the context of group projects in college classwork

USPTO (United States Patent and Trademark Office)

is the federal agency for granting U.S. patents and registering trademarks. provides a pro bono legal program to support entrepreneurs

nondisclosure agreement (NDA) or confidentiality agreement

legal contract that outlines confidential information shared by two or more parties. Means neither party can share that info w/ competitors, general public, anyone else outside the agreement a.Adam Bornstein, founder of marketing and branding agency Pen Name Consulting, used a basic online file he found online, which didn't cover the right information about company and ended up losing $30,000 in potential revenue when work was stolen. Cost for NDA that protects company/ideas outweighs price of someone stealing business from u. However, NDAs should not be used when you just have a half-baked idea with no resources; if you place an NDA in front of someone, especially an early investor, they may not sign it. NDAs are essential for entrepreneurs to protect against the growing threat of IP theft: While you don't need an NDA in the early stages, when the times comes, NDAs are essential for entrepreneurs to protect against the growing threat of IP theft.

brand strategy

long-term plan to develop a successful brand: it involves how you plan to communicate your brand messages to your target customers.

guerilla marketing

low-budget strategy that focuses on personally interacting with a target group by promoting products and services through surprise or other unconventional means. Also used by major companies. successful guerrilla marketing campaign enhances the customer's perception of value, inspires word of mouth, and increases sales. a.The strategies are many: email, interactive poster campaigns, advertisements on cars, T-shirts, street branding, characters in costume, flash mobs (where a large group of people seemingly come out of nowhere to perform an act in a public place), projecting images/videos/messages in public areas through laser or beamer, and even YouTube videos that can go viral in minutes. b.To heighten awareness of its company and prove its expertise, global blender provider, Blendtec, posted a video on YouTube called "Will it Blend?" where viewers were asked for suggestions for items to blend.The campaign was an instant hit, gathering six million views in six days.Since its launch, Blendtec has uploaded over 150 videos showcasing everything from blending marbles, glow sticks, and Bic lighters to Apple products, golf balls, and magnets. -Snow branding: making imprints of product name and brand during night on snow-covered places can be a creative and affordable way to reach your desired target market, but it has its limitations. To conduct a successful Guerrilla campaign, you need to understand your target market and where the high traffic exists: subway, mall, university campus, etc. also need to get the timing right Guerrilla marketing can also be difficult to measure as to whether the good feeling or memory you're giving your customer is going to translate into sales. Monitoring the media (newspapers, radio) for mentions of your campaign and taking the time to scout blogs, forums, and social networks to see who is talking about your company and your product is a good start in measuring the campaign's impact on sales. Lastly, you need to have a good sense of the community and any legal, social, or moral restrictions that may cause a negative reaction to a campaign. a.In a classic example of guerilla marketing going wrong, fruit drinks company Snapple came under fire when it attempted to create the world'

Benefits and advantages of convertible debt issuance

main advantages of issuing convertible debt is that it removes the need for valuation—in other words, you don't have to spend lots of time trying to figure out how much your company is worth to establish a stock share price. Valuation becomes easier after the first round of financing when there is more data and information to work with. Another benefit is that if your company succeeds, your investors may be entitled to a discount off the share price or bonus when converting the debt into equity, which can be an incentive for investors to commit. If the discount is too low, investors may not commit; if it is too high, the investor may take this into account when pricing the stock, which may end up coming out of your own shares. -Finally, by issuing convertible debt, you the entrepreneur will remain the majority stockholder, with no interference from your lenders. Depending on the terms, they will have no control, no voting rights, nor any say over how you run your company.

marketing through social media

markting tool that can launch businesses into new levels of success When used properly. a.Artist Iris Scott is on track to exceed one million dollars in revenue thanks to her creative use of social media to market her art. She engaged in communication with her followers by sharing her art on Facebook and Instagram, taking on board their suggestions, and offering her works for prices as low as $50 to start with. With follower support, Scott decided to try finger painting which created a real spike in interest and more demand for her works. Several years after she started to market her art on social media, some of Scott's paintings now hang in the Filo Sofi Arts Gallery in New York, one of which has a price tag of $45,000. Social media is also a valuable way of following market trends, finding new employees, and building and maintaining relationships with customers. Also good way to find potential stakeholders Popular sites provide ways to connect with experts in the field: Sites like Twitter, LinkedIn, Facebook, Instagram, and YouTube all provide ways to connect with experts in the field, or fellow entrepreneurs: anyone who can help you develop, build, and grow your venture. May become self-selected stakeholders or part of your founding team

requirements for angels to be able to invest in startups

must be accredited investors, which means they earn an annual income of more than $200,000 or have a net worth of more than $1 million.

