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Cover of Entrepreneurial Finance v3.0
Published: 
March 2024
Page Count: 
642
ISBN (Digital): 
978-1-4533-9482-3

Entrepreneurial Finance

Version 3.0
By William S. Hettinger and John Dolan-Heitlinger

Included Supplements

Key Features

  • Over 100 embedded videos, all of which are new to this version. Often recorded by the authors, these streaming videos explain key concepts, provide solutions to problems and case studies, and stimulate student engagement in online and hybrid course formats
  • Clear, concise, and non-technical explanations are easily understood by learners regardless of business experience, background, or level of preparation
  • Explains how to perform financial calculations, what they mean and how to use the results to compare a business to itself, competitors, and the industry over time
  • Describes how to do basic ratio calculations and includes ratios typical for various industries and how to find comparative ratios
  • Stimulates and supports active reading, self-reflection, and critical thought
  • Three running case examples introduced in Chapter 2 “Three Sample Companies” are integrated throughout. Featuring both women and men as owners, the sample companies focus on the types of small-businesses common in today’s economy
  • Sixteen illustrative case stories of financial decision making in entrepreneurial and established companies, including Ford, Rivian, Starbucks, Home Depot, Intel, Tesla, Scotts Miracle-Gro, Carvana, and Southwest Airlines
  • Consistent structure supports optimal learning
    • Chapter-Opening “Learning Objectives” preview the material to come and prepare students to learn
    • “By Any Other Name” callouts provide synonyms for common financial terms to enhance student comprehension
    • “Chapter Summary” highlight the key points of the preceding chapter before students move on to learning new material
    • New “Discussion Activities” at the end of every chapter provide a total of 100 thought-provoking ideas for online discussion boards, chats, written homework, and online or face-to-face class discussions
    • “Test Your Knowledge” at the end of every chapter encourage students to analyze information just learned to encourage deeper learning and retention
    • “Build Your Business” exercises prompt students to project the start-up and operational financial results for a prospective business
    • “Case Study” sections begin with “Learning Outcomes” and now include downloadable Excel templates
  • Most chapters include either one of fifteen applied “Case Study” problems or one of ten “Build Your Business” planning and forecasting activities
  • Comprehensive Appendix Section guides students and aspiring entrepreneurs step-by-step through the process of planning their businesses and developing financial projections using the fully functional “Business Planning Model.” This Excel-based template facilitates the instruction, development, and grading of comprehensive financial projections for a start-up or growing business
  • All supplements are written by the authors to ensure accuracy and alignment with the book. Answer guidelines for exercises, cases, and activities are included in the instructor’s manual
  • Customizable

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Entrepreneurial Finance is intended for courses called Entrepreneurial Finance, Finance for Non-Finance Professionals/Executives/Managers, Basic Finance for Business, Business Plan Finance or similar titles taught at the undergraduate or MBA level at two-and four-year colleges and universities.

Entrepreneurial Finance concisely covers the fundamentals of business finance in an easy-to-understand and applied format. The book clearly explains the meanings of key financial tools and metrics and how to use this information to effectively to plan, launch, and run a business. In addition to plentiful real-world examples and genuine company scenarios, the book features three running case studies throughout. The running cases highlight typical, small businesses that represent the kinds of organizations most students will encounter:  a retail shop, a small manufacturing business, and a medical office. Plentiful exercises, activities, and downloadable Excel templates give students hands-on experience they can immediately apply to launching and growing a thriving small business from inception to exit.

 

