Entrepreneurial Financial Management: An Applied Approach
Autor Jeffrey R. Cornwall, David O. Vang, Jean M. Hartmanen Limba Engleză Paperback – 3 sep 2019
The book provides an integrated set of concepts and applications, drawing from entrepreneurship, finance and accounting, that will prepare aspiring entrepreneurs for the world they will most likely face as they start their new businesses. The contents are designed to follow the life cycle of a new business venture. Topics are presented in logical order, as entrepreneurs will likely face them as they begin the process of business start-up and move into growing the business.
Both undergraduate and graduate students will appreciate the clear presentation of complex issues, and this book is an essential resource for budding entrepreneurs as well.
A comprehensive spreadsheet financial template is included with the book, and an all-new case study provides questions that will help students learn the template as they proceed through the book. This tool allows for the application of many of the concepts to actual businesses and can be a valuable supplement to the process of developing a full business plan. The spreadsheet financial template is available for unlimited free downloads at Professor Cornwall’s blog site: www.drjeffcornwall.com.
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Specificații
ISBN-13: 9780367335427
ISBN-10: 0367335425
Pagini: 346
Ilustrații: 34 Tables, black and white; 19 Line drawings, black and white; 19 Illustrations, black and white
Dimensiuni: 191 x 235 x 18 mm
Greutate: 2.04 kg
Ediția:5 ed
Editura: Taylor & Francis
Colecția Routledge
Locul publicării:Oxford, United Kingdom
ISBN-10: 0367335425
Pagini: 346
Ilustrații: 34 Tables, black and white; 19 Line drawings, black and white; 19 Illustrations, black and white
Dimensiuni: 191 x 235 x 18 mm
Greutate: 2.04 kg
Ediția:5 ed
Editura: Taylor & Francis
Colecția Routledge
Locul publicării:Oxford, United Kingdom
Public țintă
PostgraduateCuprins
List of Figures
List of Tables
List of Exhibits
1 Introduction
THE IMPORTANCE OF KNOWING THE NUMBERS
MEASURING SUCCESS
WHAT IS ENTREPRENEURIAL FINANCIAL MANAGEMENT?
WHAT MAKES ENTREPRENEURIAL FINANCE SIMILAR TO TRADITIONAL FINANCE?
WHAT MAKES ENTREPRENEURIAL FINANCE DIFFERENT FROM TRADITIONAL FINANCE?
USING STAKEHOLDER ANALYSIS TO GUIDE ETHICAL DECISION MAKING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITY FOR APPLICATION
REFERENCES
PART I BUILDING A FINANCIAL FORECAST
2 Setting Financial Goals
WEALTH VERSUS INCOME
INTEGRATING NONFINANCIAL GOALS INTO THE BUSINESS
THE IMPORTANCE OF SELF-ASSESSMENT
THE SELF-ASSESSMENT PROCESS
THE BUSINESS MODEL AND BUSINESS PLAN
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITY FOR APPLICATION
REFERENCES
APPENDIX 2.1. INDIVIDUAL ENTREPRENEURIAL SELF-ASSESSMENT
APPENDIX 2.2. PARTNERSHIP AND SHAREHOLDER ASSESSMENT
3 Understanding Financial Statements
THE ACCOUNTING EQUATION
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
4 Revenue Forecasting
COMMON FORECASTING MISTAKES
THE LINK BETWEEN THE REVENUE FORECAST AND THE CASH FLOW FORECAST
THE IMPACT OF BUSINESS TYPE ON REVENUES
THE IMPORTANCE OF REVENUE FORECASTING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
5 Expense Forecasting
DEFINING COSTS
COST BEHAVIOR
EXPENSE FORECASTING: THE IMPACT OF BUSINESs TYPE ON EXPENSES
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCE
6 Integrated Financial Model
THE ENTREPRENEUR'S ASPIRATIONS RECONSIDERED
CONTRIBUTION FORMAT INCOME STATEMEN
EARNINGS BEFORE INTEREST AND TAXES
INVENTORY OF ASSUMPTIONS
SOCIAL VENTURES
DETERMINING THE AMOUNT OF FUNDS NEEDED
USING THE FORECASTING TEMPLATE TO DETERMINE THE AMOUNT OF FUNDS NEEDED
CASH RUNWAY OR TIME OUT OF CASH
ASSESSMENT OF RISK SENSITIVITY
INTEGRATING FINANCIAL FORECASTS INTO BUSINESS PLAN OR FUNDING DOCUMENT
SUMMARY
APPENDIX 6.1. INSTRUCTIONS FOR USING THE INTEGRATED FINANCIAL STATEMENTS TEMPLATE
7 Monitoring Financial Performance
TRACKING ASSUMPTIONS
ESTABLISHING MILESTONES
USING NUMBERS TO MANAGE
FINANCIAL STATEMENT ANALYSIS
RATIO ANALYSIS
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
8 Day-to-Day Cash Flow Management and Forecasting
WHY IS CASH FLOW DIFFERENT FROM NET INCOME?
