Solution manual for Entrepreneurial finance 7th edition by J Chris leach and Ronald W. Melicher All Chapters 1-16 Covered

SOLUTION MANUAL
Entrepreneurial Finance,
7thEditionJ.ChrisxLeach
(Author), Ronald W. Melcher
(Author)

,Chapter1
INTRODUCTIONTOFINANCEFOR ENTREPRENEURS FOCUS x




The purpose of this first chapter is to present an overview of what entrepreneurial finance is about.
In doing so we hope to convey to you the importance of understanding and applying
entrepreneurial financemethodsandtoolstohelpensureanentrepreneurialventureissuccessful. We
present a life cycle approach to the teaching of entrepreneurial finance where we cover venture
operating and financial decisions faced byte entrepreneur as adventure progresses from an idea
through to harvesting the venture.

LEARNINGOBJECTIVES

LO1.1: Characterizetheentrepreneurialprocess.
LO1.2: Describeentrepreneurship and somecharacteristicsofentrepreneurs. LO1.3:
x




Indicateseveralmegatrendsprovidingwavesofentrepreneurialopportunities. LO
1.4: List and describe the seven principles of entrepreneurial finance.
LO1.5: Discussentrepreneurialfinancexandxtheroleofthexfinancialmanager. LO
1.6: Describe the various stages of a successful venture‘s life cycle.
LO1.7: Identify, bylife cyclestage, the relevant typesoffinancing andinvestors. LO
x




1.8: Understand the life cycle approach used in this book.

CHAPTEROUTLINE

1.1 THEENTREPRENEURIALPROCESS
1.2 ENTREPRENEURSHIP FUNDAMENTALS
A. Who is an Entrepreneur?
B. Basic Definitions
C. Entrepreneurial Traits or Characteristics
D. Opportunities Exist But Not Without Risks
x x




1.3 SOURCESOFENTREPRENEURIAL OPPORTUNITIES x




A. Societal Changes
B. Demographic Changes
C. Technological Changes
D. EmergingEconomiesand Global Changes
E. Crisesand―Bubbles‖
F. Disruptive Innovation


1

,
, 2 Chapter6:ManagingCash Flow

1.4 PRINCIPLESOFENTREPRENEURIAL FINANCE x




A. Real, Human, and Financial Capital must be Rented fromOwners(Principle#1)
x




B. Risk and Expected RewardgoHandin Hand (Principle#2)
C. While Accounting the Language of Business, Cash is the Currency (Principle #3)
s




D. New VentureFinancingInvolves Search, Negotiation, and Privacy (Principle#4)
E. AVenture‘sFinancial Objectivist Increase Value(Principle#5)
F. ItisDangerousto AssumethatPeople Act AgainstTheirOwnSelf-Interests
(Principle #6)
G. VentureCharacterand Reputation can be Assets or Liabilities(Principle#7)
1.5 ROLEOFENTREPRENEURIALFINANCE
1.6 THESUCCESSFUL VENTURELIFE CYCLE
x




A. Development Stage
x




B. Start upstage
C. Survival Stage
D. Rapid-Growth Stage
E. Early-Maturity Stage
F. LifeCycleStagesand theEntrepreneurialProcess
1.7 FINANCINGTHROUGH THEVENTURE LIFECYCLE
A. Seed Financing
B. Startup Financing
C. First-Round Financing
D. Second-Round Financing
E. Mezzanine Financing
F. Liquidity-Stage Financing
G. Seasoned Financing
1.8 LIFECYCLEAPPROACHFORTEACHINGENTREPRENEURIALFINANCE
SUMMARY


DISCUSSION QUESTIONSAND ANSWERS

1. Whatistheentrepreneurial process?

Theentrepreneurialprocesscomprises: developingopportunities, gatheringresources,
x




xand managing and building operations with the goal of creating value.

2. Whatisentrepreneurship? Whataresomebasiccharacteristics of entrepreneurs?

Entrepreneurshipistheprocessofchangingideasintocommercialopportunitiesandcreating
value. While there is no prototypical entrepreneur, many are good at recognizing commercial
opportunities, tend to be optimistic, and envision a plan for the future.

3. Whydobusinessescloseorceaseoperating? Whataretheprimaryreasonswhy businesses fail?