New in This Version

  • New Exit Strategies chapter with techniques for liquidating or selling a business or taking a company public (Ch. 29 “Exit Strategies”)
  • Downloadable Excel templates added to problems and case studies
  • Includes over 65 embedded hyperlinks to streaming videos for the first time
  • Many new case studies and case stories. Examples include
    • Ford cash flow (Ch. 3 “Cash Flow Statements: The Basics”)
    • Blue Ridge Safari Park (Ch. 6 “Balance Sheet Basics”)
    • Starbucks versus Dunkin Donuts (Ch. 7 “How the Balance Sheet Varies by Business Type”)
    • Health care industry margins (Ch. 10 “Evaluating Profitability”)
    • Leasing decisions at Westside Plaza (Ch. 12 “Can You Pay Your Bills?”)
    • Treatment Center of the Rockies (Ch 13  Can You Pay the Bank?”)
    • Carvana’s Stock Price Collapse (Ch 14 “Measuring Percentage Change”)
    • Broadway Dinner Theater (Ch 14 “Measuring Percentage Change”)
    • Bed, Bath, and Beyond (Ch. 15 “Using Finance Tools to Manage Your Business”)
    • Envision AESC (Section 21.4 “Growth Due to Industry Changes”)
    • Southwest Airlines’ Christmas Meltdown (Section 21.6 “Growth Requires Organizational Capacity”)
    • Personal Medical Devices (Ch. 23 “Evaluating Growth”)
    • Martino’s Family Restaurant (Ch. 22 “Planning and Budgeting Growth”)
    • Superior Electric NPV analysis (Ch. 26 “Time Value of Money”)
    • Shark Tank (Ch. 28 “Finding Money to Start and Operate Your Business”)
    • Northfield Country Market (Ch. 29 “Exit Strategies”)
  • New Five-Part organization based on key entrepreneurial skills
    • Part 1 (Chapters 1 to 2) introduces strategies used by businesses to make money introduces three sample companies that serve as running cases
    • Part 2 (Chapters 3 to 9) explains the content and meaning of the basic financial statements
    • Part 3 (Chapters 10 to 15) describes how to evaluate the information on financial statements and how this information can be used to help a business make money
    • Part 4 (Chapters 16 to 23) discusses how to plan, forecast, and evaluate the startup, operation, and growth of a business
    • Part 5 (Chapters 24 to 29) provides the tools to evaluate investment alternatives, make management decisions, do business internationally, find the money to start and operate a business, and exit a business
  • Enhanced discussion of amortization and depreciation (Section 6.2)
  • Revised coverage of non-operating expenses (Section 4.3)
  • Reflects recent changes to accounting guidelines and tax codes (Ch. 18 “Accounting and Your Business” and Ch. 19 “Taxes and Your Business”)
  • Enhanced discussion of Net Present Value (NPV) and Internal Rate of Return (IRR) (Ch. 26 “Time Value of Money”)
  • New “Discussion Activities” section in every chapter (total of 100 new activities)
  • Numerous calculator problems added to FlatWorld Homework
  • New Appendix A explains basic Excel functions and includes 25 new and applied Excel exercises
  • About the Authors
  • Acknowledgments
  • Preface

    • Part 1: Business Strategies

    Chapter 1: How Businesses Make Money

  • 1.1 Key Business Strategies
  • 1.2 Where’s Your Focus?
  • 1.3 Using Financial Statements
  • 1.4 Chapter Summary
  • 1.5 Exercises

    • Chapter 2: Three Sample Companies

  • 2.1 Manufacturing Company: Boutique Handbags
  • 2.2 Professional Service Firm: Uptown Chiropractic
  • 2.3 Retail Store: Bonnie’s Beachwear
  • 2.4 Chapter Summary
  • 2.5 Exercises

    • Part 2: Basic Financial Statements

    Chapter 3: Cash Flow Statements: The Basics

  • 3.1 What Is Cash?
  • 3.2 Understanding the Cash Flow Statement
  • 3.3 Cash Flow at Bonnie’s Beachwear
  • 3.4 Organize Your Cash Flow by Activity
  • 3.5 Chapter Summary
  • 3.6 Exercises
  • 3.7 Case Study: Computer Languages Institute

    • Chapter 4: Profit and Loss Statement Basics

  • 4.1 Profit Is an Estimate
  • 4.2 Understanding the Profit and Loss Statement
  • 4.3 Examining the Profit and Loss Statement
  • 4.4 Bonnie’s Beachwear Profit and Loss Statement
  • 4.5 Chapter Summary
  • 4.6 Exercises
  • 4.7 Case Study: Tino’s Taco Place

    • Chapter 5: Difference between Cash and Profit

  • 5.1 Asset and Financing Activity
  • 5.2 Timing
  • 5.3 Profit without Cash
  • 5.4 Cash without Profit
  • 5.5 Chapter Summary
  • 5.6 Exercises

