ENT 4024 Quiz D

other federal and state programs

- Economic Development Administration (EDA) - Department of Housing and Urban Development - U.S. Department of Agriculture's Business Program and Loans - Small Business Innovation Research Program - Small Business Technology Transfer Program - State and Local Loan Development Programs

what venture capitals look for/what they take

- competent management - competitive edge - growth industry - viable exit strategy - intangible factors

other methods of financing

- factoring accounts receivable - leasing - ROBS - merchant cash advance - peer-to-peer leading - loan brokers - credit cards

International Trade Agreement

- World Trade Organization (WTO) - North American Free Trade Agreement (NAFTA) - Dominican-Republic-Central America Free Trade Agreement (CAFTA-DR)

initial public offering (IPO)

a method of raising equity capital in which a company sells shares of its stock to the general public for the first time

revocable trust

a trust that a grantor can change or revoke during his or her lifetime

flexplace

a work arrangement in which employees work at a place other than the traditional office, such as a satellite branch closer to home or at home

job sharing

a work arrangement in which two or more people share a single, full-time job

job description

a written statement of the duties, responsibilities, reporting relationships, working conditions, and methods and techniques as well as materials and equipment used in a job

expat entrepreneur

an entrepreneur who keeps citizenship in his or her own country but lives and runs their business on foreign soil

situational interview

an interview in which the interviewer gives candidates a typical job-related situation (a job simulation) to see how they respond to it

capital

any form of wealth used to produce more wealth

revolving loan funds

community programs that combine private and public funds to make loans to small businesses, often at below-market interest rates

bartering

exchange of goods and services for other goods and services

hiring winners

- look inside the company first - look for employees with whom your customers can identify - encourage employee referrals - make employment advertisements stand out - use multiple channels to recruit talent - recruit on campus - forge relationships with schools and other sources of workers - recruit "retired" workers - consider using offbeat recruiting techniques - offer what workers want

what investment bankers look for

1. consistently high growth rate 2. scalability 3. strong record of earnings 4. a solid position in a rapidly growing industry 5. a sound management team with experience and strong board of directors 6. 3-5 years of audited financial statements that meet or exceed Securities and Exchange Commission (SEC) standards

Letter of Credit concept (create sound export strategy)

1. recognize that even the tiniest companies and least experienced entrepreneurs have potential to export 2. analyze your product or service 3. analyze your commitment 4. research markets and pick your target 5. develop a distribution strategy 6. find your customer 7. find financing 8. ship your goods 9. collect your money

nonbank sources of debt capital

Asset-based lenders Vendor financing Equipment suppliers Commercial finance companies Savings-and-loan associations Stockbrokers Credit unions Private placements Small business investment companies

sources of equity financing

Personal savings Friends and family members Angels Crowdfunding Accelerators Venture capital companies Corporate venture capital

term loan

a bank loan that imposes restrictions (covenants) on the business decisions an entrepreneur makes concerning the company's operations

manufacturer's export agent (MEA)

a business that acts as an international sales representative in a limited number of markets for noncompeting domestic companies

export trading company (ETC)

a business that buys and sells products in a number of countries and offers a wide variety of import and export services to its clients

loan broker

a business that specializes in helping small companies find loans by tapping into a wide network of lenders

pay-for-performance compensation system

a compensation system in which employees' pay depends on how well they perform their jobs

buy-sell agreement

a contract among co-owners of a business stating that each agrees to buy out the others in case of the death or disability of one

trust

a contract between a grantor (the company founder) and a trustee in which the grantor gives the trustee assets (company stock) that the trustee holds for the trust's beneficiaries (the grantor's heirs)

bank draft

a document that a seller draws on a buyer, requiring the buyer to pay the face amount either on sight or on a specified date

trade intermediary

a domestic agency that serves as a distributor in foreign countries for domestic companies of all sizes

export merchant

a domestic wholesaler that does business in foreign markets

managing underwriter (investment banker)

a financial company that serves two important roles: helping to prepare the registration statement for an issue and promoting the company's stock to potential investors

factor

a financial institution that buys a business' accounts receivable at a discount

road show

a gathering of potential syndicate members sponsored by the managing underwriter for the purpose of promoting a company's IPO

resident buying office

a government or privately owned operation of one country established in another country for the purpose of buying goods made there

servant leadership

a leadership style in which a leader takes on the role of servant first and leader second

quota

a limit on the amount of a product imported into a country

margin loan

a loan from a stockbroker that uses the stocks and bonds in the borrower's portfolio as collateral

microloan

a loan made through an SBA program aimed at entrepreneurs who can borrow amounts of money as small as $100 and up to a maximum of $50,000

export management company (EMC)

a merchant intermediary that provides small businesses with a low-cost, efficient, offsite international marketing department

merchant cash advance

a method of financing in which a provider prepurchases credit and debit card receivables at a discount