Limited partnership and limited liability partnership (def + pros and cons)

pass-through tax entity with either general partners, who manage the business but have personal exposure for its liabilities or limited partners, who are silent investors but are protected from liabilities. has been largely replaced by the limited liability company. It does not prohibit members from involvement in management: It does not prohibit any member from getting involved in management. It grants limited liability to all members: In exchange for registering with the state and paying an annual fee, it gets a form of limited liability for its partners. a.The partners are still not protected from the consequences of wrongful acts committed by themselves and in some cases by their employees. b.This form is popular generally only among firms of licensed professionals who want to avoid classifying their partners as employees. This means that these employers do not have to comply with employment laws and regulations (such as mandatory or enforced retirement) with regard to their partners.

angel investors

ppl who Use their own money to provide funds to young startup private businesses run by entrepreneurs who are neither friends nor family. more formal financial capital 1.They enjoy the experience of mentoring others and the personal fulfilment of nurturing a new business and watching it grow. 2.It is generally thought that the typical amount invested by angels can range from $25,000 to $100,000. 3.They look for opportunities in young startups that can be expected to return 10 times their investment in five years.

copyright

protection to the creators of original works: In literature, music, drama, choreography, art, motion pictures, sound recordings, and architecture. a.Tech entrepreneurs should be aware that computer code is classified as a literary work for purposes of copyright protection. b.Copyright does not protect ideas; it protects the tangible expression of the idea, such as in written materials or recordings. c.Generally, U.S. copyright lasts for the duration of the author's life plus 70 years. d.Copyright infringement cases can prove costly: 2018 Wixen music publisher brought a $1.6 billion lawsuit against Swedish music streaming platform, Spotify, for copyright infringement. Wixen alleged that Spotify had used thousands of songs from its artists without a proper license. g.Some limited uses of copyrighted material w/out permission of owner are allowed called "fair use"; it must be shown it is for a noncommercial purpose, constitutes only a small portion, and won't have a negative effect on the market. Fair use is a "gray area" in U.S. law; there are no absolute rules or boundaries around what is and is not fair use.

Sole Proprietorship definition + pros and cons

refers to a person who owns a business but has not formed a separate entity to run it. The business is completely managed and controlled by you: It means the business is completely managed and controlled by you, the owner, and that you are entitled to all the profits your business makes. You are exposed to all the risks and liabilities: However, it also means you are personally exposed to all the risks and legal responsibilities or liabilities of the business. Also held liable for any debts the business incurs. Can cause major financial pressure and risk having to sell your person assets if you can't repay a loan or could even be driven to bankruptcy A common choice of business structures: Sole proprietorship is the most common choice of business structures because many entrepreneurs are not well versed in the legalities. a.eBay was a sole proprietorship owned by founder Pierre Omidyar for three years before he joined with other partners. -Main reason why it is most common choice of business structures: forming a sole proprietorship is quite simple. In many jurisdictions and industries, there is no legal filing at all to set yourself up as a business owner. If your business is in an industry and/or a location where licenses or permits are necessary, you may just need to pay a nominal fee to obtain the right license or permit. Because you and your business are treated as one entity, you have to file only one personal tax return outlining your income and expenses. (You do, however, have to use a separate form, Schedule C, to report your business income.) The business's income is added to whatever other income you (and your spouse) may have and is taxed at your personal income tax rate after a 20% deduction is allowed.

unemployment and worker's comp

register with your state's labor department to pay unemployment compensation taxes, Which provide temporary relief to employees who lose their jobs. Depending on business size, most states will require you to register for workers' compensation insurance to protect against any work-related injuries (some states make exceptions for very small businesses).

marketing for entrepreneurs still involves _____

showing how a product meets customer needs, pricing the products in a way that accurately represents the value perceived by the customer, promoting products in innovative ways to reach customers, implementing delivery of the products, and maintaining the relationship with the customer even after the sale is made. -Getting all these elements to balance is tricky. It requires a lot of research and commitment to ensure your product is in line with your marketing vision. -Hiring the right people with the right skills and abilities to market your products effectively is at the core of any marketing strategy. Be vigilant in monitoring what other people think about you, especially on social media, and be sure to make the changes you need to enhance interaction with your target customer because positioning is at the heart of branding.

When it comes to fundraising, most investors will expect to see an approximate valuation of your business so that

so that both the entrepreneur and investor can negotiate the equity percentage and division of ownership. The valuation of a seed-stage, startup, or early-stage company is based on the anticipation of future growth

