Presenting the business Plan to investors

If the business plan successfully elicits the interest of a potential investor, the next step is to meet with the investor and present the plan in person. The in- vestor will typically want to meet with the firm’s founders. Because investors ultimately fund only a few ventures, the founders of a new firm should

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Establishing a Strong Ethical Culture for a Firm

One of the most important things the founders of an entrepreneurial venture can do is establish a strong ethical culture for their firms. The data regarding business ethics are both encouraging and discouraging. The most recent ver- sion of the National Business Ethics Survey was published in 2013. This survey is the only longitudinal

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Dealing Effectively with legal issues

Those leading entrepreneurial ventures can also expect to encounter a number of important legal issues when launching and then, at least initially, operating their firm. We discuss a number of these issues next. 1. Choosing an attorney for a Firm It is important for an entrepreneur to select an attorney as early as possible

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Obtaining business licenses and Permits

Many businesses require licenses and permits to operate. Depending on the na- ture of the business, licenses and permits may be required at the federal, state, and/or local levels. There are three ways for those leading a business to deter-mine the licenses and permits that are necessary. The first is to ask someone who

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Choosing a Form of business organization

When a business is launched, a form of legal entity must be chosen. Sole proprietorships, partnerships, corporations, and limited liability companies are the most common legal entities from which entrepreneurs make a choice. Choosing a legal entity is not a one-time event. As a business grows and ma- tures, it is necessary to periodically

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Introduction to Financial management

1. Introduction to Financial Management An entrepreneur’s ability to pursue an opportunity and turn the opportunity into a viable entrepreneurial firm hinges largely on the availability of money. Regardless of the quality of a product or service, a company can’t be viable in the long run unless it is successful financially. Money either comes

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Financial Statements

Historical  financial statements reflect past performance and are usually prepared on a quarterly and annual basis. Publicly traded firms are required by the Securities and Exchange Commission (SEC) to prepare financial state- ments and make them available to the public. The statements are submitted to the SEC through a number of required filings. The

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Financial Forecasts of the firm

As depicted in Figure 8.2, the analysis of a firm’s historical financial statement is followed by the preparation of forecasts. Forecasts are predictions of a firm’s future sales, expenses, income, and capital expenditures. A firm’s forecasts pro- vide the basis for its pro forma financial statements. A well-developed set of pro forma financial statements

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Pro Forma Financial Statements

A firm’s pro forma financial statements are similar to its historical financial statements except that they look forward rather than track the past. New ven- tures typically offer pro forma statements, but well-managed established firms also maintain these statements as part of their routine financial planning pro- cess and to help prepare budgets. The

NEXT BIG SOUND: Hitting the Ground Running

The idea for Next Big Sound started in Troy Henikoff’s  entrepreneurship class at Northwestern University. It was 2008, and three of the students in the class, Alex White, David Hoffman, and Samir Rayani, hatched an idea for a business in the music industry. Rayani and White had met earlier when White was running the

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Liability of newness as a Challenge

As we note throughout this textbook, new ventures have a high propensity to fail. The high failure rate is due in part to what is known as the liability of newness, which refers to the fact that companies often falter because the people who start them aren’t able to adjust quickly enough to their

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Creating a new-venture team

Those who launch or found an entrepreneurial venture have an important role to play in shaping the firm’s business model. Stated even more directly, it is widely known that a well-conceived business plan, one that flows from the firm’s previously established business model, cannot get off the ground un- less a firm has the

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Rounding out the team: the role of Professional advisers

1. Rounding  Out the team: the role of professional advisers Along with the new-venture team members we’ve already identified, founders often rely on professionals with whom they interact for important counsel and advice. In many cases, these professionals become an important part of the new-venture team and fill what some entrepreneurs call “talent holes.”

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ROOMINATE: Raising Money Carefully and deliberately

Alice  Brooks  and  Bettina  Chen  met  in  2012,  when  they  were  engineering master’s students at Stanford University. They both noticed the lack of female classmates. Both  had undergraduate degrees in engineering and reflected that  females are underrepresented in undergraduate engineering programs too. They set out to try to put their fingers on why more

Getting Financing or Funding for new venture

1. The importance of getting Financing or Funding Few people deal with the process of raising investment capital until they need to raise capital for their own firm. As a result, many entrepreneurs go about the task of raising capital haphazardly, because they lack experience in this area and because they don’t know much

Sources of Personal Financing

Typically, the seed money that gets a company off the ground comes from the founders’ own pockets. There are three categories of sources of money in this area: personal funds, friends and family, and bootstrapping. These sources are depicted in Figure 10.2 and are explained next. 1. Personal funds The vast majority of founders

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Preparing to raise debt or Equity Financing

Once a start-up’s financial needs exceed what personal funds, friends and fam- ily, and bootstrapping can provide, debt and equity are the two most common sources of funds. The most important thing an entrepreneur must do at this point is determine precisely what the company needs and the most appropriate source to use to

Sources of Equity Funding

The primary disadvantage of equity funding is that the firm’s owners relin- quish part of their ownership interest and may lose some control. The primary advantage is access to capital. In addition, because investors become partial owners of the firms in which they invest, they often try to help those firms by offering their

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Sources of debt Financing

Debt financing involves getting a loan or selling corporate bonds. Because it is virtually impossible for a new venture to sell corporate bonds, we’ll focus on obtaining loans. There are two common types of loans. The first is a single-purpose loan, in which a specific amount of money is borrowed that must be repaid

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Creative Sources of Financing and Funding

Because financing and funding are difficult to obtain, particularly for start- ups, entrepreneurs often use creative ways to obtain financial resources. Even for firms that have financing or funding available, it is prudent to search for sources of capital that are less expensive than traditional ones. The following sections discuss four of the more

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