MGNT 350 chapter 6
takeover
seizing of control of a business by purchasing its stocks to be bale to select the broad of directors
asset
something the business owns that is expected to have economic value in the future
transfer
an endgame strategy in which ownership is moved form one person or group to another
termination
an endgame strategy in which the owner closes down a business
bankruptcy
an extreme form of business termination that uses a legal method for closing a business and paying off the creditors when debts are substantially greater than assets
walkaway
business termination in which the entrepreneur ends the business with its obligations met
minimum viable product part 2
by selling to customers and collecting feedback an entrepreneur can develop a product at minimum cost
discounted cash flow
cash flows that have been reduced in value because they are to be received in the future
spin off
a business that is created by separating part of an operating business into separate entity
synergy
a combination in which the whole is greater than the sum of its component parts
minimum viable product
a concept central to lean business practices where you make a minimum product but one that can be sold
workout
a form of business termination in which the firms legal or financial obligations are not fully met at closings
franchise
a legal agreement that allows a business to be operated using the name and business procedures of another firm
effectual reasoning
a logical process in which one analyzes the resources available and restraints on the use of the resources to create an attainable goal
start up
a new business that is started from scratch
pass off
a type of business transfer where the owner gives the business to someone else without payment
sell off
a type of business transfer where the seller gets only a fraction of the value of the business
revolving credit
1. a credit agreement that allows the borrower to pay all or part of the balance at any time 2. as the loan balance is paid off, it becomes available to be borrowed again
advantages of start ups
1. begin with a clean state 2. use the most up to date technologies 3. provide new, unique products or services 4. can be kept small deliberately to limit the magnitude of possible losses
advantages of existing business
1. established customers 2. business processes are already in place 3. often requires less cash outlay
disadvantages of purchasing an existing business
1. finding a successful business for sale 2. existing employees may resist change 3. reputation may be a hindrance 4. facilities and equipment may be obsolete
disadvantages of start ups
1. no initial name recognition 2. require significant time 3. very difficult to finance 4. cannot easily gain revolving credit 5. may not have experienced managers and workers
three underlying idea of lean operations and bootstrapping
1. waste not, want not 2. create, standardize, repeat 3. keep in touch
five paths to business ownership
1. you may start a new business 2. you may buy an existing business 3. you may franchise a business 4. you may inherit a business 5. you may be the manager of a business
net realizable value
the amount for which and asset will sell, less the costs of selling
replacement value
the cost to acquire an essentially identical asset
book value
the difference between the original acquisition cost and the amount of accumulated depreciation
affordable loss
the minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market
leveraging contingencies
the practice of and ability to seize upon novel opportunities that become apparent during the conduct of business
point of indifference
the price at which buyer is indifferent abut buying or not buying business
casual (predictive) reasoning
the process of setting a goal and the determining the strategy and resources required to attain the goal
buyout
the purchase of substantially all of an existing business
buy in
the purchase of substantially less than 100 percent of a business