WHY Is AN ACCRUAL-BASED INCOME STATEMENT IMPORTANT?
How Is CASH FLOW MEASURED?
INTERPRETING A STATEMENT OF CASH FLOWS: DIRECT METHOD
STATEMENT OF CASH FLOWS: INDIRECT METHOD
INVESTORS' AND CREDITORS' USE OF THE CASH FLOW STATEMENT
EFFECTIVE CASH MANAGEMENT
THE EMOTIONAL SIDE OF CASH FLOW MANAGEMENT
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
PART III SOURCES OF FINANCING
9 Financing Over the Life of a Venture
COMMON MISCONCEPTIONS ABOUT ENTREPRENEURIAL FINANCING
THE DIVERSE NATURE OF BUSINESS FINANCING
FINANCING HIGH-GROWTH, HIGH-POTENTIAL VENTURES
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
10 Start-Up Financing from the Entrepreneur, Friends, and Family
SELF-FINANCING
ADVANTAGES AND DISADVANTAGES OF SELF-FINANCING
FRIENDS AND FAMILY FINANCING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
11 Bootstrapping
WHY BOOTSTRAP?
BOOTSTRAPPING ADMINISTRATIVE OVERHEAD
BOOTSTRAP MARKETING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
12 External Sources of Funds: Equity
ACCREDITED INVESTORS
ANGEL INVESTORS
STRATEGIC PARTNERS
PRIVATE PLACEMENT
PRIVATE EQUITY
CROWDFUNDING
SBIC
THE DOWNSIDE OF EQUITY FINANCING
WORKING WITH OUTSIDE INVESTORS
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
13 External Sources of Funds: Debt
SHORT-TERM DEBT
WORKING WITH BANKERS
INITIAL CONTACT WITH BANKERS
PREPARATION OF KEY LOAN DOCUMENTS
OTHER SOURCES OF DEBT FINANCING FOR ENTREPRENEURS
THE DOWNSIDE OF DEBT
DEVELOPING A FINANCING PLAN
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
14 Financing the High-Growth Business
INTEGRATING PROFITABILITY INTO THE BUSINESS PLAN
STAGES OF THE FIRM
STAGES OF BUSINESS FUNDING
THE DARK SIDE OF VENTURE CAPITAL FINANCING
INITIAL CONTACT WITH A VENTURE CAPITALIST
INITIAL PUBLIC OFFERING
PRIVATE EQUITY
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
PART IV PLANNING FOR THE ENTREPRENEUR’S TRANSITION
15 Business Valuation
GENERAL CONCEPTS THAT GUIDE THE DETERMINATION OF VALUE
DISCOUNTED CASH FLOW
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
16 Exit Planning
A MODEL OF EXIT PLANNING
THE ETHICAL SIDE OF THE ENTREPRENEUR'S TRANSITION
POST-EXIT ISSUES
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
List of Tables
List of Exhibits
1 Introduction
THE IMPORTANCE OF KNOWING THE NUMBERS
MEASURING SUCCESS
WHAT IS ENTREPRENEURIAL FINANCIAL MANAGEMENT?
WHAT MAKES ENTREPRENEURIAL FINANCE SIMILAR TO TRADITIONAL FINANCE?
WHAT MAKES ENTREPRENEURIAL FINANCE DIFFERENT FROM TRADITIONAL FINANCE?
