Chapter 7 FINANCE, PROTECT, AND INSURE YOUR BUSINESS

Report
Chapter 7
FINANCE, PROTECT, AND
INSURE YOUR BUSINESS
LESSONS
7.1 Put Together a Financial Plan
7.2 Obtain Financing for Your
Business
7.3 Protect Your Business
7.4 Insure Your Business
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Chapter 7
Slide 2
Lesson 7.1
PUT TOGETHER A FINANCIAL PLAN
GOALS
Calculate your start-up
costs.
Create a cash flow
statement, an income
statement, a balance sheet,
and a personal financial
statement.
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Chapter 7
Slide 3
PREPARE FINANCIAL STATEMENTS
List of start-up costs
Cash flow statement
Income statement
Balance sheet
Personal financial statement
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Chapter 7
Slide 4
START-UP COSTS
 Start-up costs are the one-time-only
expenses that are paid to establish a
business.
 Common start-up costs include:
 Equipment and supplies
 Furniture and fixtures
 Vehicles
 Remodeling
 Legal and accounting fees
 Licensing fees
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Chapter 7
Slide 5
CASH FLOW STATEMENT
A cash flow statement describes how
much cash comes in and goes out of a
business over a period of time.
Forecast revenues
Forecast operating expenses
Prepare the cash flow statement
Best and worst case
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Chapter 7
Slide 6
INCOME STATEMENT
An income statement is a financial
statement that indicates how much
money a business earns or loses during
a particular period.
Also known as a profit and loss
statement
Difference from a cash flow statement
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Chapter 7
Slide 7
BALANCE SHEET
Types of assets
Types of liabilities
Uncollectible accounts
Depreciation
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Chapter 7
Slide 8
PERSONAL FINANCIAL STATEMENT
A personal financial statement is a
balance sheet of your holdings.
It shows your personal assets, liabilities,
and net worth.
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Chapter 7
Slide 9
Lesson 7.2
OBTAIN FINANCING
FOR YOUR BUSINESS
GOALS
Consider different types of
bank loans.
Explain Small Business
Administration loans.
Evaluate other sources that
can provide debt capital.
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Chapter 7
Slide 10
BANK LOANS
Types of bank loans
Secured loans
Unsecured loans
Types of secured loans
Line of credit
Short-term loan
Long-term loan
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REASONS A BANK
MAY NOT LEND MONEY
Chapter 7
Slide 11
The business is a start up
Lack of a solid business plan
Lack of adequate experience
Lack of confidence in the borrower
Inadequate investment in the business
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SMALL BUSINESS
ADMINISTRATION LOANS
Chapter 7
Slide 12
SBA loan assistance
Requirements of SBA loans
Apply for an SBA loan
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Chapter 7
Slide 13
REQUIREMENTS OF SBA LOANS
 Your business must be considered a small business.
 Your business must not be the leader in its field.
 Your business must comply with all federal
employment laws.
 Your business cannot create or distribute ideas or
opinions.
 You must have been unable to obtain financing from
a commercial bank.
 You must invest a reasonable amount of your own
money in the venture.
 You must provide adequate collateral.
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Chapter 7
Slide 14
OTHER SOURCES OF LOANS
 Small Business Investment Companies—
SBIC
 Minority Enterprise Small Business
Investment Companies—MESBIC
 Department Of Housing And Urban
Development—HUD
 Economic Development Administration—EDA
 State governments
 Local and municipal governments
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FINANCE YOUR BUSINESS
WITH EQUITY CAPITAL
Chapter 7
Slide 15
Equity capital is money invested in a
business in return for a share in the
business’s profits.
Sources of equity
Personal financing
Friends and family
Venture capitalist
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Chapter 7
Slide 16
Lesson 7.3
PROTECT YOUR BUSINESS
GOALS
Categorize business risk.
Identify security precautions
to protect your business
from different types of theft.
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Chapter 7
Slide 17
BUSINESS RISK
Human risks
Natural risks
Economic risks
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Chapter 7
Slide 18
SHOPLIFTING
Shoplifting is the act of knowingly
taking items from a business without
paying.
Customers shoplift millions of dollars in
merchandise every year.
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Chapter 7
Slide 19
EMPLOYEE THEFT
Procedures for preventing and detecting
employee theft include:
 Prevent dishonest employees from
joining your company.
 Install surveillance systems.
 Establish a tough company policy
regarding employee theft.
 Be on the lookout.
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Chapter 7
Slide 20
OTHER TYPES OF THEFT
Robbery
Credit card fraud
Bounced checks
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Chapter 7
Slide 21
Lesson 7.4
INSURE YOUR BUSINESS
GOALS
Determine the different
types of insurance you may
need for your business.
Purchase insurance.
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Chapter 7
Slide 22
CLASSIFICATION OF RISK
Result of the risk
Control of the risk
Insurability of risk
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Chapter 7
Slide 23
TYPES OF INSURANCE
Property insurance
Casualty insurance
Life insurance
Workers’ compensation
Other kinds of insurance
ENTREPRENEURSHIP: Ideas in Action
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Chapter 7
Slide 24
BUY INSURANCE
Choose an insurance agent
Determine how much coverage you
need
ENTREPRENEURSHIP: Ideas in Action
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