Chapter 7 Flashcards
(25 cards)
refers to a person who starts a business and is willing to accept the risk associated with investing money in order to make money
entrepreneur
common characteristics of an entrepreneur (MERFS)
motivated expertise risk management focus self-belief
refers to an individual who provides capital to a business venture for start-up or expansion purposes
venture capitalist
core fundamentals to assess when investing in a start up business (5)
- Quality of management team
- Uniqueness of product/service offering
- Market size and opportunity alignment
- Current conditions within market
- Investment hypothesis (business plan)
refers to that point in time when an organization is able to cover the actual cash expenses of an operation from the revenue it generates, cash inflow > cash outflow
cash flow positive
the point where total expenses = total revenue, the income statement would show profit = $0, cash inflow = cash outflow
breakeven point
are decision points where the current path a business is taking is assessed relative to where the company is and where it should be
inflection point
business plan rules of the road
- know your customer
- Know why you will win
- Know how you will win
- Know what it takes to win
- Demonstrate why others should believe in you
a business model under which business owners share a common brand and operate through a defined business framework
franchise
benefits of a franchise model?
- immediate brand awareness and credibility
- mitigates risk
is the process of funding a project or business venture by raising money via an internet-supported funding management system (i.e. GoFundMe, Kickstarter)
crowdfunding
5 key factors influencing legal structure decisions when setting up a business
- Ease of setup
- Degree of control
- Magnitude of risk
- Financial capacity
- Required skills
business model where:
• 100% personally liable • 100% control of the business in ownership and making decisions
sole proprietorship
A business formed by two or more individuals
partnership
a written agreement among the partners that outlines the expectation of each partner and details how the partnership is going to work
partnership agreement
refers to the liability obligation of partners as a result of a legal contract; partners can be held individuals liable for their share of the obligation (several), or fully liable for the full obligation (joint) in the event that the other parties to the agreement are unable to pay their obligations
joint and several liability
is a written agreement among the partners that details the sale by one partner and the purchase by another of the business interest of the selling partner
buy-sell agreement
a partnership that is made up of both general partners (at least one) and limited (passive) partners
limited liability partnership (LLP)
• A business entity that, legally, is separate and distinct from the owners
corporation
the legal process of setting up a corporation
incorporation
is an appointed or elected body of a for-profit or NFP corporation that oversees and advises management on issues challenging the organization on behalf of its stakeholders and shareholders
board of directors
corporations whose ownership is private; the share of stock of the corporation are not publicly traded
private corporations
is an organization that facilitates the trading of securities, stocks, commodities, and other financial instruments, exchanges provide a platform for selling these financial instruments to the public at large
exchange
Can you move from a sole ownership > private corporation (external investors) > public corporation (IPO, shares publicly traded)?
yes
