The Entrepreneurial Spectrum

Types of Capital
• Equity
• Debt
 Entrepreneur Grades
• A – Experience as owner + Employee of
entrepreneurial firm

• B - Experience as owner OR Employee of

entrepreneurial firm

• C - Neither
 Entrepreneurial Spectrum

Intrapreneur
Corporation Franchise Acquisition Start up
Reliance Mc Donalds Microsoft Apple
Essar Gangaur Google
Bajaj Facebook
Emami Flipkart
 Challenges
for Entrepreneurs
• Accounting
• Book keeping
• Raising of Capital
• Daily management of Cash flow
 Definition
• Entrepreneurial Finance is an integrative
analysis of qualitative issues of marketing,
sales, personnel management and strategic
planning through:
– Financial tools to manage efficient cash flow
– Techniques to calculate valuation
– How, when and where to acquire financial
resources to finance the business
 Financial Statements
• Income statement
• Balance Sheet
• Statement of cashflow
 Key Terms
• Revenues- Expenses = Net Income
• EBITDA, EBIT, EBT
• COGS
• [Sales – COGS = Gross Margin]
• Operating Expenses (Selling, general & Administrative
expenses)
• Fixed v/s Variable costs
• Depreciation and its influence on timing of reported income
• Tax loss carryforward
• Cash v/s Accrual Accounting
 Terms used interchangably
• Revenues and Sales
• Margins, Sales, Profits, Income
 Balance Sheet
• Assets = Equity + Liabilities
• Sharehoders’ Equity / Net Worth
• Working Capital
 Statement of Cash flow
• Cash flow from operating Activities
• Cash flow from Financing Activities
• Cash flow from operatinginvesting Activities
 Financial Projections
• Conduct industry Analysis; Extrapolate sales, use
calculated cost data
• Prepare a worst case scenario
• Undertake market research if product is new
• Identify market size; number of competitors
• Include all necessary equipment financing needs
• Ensure servicing of all debts otherwise reduce the
amount of debt; lower the interest rates; extend terms of
loan
• Keep projections realistic
 Checklist of
Financial Information
• Historical Financial Statements
• Proforma financial Projections
• Detailed description of Banking relationships
• Terms and rates of loans
• Proposed financing plan
– Amount
– Sources and uses
– Payback & Collateral
• Working Capital needs
• Line of Credit