    • Chapter 6: Balance Sheet Basics

  • 6.1 Understanding the Balance Sheet
  • 6.2 Examining the Balance Sheet
  • 6.3 Bonnie’s Beachwear Balance Sheet
  • 6.4 Chapter Summary
  • 6.5 Exercises
  • 6.6 Case Study: The Blue Ridge Safari Park

    • Chapter 7: How the Balance Sheet Varies by Business Type

  • 7.1 Retail Business
  • 7.2 Manufacturing Business
  • 7.3 Service Business
  • 7.4 Chapter Summary
  • 7.5 Exercises

    • Chapter 8: How Financial Statements Tie Together

  • 8.1 Operating Activities
  • 8.2 Financing Activities
  • 8.3 Asset Activities
  • 8.4 Chapter Summary
  • 8.5 Exercises

    • Chapter 9: Understanding the Indirect Cash Flow Statement

  • 9.1 Operating Cash Flow
  • 9.2 Examining the Indirect Operating Cash Flows at Bonnie’s Beachwear
  • 9.3 Examining Indirect Asset Activity and Financing Activity Cash Flow at Bonnie’s Beachwear
  • 9.4 Putting It All Together
  • 9.5 Chapter Summary
  • 9.6 Exercises

    • Part 3: Evaluating Financial Statements

    Chapter 10: Evaluating Profitability

  • 10.1 Gross Margin
  • 10.2 Operating Margin
  • 10.3 Net Margin
  • 10.4 Analyzing Your Margins
  • 10.5 Return on Assets
  • 10.6 Return on Equity
  • 10.7 Chapter Summary
  • 10.8 Exercises
  • 10.9 Case Study: Growth and Profitability at Tesla

    • Chapter 11: Working Capital and Operational Efficiency

  • 11.1 Working Capital
  • 11.2 Efficiency Ratios
  • 11.3 Efficiency at Boutique Handbags
  • 11.4 Analyzing Your Efficiency
  • 11.5 Managing Collection and Payment Periods
  • 11.6 Is Boutique Handbags Efficient?
  • 11.7 Chapter Summary
  • 11.8 Exercises
  • 11.9 Case Study: Boom and Bust at Scotts Miracle-Gro

    • Chapter 12: Can You Pay Your Bills?

  • 12.1 Liquidity Ratios
  • 12.2 Liquidity at Bonnie’s Beachwear
  • 12.3 Understanding Liquidity Ratios
  • 12.4 Chapter Summary
  • 12.5 Exercises
  • 12.6 Case Study: Leasing Decisions at Westside Plaza

    • Chapter 13: Can You Pay the Bank?

  • 13.1 Leverage Ratios
  • 13.2 Leverage at Uptown Chiropractic
  • 13.3 Industry Leverage Ratios
  • 13.4 Chapter Summary
  • 13.5 Exercises
  • 13.6 Case Study: Treatment Center of the Rockies

    • Chapter 14: Measuring Percentage Change

  • 14.1 Understanding Percentage Change
  • 14.2 Percentage Change at Bonnie’s Beachwear
  • 14.3 Comparing Alternatives Using Percentage Change
  • 14.4 Chapter Summary
  • 14.5 Exercises
  • 14.6 Case Study: Broadway Dinner Theater

    • Chapter 15: Using Finance Tools to Manage Your Business

  • 15.1 Focus on Your Strategy
  • 15.2 Focus On Your Cash
  • 15.3 Use Your Tools
  • 15.4 Chapter Summary
  • 15.5 Exercises
  • 15.6 Case Study: The Ratio Match Game

    • Part 4: Growing a Business

    Chapter 16: What to Consider When Starting Your Business

  • 16.1 Use Your Expertise
  • 16.2 Identify Products and Services
  • 16.3 Customers
  • 16.4 Prices and Margins
  • 16.5 Cash
  • 16.6 Working Capital Needs
  • 16.7 Return
  • 16.8 Chapter Summary
  • 16.9 Exercises

