BUS368 Week 1 - Discussion 1
Buy and Download >
Historical Operating Data and Risk Management [WLOs: 1, 2, 3] [CLOs: 1, 5]
Prior to beginning work on this discussion, review the assigned text chapters and the articles listed in Week 1 Required Resources. You and a colleague decided to start a business, and based upon your work experience you know the importance of finance to organizational success. In fact, you have experience with many corporate finance activities; however, you are sure that a start-up business faces challenges no longer relevant to established organizations. You know it is important to identify differences and understand how the differences affect your effort to develop a financial plan for your start-up.
You are going to create an initial discussion post that addresses the two differences between established and start-up businesses below:
- Entrepreneurs usually have little or no historical operating data to work with, something which affects financial predictions.
- Risk management activities for a startup do not use the standard procedures applicable to corporate and established businesses. For example, mitigating risk by diversifying is not a practical option for a startup.
How do these differences affect the entrepreneur’s effort to plan?
In your response focus on the following items (you are encouraged to go beyond the course text for information):
- Evaluate the significant assumptions associated with traditional finance procedures and how these assumptions affect the application of financial procedures in an entrepreneurial environment, especially when making financial projections or establishing risk-management procedures. You should describe at least two assumptions.
- Analyze at least two things an entrepreneur must know to effectively cope with an operating environment in which traditional finance assumptions do not apply and in which risks abound.
- Offer your peers a link to a video or an article that complements your answer to the items above.