LACK OF HISTORICAL DATA TO MEASURE RISKHOW THE LACK OF HISTORICAL DATA AND LIQUIDITY COMPLICATES THE PRACTICE OF FINANCE IN EARLY-STAGE FIRMS
TRADITIONAL FINANCIAL CONCEPTS OF RISK AND RETURN
USING STAKEHOLDER ANALYSIS TO GUIDE ETHICAL DECISION MAKING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITY FOR APPLICATION
REFERENCES
PART I BUILDING A FINANCIAL FORECAST
2 Setting Financial Goals
WEALTH VERSUS INCOME
INTEGRATING NONFINANCIAL GOALS INTO THE BUSINESS
THE IMPORTANCE OF SELF-ASSESSMENT
THE SELF-ASSESSMENT PROCESS
THE BUSINESS MODEL AND BUSINESS PLAN
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITY FOR APPLICATION
REFERENCES
APPENDIX 2.1. INDIVIDUAL ENTREPRENEURIAL SELF-ASSESSMENT
APPENDIX 2.2. PARTNERSHIP AND SHAREHOLDER ASSESSMENT
3 Understanding Financial Statements
THE ACCOUNTING EQUATION
AN EXAMPLEBASIC FINANCIAL STATEMENTS
INCOME STATEMENTSTATEMENT OF CASH FLOWS
BALANCE SHEETAssets
Liabilities
Owners’ Equity
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
4 Revenue Forecasting
COMMON FORECASTING MISTAKES
1. THE LINEAR FORECAST MISTAKETHE LINK BETWEEN THE MARKETING PLAN AND REVENUE FORECASTS
2. THE HOCKEY STICK FORECAST MISTAKE
3. THE 20/80 VERSUS 80/20 MISTAKE
1. INDUSTRY AND MARKET TRENDSCREATING SCENARIOS
2. MARKET RESEARCH
3. COMPETITIVE ANALYSIS
THE LINK BETWEEN THE REVENUE FORECAST AND THE CASH FLOW FORECAST
THE IMPACT OF BUSINESS TYPE ON REVENUES
MANUFACTURING FIRMSQUANTITATIVE FORECASTING TECHNIQUES
SERVICE FIRMSBilling by the HourRECURRING REVENUE FIRMS
Billing by the Job
COMMISSION-BASED SELLING FIRMS
CYCLICAL OR SEASONAL SALES FIRMSInternational Sales Firms
THE IMPORTANCE OF REVENUE FORECASTING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
5 Expense Forecasting
DEFINING COSTS
COST BEHAVIOR
VARIABLE COSTSBREAKEVEN ANALYSIS
FIXED COSTS
MIXED COSTS
EXPENSE FORECASTING: THE IMPACT OF BUSINESs TYPE ON EXPENSES
MANUFACTURING FIRMSREDUCING EXPENSES THROUGH BOOTSTRAPPING
SERVICE FIRMS
RECURRING REVENUE FIRMS
COMMISSION-BASED SALES FIRMS
CYCLICAL OR SEASONAL FIRMS
INTERNET BASED FIRMS
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCE
6 Integrated Financial Model
THE ENTREPRENEUR'S ASPIRATIONS RECONSIDERED
CONTRIBUTION FORMAT INCOME STATEMEN
EARNINGS BEFORE INTEREST AND TAXES
INVENTORY OF ASSUMPTIONS
SOCIAL VENTURES
DETERMINING THE AMOUNT OF FUNDS NEEDED
USING THE FORECASTING TEMPLATE TO DETERMINE THE AMOUNT OF FUNDS NEEDED
CASH RUNWAY OR TIME OUT OF CASH
ASSESSMENT OF RISK SENSITIVITY
INTEGRATING FINANCIAL FORECASTS INTO BUSINESS PLAN OR FUNDING DOCUMENT
SUMMARY
APPENDIX 6.1. INSTRUCTIONS FOR USING THE INTEGRATED FINANCIAL STATEMENTS TEMPLATE
PRODUCT MODEL [FOR A BUSINESS THAT SELLS INVENTORY]PART II MANAGING THE FINANCIAL RESOURCES OF A VENTURE
SERVICE MODEL [FOR A BUSINESS THAT SELLS SERVICES]
SOCIAL VENTURE MODEL [FOR A NONPROFIT BUSINESS]
7 Monitoring Financial Performance
TRACKING ASSUMPTIONS
ESTABLISHING MILESTONES
USING NUMBERS TO MANAGE
FINANCIAL STATEMENT ANALYSIS
RATIO ANALYSIS
LIQUIDITY RATIOSWORKING WITH ACCOUNTANTS
ACTIVITY RATIOS
PROFITABILITY RATIOS
SOLVENCY AND COVERAGE RATIOS
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
8 Day-to-Day Cash Flow Management and Forecasting
WHY IS CASH FLOW DIFFERENT FROM NET INCOME?
