Outline: Chapter 9 Financing Over the Life of a

Transcript:Outline: Chapter 9 Financing Over the Life of a:
Outline: Chapter 9 Financing Over the Life of a Venture Common Misconceptions about Entrepreneurial Financing The Diverse Nature of Business Financing Financing Smaller Businesses with Modest Growth Potential Financing High Growth, High Potential Ventures Copyright 2013 Cornwall, Vang & Hartman Common Misconceptions about Entrepreneurial Financing Venture Capitalists Fund Most Businesses Banks Lend to Start-ups SBA lends money directly to entrepreneurs Entrepreneurs Tend to Rely on One Single Source of Funding Government Grants are a Good Source of Money for Small Businesses Copyright 2013 Cornwall, Vang & Hartman The Diverse Nature of Business Financing The Nature of the Business Model Aspirations of the Entrepreneur The Stage of Development of the Business Venture Fitting the Pieces of the Financing Puzzle Together Copyright 2013 Cornwall, Vang & Hartman Financing a Small Business - Modest Growth Figure 9.1 Copyright 2013 Cornwall, Vang & Hartman Financing a High-Growth, High-Potential Venture Figure 9.2 Copyright 2013 Cornwall, Vang & Hartman Outline: Chapter 10 Start-up Financing From the Entrepreneur, Friends and Family Self-financing Advantages and Disadvantages of Self-financing Friends and Family Financing Structure of Funds Invested Loan Equity Copyright 2013 Cornwall, Vang & Hartman Most Common Sources of Financing Figure 10.1 Copyright 2013 Cornwall, Vang & Hartman Advantages and Disadvantages of Self-Financing Table 10.1 Copyright 2013 Cornwall, Vang & Hartman Friends and Family Financing Determine True Motivations Use a Formal Business Plan Provide Accurate, Objective, and Full Information about the Business Keep Boundaries Tax Planning Copyright 2013 Cornwall, Vang & Hartman Outline: Chapter 11 Bootstrapping Why bootstrap? Bootstrapping Administrative Overhead Bootstrapping Employee Expenses Bootstrapping Operating Expenses Bootstrap Marketing The Ethics of Bootstrapping Copyright 2013 Cornwall, Vang & Hartman Bootstrapping Throughout the Life of a Venture Figure 11.1 Copyright 2013 Cornwall, Vang & Hartman Bootstrapping Defined as the “process of finding creative ways exploit opportunities to launch and grow businesses with the limited resources available for most start-up ventures.” Cornwall, J. (2010). Bootstrapping. Englewood Cliffs, NJ: Pearson/Prentice-Hall. Copyright 2013 Cornwall, Vang & Hartman Why Bootstrap? Often necessary for small businesses to get started Difficulty in raising money for growth Preserves the value and wealth of a business “Extend the Runway” Reduce risk associated with debt financing Copyright 2013 Cornwall, Vang & Hartman Rules of Bootstrapping Rule #1: Overhead matters Rule #2: Employee expenses are usually the highest single recurring cost Rule #3: Minimize operating costs Rule #4: Marketing matters, but know your customers and how they make decisions Copyright