ESB V2 Domain 4, Lesson 2 & 3
Angel investor - ANS-a wealthy individual willing to invest in return for equity in a new venture
Bootstrapping - ANS-Using your own savings to start a business
Burn rate - ANS-A calculation used to measure a business's monthly cash flow.
Cash Flow - ANS-the difference between cash coming in and cash going out of a business
Crowdfunding - ANS-raising money for a project or venture by obtaining many small amounts of
money from many people
Fixed Costs - ANS-costs that do not vary with production or sales level
Formula for Burn Rate - ANS-Beginning balance - Ending balance
Formula for cash flow - ANS-Total cash - total expenses
Formula for Gross income - ANS-Revenue - COGS
Formula for Net income - ANS-Revenue - Expenses - COGS
Formula for Return on Investment - ANS-Profit from investment / cost of investment x 100
Formula for run rate - ANS-revenue x 12
Incubater - ANS-Organization that gives advice to new business at no cost
Operating budget - ANS-A budget that states how managers intend to use organizational
resources to achieve organizational goals.
Return on investment - ANS-the percentage of the total cost of purchasing an investment and
the profit made from selling that investment
Run rate - ANS-A calculation used to make projections about a company's future performance.
SBA - ANS-Small Business Administration
Startup cost - ANS-the cost associated with beginning a business
Timeframe to repay SBA inventory/equipment loan - ANS-10 years
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