WHY Is AN ACCRUAL-BASED INCOME STATEMENT IMPORTANT?
How Is CASH FLOW MEASURED?
INTERPRETING A STATEMENT OF CASH FLOWS: DIRECT METHOD
STATEMENT OF CASH FLOWS: INDIRECT METHOD
INVESTORS' AND CREDITORS' USE OF THE CASH FLOW STATEMENT
EFFECTIVE CASH MANAGEMENT
THE EMOTIONAL SIDE OF CASH FLOW MANAGEMENT
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
PART III SOURCES OF FINANCING
9 Financing Over the Life of a Venture
COMMON MISCONCEPTIONS ABOUT ENTREPRENEURIAL FINANCING
THE DIVERSE NATURE OF BUSINESS FINANCING
THE NATURE OF THE BUSINESS MODELFINANCING SMALL BUSINESSES WITH MODEST GROWTH POTENTIAL
ASPIRATIONS OF THE ENTREPRENEUR
THE STAGE OF DEVELOPMENT OF THE BUSINESS VENTURE
FITTING THE PIECES OF THE FINANCING PUZZLE TOGETHER
FINANCING HIGH-GROWTH, HIGH-POTENTIAL VENTURES
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
10 Start-Up Financing from the Entrepreneur, Friends, and Family
SELF-FINANCING
ADVANTAGES AND DISADVANTAGES OF SELF-FINANCING
FRIENDS AND FAMILY FINANCING
DETERMINE TRUE MOTIVATIONSSTRUCTURE OF FUNDS INVESTED
USE A FORMAL BUSINESS PLAN
PROVIDE ACCURATE, OBJECTIVE, AND FULL INFORMATION ABOUT THE BUSINESS
KEEP BOUNDARIES
TAX PLANNING
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
11 Bootstrapping
WHY BOOTSTRAP?
BOOTSTRAPPING ADMINISTRATIVE OVERHEAD
SPACEBOOTSTRAPPING EMPLOYEE EXPENSES
FURNISHINGS AND OFFICE EQUIPMENT
ADMINISTRATIVE SALARIES
INDEPENDENT CONTRACTORSBOOTSTRAPPING OPERATING EXPENSES
FRACTIONAL AND TEMPORARY EMPLOYEES
STUDENT INTERNS
EQUITY COMPENSATION
NONMONETARY BENEFITS
BOOTSTRAP MARKETING
THE BASIC BOOTSTRAP MARKETING TOOLSTHE ETHICS OF BOOTSTRAPPINGWord of Mouth
Business Cards
Blogs
Websites
Banners and Signs
Email Marketing
Publicity
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
12 External Sources of Funds: Equity
ACCREDITED INVESTORS
ANGEL INVESTORS
STRATEGIC PARTNERS
PRIVATE PLACEMENT
PRIVATE EQUITY
CROWDFUNDING
SBIC
THE DOWNSIDE OF EQUITY FINANCING
WORKING WITH OUTSIDE INVESTORS
BUSINESS MODEL AND BUSINESS PLANSUMMARY
CONFIDENTIALITY AGREEMENT
LETTER OF INTENT
MODIFICATIONS OF SHAREHOLDER AGREEMENTS
COMMUNICATION WITH SHAREHOLDERS
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
13 External Sources of Funds: Debt
SHORT-TERM DEBT
TRADE CREDITLONG-TERM DEBT
INSTITUTIONAL CREDITORSBanks
Asset-Based Lenders
Factors
BANKSGOVERNMENT FUNDING THROUGH SBA
LEASING COMPANIES
REAL ESTATE LENDERS
WORKING WITH BANKERS
INITIAL CONTACT WITH BANKERS
PREPARATION OF KEY LOAN DOCUMENTS
Loan ProposalONGOING COMMUNICATION AFTER THE LOAN IS MADE
Loan Document
Personal Guarantees
OTHER SOURCES OF DEBT FINANCING FOR ENTREPRENEURS
THE DOWNSIDE OF DEBT
DEVELOPING A FINANCING PLAN
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
14 Financing the High-Growth Business
INTEGRATING PROFITABILITY INTO THE BUSINESS PLAN
STAGES OF THE FIRM
STAGES OF BUSINESS FUNDING
THE DARK SIDE OF VENTURE CAPITAL FINANCING
INITIAL CONTACT WITH A VENTURE CAPITALIST
INITIAL PUBLIC OFFERING
ADVANTAGES OF AN IPOTHE PROCESS OF THE IPO
DISADVANTAGES OF AN IPO
PRIVATE EQUITY
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
PART IV PLANNING FOR THE ENTREPRENEUR’S TRANSITION
15 Business Valuation
GENERAL CONCEPTS THAT GUIDE THE DETERMINATION OF VALUE
FAIR MARKET VALUEBASIC INFORMATION REQUIRED FOR A VALUATION
