MgtOps 492 - Exam 1
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MgtOps 492 - Exam 1
MgtOps Ernst Young Business Plan Guide 3rd Edition
MgtOps Ernst & Young Business Plan Guide - 3rd Edition
Purpose of a business plan
It's a way to map out a desired short- and medium-term future.
When should a business plan be written?
For any new operating group/division/subsidiary being formed
For new product or project
When buying or merging with another entity
Annually for corporate resource allocation
What functions does a business plan serve?
Determine future projects
Determine how well goals have been met
For an ongoing business, what purposes does a business plan serve?
It's a way of getting consensus and consistency throughout the company.
Assist in strategic planning.
Used to test theories of how the company should be run and calculate possible outcomes.
What are the book's "four c's of credit"?
What are lenders looking for when reviewing loan applications?
The ability of a company to repay its debt.
What are venture capitalists looking for?
Rates of return of 25 to 50-percent or more, compounded annually
Investments that will become liquid within a relatively short period of time.
Why is liquidity important?
At the end of a venture capital fund's defined lifetime, the fund must be split up and returned to investors.
What kind of businesses do venture capitalists look for?
Businesses that have an edge on the competition that cannot easily be copied.
Proprietary characteristics often marked by patents, licenses, trademarks, or other legal protection.
What are the ___ types of investors?
Venture capital funds
Vendors - by giving better terms on payables
Corporate Venture Capitalists
Ad Hoc Venture Pools (minority enterprise investment groups)
What are the variables an entrepreneur must deal with when choosing the legal form of a business?
Ease of bringing in new investors
What are the six types of legal organizations listed in the book?
Simplicity characteristics of each type of legal organization
: most simple, least expensive
: relatively simple to establish & maintain
: needs a formal written agreement
: more complex; needs formal operating agreement & registration in some states
: generally requires the most formality and maintaining
: same degree of formality and expense as regular corp; maintenance is more expensive due to constant need for oversite.
Liability of various types of organizations
: owner has unlimited personal liability
: each has unlimited personal liability
: general partners are personally liable; limited partners are only responsible up to the extent of their investment
: Owners not generally liable
: Stockholders not generally liable
List the Financial Risks analyzed while doing due diligence
List the operational risks reviewed during due diligence
- Raw materials
- Design / engineering
- Supply chair
- Manufacturing operations
- Compliance with legal and regulatory standards
List the business risks associated with due diligence
Changing forms of competition
Governance and human resource risks
Compliance with laws, regulations and the company's governing documents on business conduct and ethics
List the transaction risks associated with due diligence
Tax and accounting considerations
Comparable valuations of competitors or industry leaders
What info is included in the general company description?
What type of business
What customers does it want to serve
Mgmt team overview
What is in the "Products and Services" section of a business plan?
Use and appeal
Stage of development
Convey as concisely as possible the nature of the business offerings
What is in the "Marketing Plan" section of a business plan?
Market definition and opportunity
Competition and other influences
What is the purpose of the "Major Milestones" section of the business plan?
Plans and objectives for a venture
It's a schedule and a set of goals against which progress can be measured
It should focus on major events, such as financing commitments, prototype development, first market test, break-even attainment, etc.
Should be clearly defined and easily measured