compensating employees

startup's need for employees outstrips the company's ability to pay in cash for additional employees. Entrepreneurs often come up with alternative ways to compensate employees: When faced with this resource constraint, entrepreneurs often come up with alternative ways to compensate employees such as giving them flexible hours, additional days off, and small perks such as gift cards or a lunch paid for by the company. Compensation in the form of equity: Entrepreneurs often attempt to obtain services from employees and contractors in exchange for a share of the business. raises two legal issues. 1. Issuance of shares to employees and contractors risks noncompliance with securities laws. Although the workers are not investing cash in the business, their time and labor is considered an investment under the law, triggering the protection of securities regulation. Need right process in place when giving shares to employees 2. Income tax is triggered any time an individual receives any form of property in exchange for performing services, not just when he or she is paid in cash. Therefore, receipt of shares as compensation can come w/ unexpected tax bill 3. If the shares are subject to a vesting schedule, the problem becomes magnified as the tax may not apply until the shares have vested (and have increased in value). Same prob when founders' stock subject to vesting schedule bc tying retention of stock to performance of services 4.There are tax techniques available to mitigate and eliminate this unwelcome tax issue, so be sure to consult competent tax professionals before agreeing to pay compensation in the form of equity. Unpaid Internships: 1.The Fair Labor Standards Act provides a minimum wage, Overtime pay, and other protections to most workers; putting an intern to work in your business might require compliance with these requirements. 2. The U.S. Department of Labor adopted a "primary beneficiary" test: In 2018, the U.S. Department of Labor adopted a "primary beneficiary" test, allowing this practice if the benefits of the internship flow primarily to the intern and not to the employer. the Department of Labor has published a list of seven factors it will consider in determining primary beneficiary

not for profit business (def + pros and cons)

tax status available to corporations, LLCs, trusts, and other structures that meet specific criteria set out in the Internal Revenue Code. -not technically a different form of business entity. It is a tax status available to corporations, LLCs, trusts, and other structures All not-for-profits are exempt from income tax on their profits: All not-for-profits are exempt from income tax on their profits (so-called "surplus"), and some are eligible to receive tax deductible donations. Only those companies described in Section 501(c) of the tax code are eligible; these include charitable organizations, business leagues, civic leagues, labor organizations, chambers of commerce, social clubs, fraternal organizations, cemetery companies, and the like. Those also eligible to receive tax-deductible contributions are the smaller list of organizations in Section 501(c)(3), including religious, educational, scientific, and charitable institutions None of the organization's earnings can benefit individuals: One important condition is that none of the organization's earnings are permitted to benefit individuals. They cannot have shareholders: Although not-for-profits can pay reasonable compensation to employees, they cannot have shareholders; all profit must be reinvested in the business.

pre-money valuation+ basic idea how calculated

the company's value before it receives outside investment. The pre-money valuation is simply the post-money valuation less the investment

why we need to market ourselves

we have fewer than 20 seconds to make a good first impression and fewer than 90 seconds to engage our audience in our ideas. How you market yourself really matters. •55% of the message is conveyed through facial expression •38% of the message is conveyed through tone of voice •7% of the message is conveyed through words The nonvisual dimension is important: and you should be aware of the different sensory learning styles of your audience in order to build a rapport. a.Some are visual learners, while others are auditory or kinesthetic learners. b.A slide show with images and describing your ideas clearly will appeal to auditory learners. c.Bring a prototype of your product along to give your audience something to touch and feel.

enthusiast angels

wealthy retired or semiretired entrepreneurs or executives who often invest their personal capital in startups as a hobby. a.They tend to invest in several different companies and rarely take a role in active management.

place (marketing mix)

where the product is distributed to your target market: Trade fairs, retail stores, catalogs, mail order, online, and so forth. Wherever you choose to sell, it is essential that your customers receive the best buying information on your product or service to help them make a buying decision.

how do investors value startups

•Based on your experience and past success •Based on usage of your product or service (even if not profitable, want to see if scalable if given right resources) •Progress with business, e.g., having a distribution channel already set up •popularity of the industry you are in at the moment. Top 3 industries invested in by VCs were internet, healthcare, mobile, telecomm (in general tech popular). Negotiate to decide on a valuation: It often takes a lot of negotiation before entrepreneurs and investors agree on what they both consider a fair valuation of the company.

how to find an angel investor

•Sites like AngelList. •Referrals and unsolicited idea submissions. (some only accept referrals. start w ppl you know first) •Tap your network (and think about who could provide you with an introduction to an angel) •Having a professional vouch: Among those who can provide you with referrals to angels are attorneys, other entrepreneurs, work colleagues, university faculty, VCs, and investment bankers

Splitting the Ownership Pie

•investment to enhances growth: Pie becomes bigger. if does well, smaller slice of bigger pie gets larger than original pie •Dividing the pie after investment can cripple a startup team: splitting the pie starts before investment if there is a team involved which is tricky because you are splitting what doesn't yet exist. Founders agree to a % of ownership that of something that does not exist. a. Entrepreneur Mike Moyer who wrote Slicing the Pie warns against splitting the pie before you build the company and also warns against dividing up the pie after you build the company, which often leads to internal battles that can cripple a startup team. b.Moyer suggests creating a process for allocating equity based on contribution including time, money, intellectual property, and other resources, which will help later when formal financing is warranted.