Entrepreneurial Finance

Entrepreneurial Finance

For more videos on FINANCE, go to the topic Finance under the subject Economics. 

Finance is the science of funds management. The general areas of finance are business
finance, personal finance, and public finance. Finance includes saving money and often
includes lending money. The field of finance deals with the concepts of time, money and risk
and how they are interrelated. It also deals with how money is spent and budgeted.

Finance works most basically through individuals and business organizations depositing
money in a bank. The bank then lends the money out to other individuals or corporations for
consumption or investment, and charges interest on the loans.

Loans have become increasingly packaged for resale, meaning that an investor buys the
loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to
investors from corporations, while that investor can then hold the debt and collect the
interest or sell the debt on a secondary market. Banks are the main facilitators of funding
through the provision of credit, although private equity, mutual funds, hedge funds, and
other organizations have become important as they invest in various forms of debt. Financial
assets, known as investments, are financially managed with careful attention to financial
risk management to control financial risk. Financial instruments allow many forms of
securitized assets to be traded on securities exchanges such as stock exchanges, including
debt such as bonds as well as equity in publicly-traded corporations.

Central banks act as lenders of last resort and control the money supply, which affects the
interest rates charged. As money supply increases, interest rates decrease.

Financial bootstrapping
Financial bootstrapping is a term used to cover different methods for avoiding using the
financial resources of external investors. Bootstrapping can be defined as “a collection of
methods used to minimize the amount of outside debt and equity financing needed from
banks and investors”[9]. The use of private credit card debt is the most known form of
bootstrapping, but a wide variety of methods are available for entrepreneurs. While
bootstrapping involves a risk for the founders, the absence of any other stakeholder gives
the founders more freedom to develop the company. Many successful companies including
Dell Computers were founded this way.

There are different types of bootstrapping:

* Owner financing

* Minimization of the accounts receivable

* Joint utilization

* Delaying payment

* Minimizing inventory

* Subsidy finance

Source: Wikipedia

Business Opportunity
Business opportunity

A business opportunity (or bizopp) involves the sale or lease of any product, service,
equipment, etc. that will enable the purchaser-licensee to begin a business. The licensor or
seller of a business opportunity usually declares that it will secure or assist the buyer in
finding a suitable location or provide the product to the purchaser-licensee. This is different
from the sale of an independent business, in which there is no continued relationship
required by the seller.

Concept

The use of a toll-free telephone number makes it difficult for customers to immediately
identify the company's geographical location. Moreover, a company can own many 1-800
numbers, using a different one for each area in which it advertises. In the event of consumer
complaints, this thwarts investigators from recognizing the connection between biz-ops
listings in various newspapers.

A common type of business opportunity involves a company that sells bulk vending
machines and promises to secure suitable locations for the machines. The purchaser is
counting on the company to find locations where sales will be high enough to enable him to
recoup his expenses and make a profit. Because of the many cases of fraudulent biz-ops in
which companies have not followed through on their promises, or in which profits were much
less than what the company led the investor to believe, governments closely regulate these
operations.

Multi-level marketing is often presented as a business opportunity, such as the phrase, "Let
me tell you about an incredible ground-level business opportunity."

In the United States, the Federal Trade Commission receives complaints and helps
coordinate enforcement action against fraudulent business opportunities[1].

Makeup of a business opportunity

A business opportunity consists of four integrated elements all of which are to be present
within the same timeframe (window of opportunity) and most often within the same domain
or geographical location, before it can be claimed as a business opportunity. These four
elements are:
* A need

* The means to fulfill the need

* A method to apply the means to fulfill the need and;

* A method to benefit

With anyone of the elements missing, a business opportunity may be developed, by finding
the missing element. The more unique the combination of the elements, the more unique
the business opportunity. The more control an institution (or individual) has over the
elements, the better they are positioned to exploit the opportunity and become a niche
market leader.

Source: Wikipedia

Social Entrepreneurship
Social Entrepreneurship

Social entrepreneurship is the work of a social entrepreneur. A social entrepreneur is

someone who recognizes a social problem and uses entrepreneurial principles to organize,
create, and manage a venture to make social change. Whereas a business entrepreneur
typically measures performance in profit and return, a social entrepreneur assesses success
in terms of the impact s/he has on society as well as in profit and return. While social
entrepreneurs often work through nonprofits and citizen groups, many now are working in
the private and governmental sectors and making important impacts on society.

The main aim of social entrepreneurship as well as a social enterprise is to further social and
environmental goals for a good cause. Although social entrepreneurs often are associated
with nonprofits, this need not be incompatible with making a profit. Social enterprises are for
‘more-than-profit,’ using blended value business models that combine a revenue-generating
business with a social-value-generating structure or component. A social entrepreneur in the
twenty-first century will redefine entrepreneurship as we know it, due to their progressive
business models.