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