ZeePedia buy college essays online


Entrepreneurship

<<< Previous PRO FORMA SOURCES AND USES OF FUNDS:PERSONAL FUNDS, FAMILY AND FRIENDS Next >>>
 
img
Entrepreneurship ­ MGT602
VU
Lesson 32
PRO FORMA SOURCES AND USES OF FUNDS
1.
To identify the types of financing available.
2.
To understand the role of commercial banks in financing new ventures, the types of loans
available, and bank lending decisions.
3.
To discuss Small Business Administrative (SBA) loans.
4.
To understand the aspects of research and development limited partnerships.
5.
To discuss government grants, particularly small business innovation research grants.
6.
To understand the role of private placement as a source of funds.
AN OVERVIEW
Different sources of capital are generally used at different times in the life of the venture.
Debt or Equity Financing.
Debt financing involves an interest-bearing instrument, usually a loan, the payment of which is
1.
only indirectly related to sales and profits.
a.
Debt financing (also called asset-based financing) requires some asset be used as collateral.
b.  The entrepreneur has to pay back the amount of funds borrowed plus a fee, expressed in
terms of interest.
c.
Short-term money is used to provide working capital.
d.  Long term debt (lasting more than a year) is frequently used to purchase some asset, with
part of the value of the asset being used as collateral.
e.
Debt has the advantage of letting the entrepreneur retain a large ownership position and
have greater return on equity.
f.
If the debt is too great payments become difficult to make and growth is inhibited.
Equity financing offers the investor some form of ownership position in the venture.
2.
a.
The investor shares in the profits of the venture.
b.  Key factors in choosing the type of financing are availability of funds, assets of the venture,
and prevailing interest rates.
c.
Usually a combination of debt and equity financing is used.
3.  In a market economy all ventures will have some equity, as all are owned by someone.
a.
The equity may be entirely provided by the owner or may require multiple owners.
b.  This equity funding provides the basis for debt financing, which makes up the capital
structure of the venture.
Internal or External Funds
1.
The most often used type of funds is internally generated funds.
a.
These funds come from sources within the company, such as profits, sale of assets,
reduction in working capital, and accounts receivable.
b.  The start-up years usually involve plowing all the profits back into the venture.
c.
Sometimes little-used assets can be sold or leased.
d.  Assets, whenever possible, should be on a rental basis, not an ownership basis.
e.
One short-term internal source of funds is reducing short-term assets, or through extended
payments from suppliers.
f.
Another method is by collecting accounts receivable more quickly.
2.
External sources.
a.
Alternative sources should be evaluated by:
(I)  Length of time the funds are available.
(ii)  Costs involved.
(iii) Amount of control lost.
b.  The more frequently used sources of funds are discussed below.
73
Table of Contents:
  1. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:DEFINITION OF ENTREPRENEUR
  2. THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP:Possibility of New Venture Formation
  3. ENTREPRENEURIAL PROCESS/START UPS:GOVERNMENT AS AN INNOVATOR
  4. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND:ENTREPRENEURIAL PROCESS
  5. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…)
  6. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):CLIMATE FOR ENTREPRENEURSHIP
  7. THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued…):PROBLEMS AND SUCCESSFUL EFFORTS
  8. THE INDIVIDUAL ENTREPRENEUR:ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS
  9. THE INDIVIDUAL ENTREPRENEUR (continued…):Personal Values, Work History, MOTIVATION
  10. THE INDIVIDUAL ENTREPRENEUR (continued…):ROLE MODELS AND SUPPORT SYSTEMS
  11. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES:INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES, Minority interests
  12. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):DIRECT FOREIGN INVESTMENT
  13. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):BARRIERS TO INTERNATIONAL TRADE
  14. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):ENTREPRENEURIAL PARTNERING
  15. INTERNATIONAL ENTREPRENEURIAL OPPORTUNITIES (continued…):SOURCES OF NEW IDEAS
  16. CREATIVITY AND THE BUSINESS IDEA:METHODS OF GENERATING NEW IDEAS, CREATIVE PROBLEM SOLVING
  17. CREATIVITY AND THE BUSINESS IDEA:PRODUCT PLANNING AND DEVELOPMENT PROCESS
  18. LEGAL ISSUES FOR THE ENTREPRENEUR:NEED FOR A LAWYER, PATENTS
  19. LEGAL ISSUES FOR THE ENTREPRENEUR:TRADEMARKS, LICENSING
  20. LEGAL ISSUES FOR THE ENTREPRENEURS:PRODUCT SAFETY AND LIABILITY, INSURANCE
  21. CREATING AND STARTING THE VENTURE:WHAT IS THE BUSINESS PLAN, PRESENTING THE PLAN
  22. CREATING AND STARTING THE VENTURE (Continued….):WRITING THE BUSINESS PLAN
  23. CREATING AND STARTING THE VENTURE (Continued….):
  24. CREATING AND STARTING THE VENTURE (Continued….):WHY SOME BUSINESS PLANS FAIL, MARKETING PLAN
  25. THE MARKETING PLAN:MARKET RESEARCH FOR THE NEW VENTURE
  26. THE MARKETING MIX:STEPS IN PREPARING THE MARKETING PLAN
  27. THE ORGANIZATIONAL PLAN:DEVELOPING THE MANAGEMENT TEAM, LEGAL FORMS OF BUSINESS
  28. THE ORGANIZATIONAL PLAN (Continued….)
  29. THE ORGANIZATIONAL PLAN (Continued….):THE LIMITED LIABILITY COMPANY
  30. THE FINANCIAL PLAN:OPERATING AND CAPITAL BUDGETS
  31. THE FINANCIAL PLAN (Continued….):PRO FORMA INCOME STATEMENTS, PRO FORMA CASH FLOW
  32. PRO FORMA SOURCES AND USES OF FUNDS:PERSONAL FUNDS, FAMILY AND FRIENDS
  33. PRO FORMA SOURCES AND USES OF FUNDS:COMMERCIAL BANKS
  34. BANK LENDING DECISIONS:SMALL BUSINESS ADMINISTRATION LOANS
  35. SOURCES OF CAPITAL:GOVERNMENT GRANTS
  36. SOURCES OF CAPITAL:PRIVATE PLACEMENT, BOOTSTRAP FINANCING
  37. CAPITAL SOURCES IN PAKISTAN:PROVINCIAL LEVEL INSTITUTIONS, FINANCIAL INSTITUTIONS
  38. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  39. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  40. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  41. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  42. PREPARING FOR THE NEW VENTURE LAUNCH: EARLY MANAGEMENT DECISIONS (Continued….)
  43. NEW VENTURE EXPANSION STRATEGIES AND ISSUES:JOINT VENTURES, ACQUISITIONS
  44. NEW VENTURE EXPANSION STRATEGIES AND ISSUES (Continued….):DETERMINING THE PRICE FOR AN ACQUISITION
  45. ENTREPRENEURSHIP & PAKISTAN:GENDER DEVELOPMENT STATUS WOMAN AS AN ENTREPRENEUR IN PAKISTAN