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INTRODUCTION

INTRODUCTION. Accounting and Finance for Entrepreneurs EBD 301. Course Management. Basic Approach I Don’t assume any previous exposure to; Accounting: keeping the books Finance: analyzing the numbers Economics: understanding basic concepts Marketing: getting your message out

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INTRODUCTION

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  1. INTRODUCTION Accounting and Finance for Entrepreneurs EBD 301

  2. Course Management • Basic Approach • I Don’t assume any previous exposure to; • Accounting: keeping the books • Finance: analyzing the numbers • Economics: understanding basic concepts • Marketing: getting your message out • Business forms: sole, partners, corporation, LLC • Tax issues: effects of business form, types • Legal Issues: personal liability

  3. Course Management • Basic Approach (Continued) • What can I safely assume? • All of you have experience surfing the web • All of you watch TV at some point • All of you have gone shopping • Many of you have credit cards. • Some may have checking accounts. • Most of you should have some experience using Word, PowerPoint, and possibly Excel • All of you have some curiosity about running your own business at some point.

  4. Course Management • Acquiring the necessary knowledge • Reading the assigned materials before class • Participating in class discussions and/or asking questions about the current topic • Completing homework assignments • Getting an early start on the term project • Remembering that you are already know half of the entrepreneurial equation

  5. Examining our Motives • Where should we start? • Why do I want to run my own business? • Financial Independence • The Challenge • Being the BOSS • ??????????????? • What makes you think you can run a business? • Previous work experiences • Confidence in your abilities • Willing to take risks • Ready to take advantage of an opportunity

  6. Examining our Motives • Personal Inventory • What skills do I have that will be useful? • What skills do I need to acquire to increase the chance of success? • Can I muster the commitment necessary to see this venture become successful? • Will I need help in accomplishing my goals? • What kinds of people will I need in the business?

  7. Examining our Motives • Environmental Scanning • When is a good time to start a business? • What types of opportunities are available where I live or plan to live? • What resources are available to launch my business? • Are there similar businesses already operating? • What kinds of permits/licenses will I require?

  8. Looking Forward • Why do we need to know some Accounting? • If you are not keeping records, you won’t know if you are making or losing money. • If you’re losing money you’ll need to take corrective actions and fast. • If you’re making money, you want to know how much. • Keep in mind that you will always have “partners” that are very interested in your business – the tax collectors.

  9. Looking Forward • Why do w need to know some Finance? • Just about every type of business has a set of more or less universal performance standards; • Gross Profit Margins (GPM) • Operating Profit Margins (OPM) • Net Profit Margins (NPM) • Critical Ratios • Inventory Turnover • Various Expense Ratios: Rent, Labor, Marketing • Return on Investment

  10. Looking Forward • Why do we need to know some basic Economics? • The Laws of Supply and Demand dominate the business landscape • How do we deal with the competition? • How important is pricing strategy? • How does scale of plant affect profitability?

  11. Looking Forward • Why do we need to know something about marketing? • Why is your “message” so important? • What venues are best for reaching your target clients? • What about needs and wants? Consumer preferences? • What types of research should we do before launching the venture?

  12. Looking Forward • Why is the form of business organization selected an important decision? • Sole Proprietorship: max liability • Partnership: less personal liability (maybe) • Sub-Chapter S Corp: spreading the liability • Corporation: the best form in the long run for a larger business • Limited Liability Company: combining aspects of partnership and corporate forms

  13. Looking Forward • Why do we need to know about taxes? • If you don’t pay them – you may find your wages garnished or worse – time in prison. • Importance of paying them on time. • Importance of adequate record keeping. • IRS audits will require documentation of deductions. • Knowing what can be deducted is important to profitability

  14. Looking Forward • What do we need to know about personal liability? • In the beginning, you will have to personally guarantee the credit/debts of your business. • Failure of the business can drive you into personal bankruptcy. • It’s important to work out strategies to protect your personal assets. • What happens when the court waives the corporate veil?

  15. Reading Assignment • Read Chapter 1

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