GOING-CONCERN VALUE
HIGHEST AND BEST USE
FUTURE BENEFITS
SUBSTITUTE AND ALTERNATIVES
DISCOUNTED CASH FLOW ANALYSIS
OBJECTIVITY
DISCOUNTED CASH FLOW
EFFECT ON THE BALANCE SHEET OF THE NEW OWNERS (GOODWILL)MARKET COMPARISON TECHNIQUES
DEFINITION OF FREE CASH FLOW
ESTIMATING FREE CASH FLOW FOR A PARTICULAR YEAR
ESTIMATING FREE CASH FLOW OVER A SIX-YEAR PERIOD
SUMMARY OF THE DISCOUNTED CASH FLOW APPROACH
SUMMARY OF THE MARKET COMPARISON APPROACHSUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
16 Exit Planning
A MODEL OF EXIT PLANNING
Self-Assessment Revisited and Setting a Time FrameEXIT OPTIONS
Manage Financial Statements
Strengthen Systems and Processes
Develop a Business Plan for the Sale of the Business
Ownership TransferTHE PROCESS OF SELLING A BUSINESS
Partial or Transitional Transfer
Bankruptcy or Planned Termination of Operations
THE ETHICAL SIDE OF THE ENTREPRENEUR'S TRANSITION
POST-EXIT ISSUES
SUMMARY
DISCUSSION QUESTIONS
OPPORTUNITIES FOR APPLICATION
REFERENCES
Notă biografică
Jeffrey R. Cornwall is the inaugural recipient of the Jack C. Massey Chair and professor of Entrepreneurship at Belmont University in Nashville, Tennessee. He has a DBA and an MBA from the University of Kentucky.
David O. Vang is a professor of finance in the Opus College of Business at the University of St. Thomas in St. Paul, Minnesota.
Jean M. Hartman holds a BA in business administration and accounting from Southwest Minnesota State University and an MBA from the University of St. Thomas. She is a certified public accountant.
David O. Vang is a professor of finance in the Opus College of Business at the University of St. Thomas in St. Paul, Minnesota.
Jean M. Hartman holds a BA in business administration and accounting from Southwest Minnesota State University and an MBA from the University of St. Thomas. She is a certified public accountant.
Descriere
This fifth edition of a classic and comprehensive resource presents an applied, realistic view of entrepreneurial finance for today’s entrepreneurs, completely updated to address the latest trends and technologies.
Recenzii
“Cornwall et al.’s book takes an applied approach that teaches students entrepreneurial financial skills. It does not require students to have a strong finance background and is written for undergraduates who want to gain an understanding of the topics that everyone who is planning a start-up venture should know.”
—Dr Jay Azriel, Lycoming College, Williamsport, Pennsylvania, USA
“In my teaching experience, I realized that entrepreneurial finance is the weakest link in the entrepreneurship student’s skill set. After reviewing several books, I’ve found the sixth edition of Entrepreneurial Financial Management to be the best resource for understanding the subject.”
—Kanhaiya Sinha, PhD, University of Minnesota Dulut, USA
—Dr Jay Azriel, Lycoming College, Williamsport, Pennsylvania, USA
“In my teaching experience, I realized that entrepreneurial finance is the weakest link in the entrepreneurship student’s skill set. After reviewing several books, I’ve found the sixth edition of Entrepreneurial Financial Management to be the best resource for understanding the subject.”
—Kanhaiya Sinha, PhD, University of Minnesota Dulut, USA