SOLUTION MANUAL FOR Entrepreneurial Finance 7th Edition by J. Leach , Ronald Melicher ISBN:978-0357442043 COMPLETE GUIDE WITH RATIONALES 100% VERIFIED A+ GRADE ASSURED!!!!!NEW LATEST UPDATE!!!!!

Chapter 1 GK




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUSGK GK GK GK GK




The purpose of this first chapter is to present an overview of what entrepreneurial finance is a
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bout. In doing so we hope to convey to you the importance of understanding and applying entre
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preneurial finance methods and tools to help ensure an entrepreneurial venture is successful. We
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present a life cycle approach to the teaching of entrepreneurial finance where we cover ventur
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e operating and financial decisions faced by the entrepreneur as a venture progresses from an i
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dea through to harvesting the venture.
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LEARNING OBJECTIVES GK




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs.
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,LO 1.3: Indicate several megatrends providing waves of entrepreneurial opportunities. LO 1.4: Li
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st and describe the seven principles of entrepreneurial finance.
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LO 1.5: Discuss entrepreneurial finance and the role of the financial manager. LO 1.6: Describe the
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various stages of a successful venture‗s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors. LO 1.8: Und
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erstand the life cycle approach used in this book.
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CHAPTER OUTLINE GK




1.1 THE ENTREPRENEURIAL PROCESS
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1.2 ENTREPRENEURSHIP FUNDAMENTALS GK




A. Who is an Entrepreneur?
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B. Basic Definitions
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C. Entrepreneurial Traits or Characteristics GK GK GK




D. Opportunities Exist But Not Without Risks
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1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES
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A. Societal Changes GK




B. Demographic Changes GK




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,C. Technological Changes GK




D. Emerging Economies and Global Changes
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E. Crises and ―Bubbles
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F. Disruptive Innovation GK




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1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE
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A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
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B. Risk and Expected Reward go Hand in Hand (Principle #2)
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C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
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D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‗s Financial Objective is to Increase Value (Principle #5)
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F. It is Dangerous to Assume that People Act Against Their Own Self-Interests (Principle #6)
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G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
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1.5 ROLE OF ENTREPRENEURIAL FINANCE
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1.6 THE SUCCESSFUL VENTURE LIFE CYCLE
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A. Development Stage GK




B. Startup StageGK




C. Survival Stage GK




D. Rapid-Growth Stage GK




E. Early-Maturity Stage GK




F. Life Cycle Stages and the Entrepreneurial Process
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1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE
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A. Seed Financing
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, B. Startup FinancingGK




C. First-Round Financing GK




D. Second-Round Financing GK




E. Mezzanine Financing GK




F. Liquidity-Stage Financing GK




G. Seasoned Financing GK




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE SUMMARY
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DISCUSSION QUESTIONS AND ANSWERS GK GK GK




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, and managin
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g and building operations with the goal of creating value.
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2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and creating val
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ue. While there is no prototypical entrepreneur, many are good at recognizing commercial opport
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unities, tend to be optimistic, and envision a plan for the future.
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3. Why do businesses close or cease operating? What are the primary reasons why businesses fail?
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Nearly one- GK


half of businesses that fail do so because of economic factors including inadequate sales, insuffi
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cient profits, and industry weakness. Many of the economic factors are directly tied to financing
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GKconcerns (e.g., insufficient profits for investors). Almost 40 percent of business failures not citi
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ng economic factors cite specifically financial causes like excessive debt and insufficient financial
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GKcapital. The remaining cited reasons for failure include a lack of business and managerial expe
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rience, business conflicts, family problems, fraud, and disasters. Many businesses close and fail d
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ue to financial trouble which is mostly related to lack of sales and unsatisfactory profits.
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