Summer 2009 URG MBA Program Chapters 1-3. Establishing a Venture Most start-ups fail – Why? The...
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Transcript of Summer 2009 URG MBA Program Chapters 1-3. Establishing a Venture Most start-ups fail – Why? The...
Small Business Finance…Summer 2009
URG MBA ProgramChapters 1-3
Establishing a VentureMost start-ups fail – Why?The idea
Demand?Need?Benefit provided?
Management TeamExperienceExample: CEO Larry Hsu
Legal and Financial Advisors
Business StructureSole proprietorLimited liabilityCorporationPartnershipLLC (Limited Liability company)Each type uses different:
DocumentationRegulations/Laws/TaxationSBA
Financial and Business PlanningBusiness Cycle—What makes it tickFinancial Statements
Balance Sheet Assets and Liabilities
Income Statement Income/Revenue and Expenses/Costs
Cash flow Statements – Importance? EBIT (Earnings Before Interest and Taxes) Examples
Accounting and Actual Cash FlowTiming between sales and payment receipt
Cost of doing business Credit card fees
BartersBased on market priceExample: Web page design and
maintenance/AdvertisingAccounting depreciationLeasing and relying on credit from suppliers
EBITDAEarnings before interest, depreciation and
AmortizationUsed in companies that have a high value in
equipmentDisadvantage : does not include maintenance
of equipmentDoes not affect cash flow—does affect taxes
and tax reporting
Financial ProjectionsForecasting cash needsValuation of the companyCompare actual performance to forecasts
Gives creditability and reliability to your forecast
IssuesMarkets are difficult to predictPromising a % increase must be substantiatedConservative estimates or not?
PoliciesPricing
What are some strategies?R & D Cost
CreditHow much and to whom?Establishing your own
DividendAffects cash balances
Cost Structure AnalysisBreak-even Point
Be conservative hereEstablishing Fixed and Variable Costs
Fixed costs are easy to establish/consistentVariable costs?
Energy Costs Shipping, etc.
Establishing what could and/or should be outsourced
Cost of establishing your business networkWho will be your business partners?
Strategic PlanningMarket analysis/feasibilityStart-up costsR & D costsConsider target markets
Test market?Decision making
Establish a processUse a decision tree
Strategic AlliancesAnti-trust issuesGo to Youtube.com and search for AT&T
funny video Look for the one that looks like a diagram
Application to today’s markets?BankingCommunicationsTransportationCar makers
Business PlanGreat resource – SBA – www.sba.orgComponents:
General descriptionBusiness goalsProduct description/Service descriptionThe management teamCurrent statusSummary of financial projectionsFinancial resource requirements