Rollovers as Business Startups (ROBS)

a method of financing that allows entrepreneurs to use their retirement savings to fund their business start-ups

crowdfunding

a method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on specialized web sites and raise money from ordinary people who invest as little as $100

credit union

a nonprofit financial cooperative that promotes saving and provides loans to its members

certified development company (CDC)

a nonprofit organization licensed by the SBA and designed to promote growth in local communities by working with commercial banks and the SBA to make long-term loans to small businesses

stock options

a plan under which employees can purchase shares of a company's stock at a fixed price

cafeteria benefits plan

a plan under which employers provide certain basic benefits and then allocate a specific dollar amount for employees to select the benefits that best suit their needs

bootstrapping

a process in which entrepreneurs tap their personal savings and use creative, low-cost start-up methods to launch their businesses

accelerator program

a program, possibly sponsored by a community or university, that provides a small amount of seed capital and a wealth of additional support for start-up companies

profit-sharing plan

a reward system in which employees receive a portion of the company's profit

line of credit

a short-term bank loan with a preset limit that provides working capital for day-to-day operations

leveraged buyout (LBO)

a situation in which managers and/or employees borrow money from a financial institution to purchase a business and then use the money from the company's operations to pay off the debt

margin (maintenance) call

a situation that occurs when the value of a borrower's portfolio drops and the broker calls the loan in, requiring the borrower to put up more cash and securities as collateral

capital access program (CAP)

a state lending program that encourages leading institutions to make loans to businesses that don't qualify for traditional financing because of their higher risk

family limited partnership (FLP)

a strategy that allows business-owning parents to transfer their company to their children (lowering their estate taxes) while still retaining control over it for themselves

estate freeze

a strategy that minimizes estate taxes by creating two classes of stock for a business: preferred voting stock for the parents and nonvoting common stock for the children

open-book management

a system in which entrepreneurs share openly their companies' financial results with employees

tariff

a tax, or duty, that a government imposes on goods and services imported into that country

embargo

a total ban on imports of certain products into a country

countertrade

a transaction in which a company selling goods in a foreign country agrees to promote investment and trade in that country

irrevocable trust

a trust in which a grantor cannot require the trustee to return the assets held in trust

job specification

a written statement of the qualifications and characteristics needed for a job, stated in terms such as education, skills, and experience

international trade program

an SBA loan program for small businesses that are engaging in international trade or are adversely affected by competition from imports

Export Working Capital (EWC) Program

an SBA loan program that is designed to provide working capital to small exporters

export excess program

an SBA loan program that offers quick turnaround times to small companies that are developing or expanding their export initiatives

disaster loan

an SBA loan to a small business devastated by some kind of financial or physical loss

7(a) loan guaranty program

an SBA program in which loans made by private lenders to small businesses are guaranteed up to a ceiling by the SBA

CAPLine program

an SBA program that makes short-term capital loans to growing companies needing to finance seasonal buildups in inventory or accounts receivable

letter of credit

an agreement between an exporter's bank and a foreign buyer's bank that guarantees payment to the exporter for a specific shipment of goods

letter of intent

an agreement between the underwriter and the company about to go public that outlines the details of the deal

foreign joint venture

an alliance between a US small business and a company in the target nation

domestic joint venture

an alliance of two or more U.S. small companies for the purpose of exporting their goods and services abroad

employee stock ownership plan (ESOP)

an arrangement in which employees and/or managers contribute a portion of their salaries and wages over time toward purchasing shares of a company's stock from the founder until they own the company outright

compressed workweeks

an arrangement in which employees work 32-40 hours per week but concentrate those hours across 4 days rather than the typical 5 days

telecommuting

an arrangement in which employees working remotely use modern communications equipment to connect electronically to their workplaces

flextime

an arrangement under which employees work a normal number of hours but have flexibility about when they start and stop work

free trade area

an association of countries that have agreed to eliminate trade barriers, both tariff and nontariff, among partner nations

puzzle interview

an interview that includes offbeat questions to determine how job candidates think and reason and to judge their capacity for creativity

equity capital (risk capital)

capital that represents the personal investment of the owner (or owners) of a company

community development financial institutions (CDFIs)

community-based financial institutions that designate at least a portion of their loan portfolios to other wise "unbankable" business owners and aspiring entrepreneurs

accredited investors

investors who have a sustained net worth (excluding their primary residences) of at least $1 million or annual income of at least $200,000.

peer-to-peer loans

loans made via web-based platforms that create online communities of lenders who provide funding to creditworthy small businesses

venture capital companies

private, for-profit organizations that purchase equity positions in young businesses that they believe have high-growth and high-profit potential

small business investment companies (SBICs)

privately owned financial institutions that are licensed by the SBA and use a combination of private capital and federally guaranteed debt to provide long-term venture capital to small businesses

dumping

selling large quantities of goods at prices that are below cost in foreign countries in an effort to grab market share quickly

culture

the beliefs, values, views, and more that a nation's inhabitants share; the distinctive, unwritten, informal code of conduct that governs an organization's behavior, attitudes, relationships, and style

registration statement

the document a company must file with the SEC that describes both the company and its stock offering and discloses information about the risk of investing

debt capital

the financing that an entrepreneur borrows and must repay with interest

prime rate

the interest rate that banks charge their most credit-worthy customers

advance rate

the percentage of an asset's value that a lender will lend

job analysis

the process by which a firm determines the duties and nature of the jobs to be filled and the skills and experience required of the people who are to fill them

leadership

the process of influencing and inspiring others to work to achieve a common goal and then giving them the power and the freedom to achieve it

layered financing

the technique of raising capital from multiple sources

job enlargement (horizontal job loading)

the type of job design that adds more tasks to a job to broaden its scope

job simplification

the type of job design that breaks down work into its simplest form and standardizes each task

job enrichment (vertical job loading)

the type of job design that involves building motivators into a job by increasing the planning, decision-making, organizing, and controlling functions that workers perform

job rotation

the type of job design that involves cross-training employees so that they can move from one job in the company to others, giving them a greater number and variety of tasks to perform

private investors (angels)

wealthy individuals, often entrepreneurs themselves, who invest in business start-ups in exchange for equity stakes in the companies