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Entrepreneurial Financial Management: An Applied Approach, Second Edition
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Description: This practical text presents an applied, realistic view of entrepreneurial finance for today's changing business environment. It provides an integrated set of concepts and applications, drawing from entrepreneurship, finance, and accounting, that will prepare aspiring entrepreneurs for the world they will most likely face as they start their new businesses.
The contents are designed to follow the life cycle of a new business venture, with topics presented in the logical order that entrepreneurs are likely to face them. Although the authors cover venture capital and public offerings, they put them in their proper perspective as unlikely vehicles for most entrepreneurs. The book includes a comprehensive financial spreadsheet template with step-by-step instructions that allows for applications of many of the concepts to actual businesses. This new edition adds a nonprofit version of the spreadsheet, and both templates can be downloaded from the author's website. The book also includes a comprehensive survey of funding sources, including all-new chapters on financing over the life of a venture and financing from the entrepreneur, family and friends.
Selected Contents:
Preface
1. Introduction
Importance of Knowing the Numbers
Measuring Success
What Is Entrepreneurial Financial Management?
What Makes Entrepreneurial Finance Similar to Traditional Finance?
What Makes Entrepreneurial Finance Different from Traditional Finance?
Lack of Historical Data and Liquidity Complicate the Practice of Finance in Early Stage Firms
Using Stakeholder Analysis to Guide Ethical Decision Making
Summary
PART I. BUILDING A FINANCIAL FORECAST
2. Setting Financial Goals
Wealth vs. Income
Integrating Non-Financial Goals
Importance of Self-Assessment
The Self-Assessment Process
The Business Plan
Summary
Appendix 2.1. Individual Entrepreneurial Self-Assessment
Appendix 2.2. Partnership/Shareholder Assessment
3. Understanding Financial Statements
The Accounting Equation
An Example
Basic Financial Statements
Limitations of Business Financial Statements
Summary
4. Revenue Forecasting
Common Forecasting Mistakes
The Link Between the Marketing Plan and Revenue Forecasts
Creating Scenarios
The Link Between the Revenue Forecast and the Cash Flow Forecast
The Impact of Business Type on Revenues
Quantitative Forecasting Techniques
Importance of Revenue Forecasting
Summary
5. Expense Forecasting
Defining Costs
Cost Behavior
Breakeven Analysis
Expense Forecasting: The Impact of Business Type on Expenses
Reducing Expenses Through Bootstrapping
Summary
6. Integrated Financial Model
The Entrepreneur's Aspirations Reconsidered
Contribution Formal Income Statement
Earnings Before Interest and Taxes (EBIT)
Inventory of Assumptions
Social Ventures
Determining the Amount of Funds Needed
Using the Forecasting Template to Determine the Amount of Funds Needed
Time Out of Cash
Assessment of Risk Sensitivity
Integrating into Business Plan or Funding Document
Summary
Appendix 6.1. Integrated Financial Statements Template Instructions
PART II. MANAGING THE FINANCIAL RESOURCES OF A VENTURE
7. Monitoring Financial Performance
Tracking Assumptions
Establishing Milestones
Getting the Numbers Needed to Manage
Using Numbers to Manage
Working with Accountants
Summary
8. Day-to-Day Cash Flow Management and Forecasting
Why Is Cash Flow Different From Net Income?
How Is Cash Flow Measured?
Interpreting a Statement of Cash Flows
Statement of Cash Flows: Indirect Method
Investors and Creditors Use of the Cash Flow Statement
Effective Cash Management
The Emotional Side of Cash Flow Management
Summary
PART III. SOURCES OF FINANCING
9. Financing over the Life of a Venture
Common Misconceptions about Entrepreneurial Financing
The Diverse Nature of Business Financing
Financing Smaller Businesses with Modest Growth Potential
Financing High Growth, High Potential Ventures
Summary
10. Start-up Financing from the Entrepreneur, Friends, and Family
Self-Financing
Advantages and Disadvantages of Self-Financing
Friends and Family Financing
Structure of Funds Invested
Summary
11. Bootstrapping
Why Bootstrap?
Bootstrapping Administrative Overhead
Bootstrapping Employee Expenses
Bootstrapping Operating Expenses
Bootstrap Marketing
The Ethics of Bootstrapping
Summary
12. External Sources of Funds: Equity
Angel Investors
Strategic Partners
Private Placement
SBIC
The Downside of Equity Financing
Working with Outside Investors
Summary
13. External Sources of Funds: Debt
Short-Term Debt
Long-Term Debt
Forms of Debt Overlooked by Entrepreneurs
Government Funding Through SBA
Working with Bankers
The Downside of Debt
Developing a Financing Plan
Summary
14. Financing the High Growth Business
What Venture Capitalists and Private Equity Funds Provide: The Four "Cs"
Integrating Profitability into the Business Plan
Stages of the Firm
Stages of Business Funding
The Dark Side of Venture Capital Financing
Initial Contact with a Venture Capitalist
Initial Public Offering (IPO)
The Process of the IPO
Summary
PART IV. PLANNING FOR THE ENTREPRENEUR'S TRANSITION
15. Business Valuation
General Concepts that Guide the Determination of Value
Basic Information Required for a Valuation
Discounted Cash Flow
Market Comparison Techniques and Their Drawbacks
Summary of Market Comparison Approach
16. Exit Planning
Self-Assessment Revisited
The Ethical Side of the Entrepreneur's Transition
A Model of Exit Planning
Exit Options
The Process of Selling a Business
Post-Exit Issues
Summary
Index
About the Authors
Comment(s): "The authors have put together a comprehensive book that provides students with a pragmatic guide to the increasingly complex world of entrepreneurial finance. Entrepreneurial Financial Management is a useful survey of the many facets that go into financing a venture from a strategic point of view." -- Michael H. Morris N. Malone Mitchell Chair in Entrepreneurship, Oklahoma State University
"Cornwall, Vang and Hartman's Entrepreneurial Financial Management is the best text available for students and entrepreneurs. The sections on bootstrapping, debt and equity financing take the reader from the smallest start-up business to the growing entrepreneurial firm. The book is well written and easy to follow." -- George T. Solomon, Director, Center For Entrepreneurial Excellence, The George Washington University
" Entrepreneurial Financial Management is THE perfect book for undergraduate classes in entrepreneurial finance. Cornwall et al offer an excellent foundation book combining basic accounting fundamentals with a comprehensive study of the options for financing new ventures from bootstrapping to IPOs. The 'end of chapter' problems and questions are great and the authors offer a template that students can use to create their proforma statements. The book is written in a straightforward manner and works for both business and non-business majors." -- Rebecca J. White, James W. Walter Distinguished Chair of Entrepreneurship, The University of Tampa
"Jeff Cornwall's book is extremely helpful for students. It is easy to understand and provides valuable information that every entrepreneur must have." -- Mindy Walls, Director, Entrepreneurship Center, West Virginia University
    
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