9.1-2
What is a benefit of debt financing?
You keep ownership
Crowdfunding websites allow entrepreneurs to:
Access funding without traditional loans by raising small amounts from many people
What is the basic accounting equation that forms the foundation of a balance statement?
assists = liability + equity
What is cost of goods sold (COGS)?
The cost to make the product or service
explain what a lean startup means.
when entrepreneurs innovate by continuously testing their product by getting feedback from customers in real-time
what is an example of a asset and liability?
Asset = investing money, new equipment,
liability = taking on debt, things you must repay
What is bootstrapping?
Bootstrapping is the process of self-funding a startup business, often using the entrepreneur's personal savings and creative approaches to conserve cash.
What does the balance sheet tell an investor about a company?
What the company owns and what it owes
What is the basic equation that can be found in an income statement?
Revenue - Expenses = net profit
What does MVP mean?
Minimum Viable Product
It's an early version or prototype of a product that may not be complete but is good enough that you can begin to market it or test it.
At what stage would a venture capitalist company most likely be interested in funding a company?
Early stage
What is a benefit of equity financing?
You don't have to repay immediately.
What does accounts payable and receivable represent?
accounts payable = business that the company owes money to
accounts receivable = customers that owe the business money
How can entrepreneurs use financial projections?
To plan and show potential investors what the business will look like in the future
What does iteration and pivot mean when discussion developing your business?
Iteration means a new and/or changed version of your product. Pivot means you change to something new that wasn't your original idea.
What is the focus of accounting?
Recording transactions to share information with stakeholders and make business decisions
Why is equity financing considered more flexible than debt financing?
It can be repaid when cash flow is stronger.
What is the primary purpose of the income statement?
To describe how much money the company earned and what were the costs
What information does a break-even point provide to an entrepreneur?
The minimum amount of sales required to cover expenses
Explain how Dropbox or Zappos Shoes introduced a Minimum Viable Product.
Dropbox only showed a demo of their idea to prove people would like. People were interested and signed up, then Dropbox brought smart people together and developed the company.
Zappos took pictures of shoes from a shoe store and put online to prove people would buy shoes online.
Seed Stage funding is usually from where?
Family and friends, personal money, angel investors, etc..
Name a creative funding strategy that involves trading goods or services without using money?
Bartering
How to find the profit margin?
net income / revenue
What are the three sections of statement of cash flows? And give an example in each
Operating - day to day costs
Investing - very big purchase, like equipment
Financing - loans from a bank
What are people called who are first to sign up for new products or buy new things?
Early adopters