    • Chapter 17: Legal and Your Business

  • 17.1 Legal Structure
  • 17.2 Licenses and Permits
  • 17.3 Protecting Intellectual Capital
  • 17.4 Contracts
  • 17.5 Chapter Summary
  • 17.6 Exercises

    • Chapter 18: Accounting and Your Business

  • 18.1 Fiscal Year
  • 18.2 Cash and Accrual Accounting
  • 18.3 Accounting Software and Systems
  • 18.4 Chapter Summary
  • 18.5 Exercises

    • Chapter 19: Taxes and Your Business

  • 19.1 Income Taxes
  • 19.2 Payroll Taxes
  • 19.3 Sales Taxes
  • 19.4 Chapter Summary
  • 19.5 Exercises

    • Chapter 20: Starting Your Business

  • 20.1 Setting Up the Business
  • 20.2 Building Sales Volume
  • 20.3 Positive Cash Flow
  • 20.4 How Much Money Does a Business Need?
  • 20.5 Chapter Summary
  • 20.6 Exercises

    • Chapter 21: When Growth Makes Sense

  • 21.1 Growth to Meet Customer Demand
  • 21.2 Growth to Remain Operationally Efficient
  • 21.3 Growth to Remain Competitive
  • 21.4 Growth Due to Industry Changes
  • 21.5 Growth Requires Money
  • 21.6 Growth Requires Organizational Capacity
  • 21.7 Chapter Summary
  • 21.8 Exercises

    • Chapter 22: Planning and Budgeting Growth

  • 22.1 Understanding Projections
  • 22.2 First-Year Operations
  • 22.3 Growing Uptown Chiropractic
  • 22.4 How Fast Should You Grow?
  • 22.5 Chapter Summary
  • 22.6 Exercises
  • 22.7 Case Study: Martino’s Family Restaurant

    • Chapter 23: Evaluating Growth

  • 23.1 Have Profits Increased?
  • 23.2 Have Margins Increased?
  • 23.3 Have Returns Increased?
  • 23.4 Chapter Summary
  • 23.5 Exercises
  • 23.6 Case Study: Personal Medical Devices

    • Part 5: Beyond the Basics

    Chapter 24: Sales Projection Analysis

  • 24.1 Speaking Economics
  • 24.2 Break-Even Volume
  • 24.3 Break-Even Amount
  • 24.4 Can You Sell That Many?
  • 24.5 Chapter Summary
  • 24.6 Exercises

    • Chapter 25: Cost–Benefit Analysis

  • 25.1 Analyzing Investments and Capital Expenditures
  • 25.2 Return on Investment
  • 25.3 Payback Period
  • 25.4 Break-Even on Investment
  • 25.5 Examining Investment Opportunities at Johnny’s Garage
  • 25.6 Limitations of Cost Benefit Analysis
  • 25.7 Chapter Summary
  • 25.8 Exercises
  • 25.9 Case Study: New England Office Chair—Part 1

    • Chapter 26: Time Value of Money

  • 26.1 Understanding the Time Value of Money
  • 26.2 Future Value
  • 26.3 Present Value
  • 26.4 Net Present Value
  • 26.5 Determining Interest Rates and Discount Rates
  • 26.6 Internal Rate of Return
  • 26.7 Examining the Time Value of Money at Johnny’s Garage
  • 26.8 Chapter Summary
  • 26.9 Exercises
  • 26.10 Case Study: Investment Opportunities at the Superior Electric Corporation
  • 26.11 Case Study: New England Office Chair—Part 2

    • Chapter 27: Doing Business Internationally

  • 27.1 Exporting
  • 27.2 Importing
  • 27.3 Understanding International Payments
  • 27.4 Understanding Exchange Rates
  • 27.5 Hedging Exchange Rates
  • 27.6 Big Macs and Purchasing Power Parity
  • 27.7 Chapter Summary
  • 27.8 Exercises

    • Chapter 28: Finding Money to Start and Operate Your Business

  • 28.1 Your Money
  • 28.2 Family and Friends
  • 28.3 Small-Business Lenders
  • 28.4 Outside Investors and Venture Capitalists
  • 28.5 Crowdfunding
  • 28.6 Chapter Summary
  • 28.7 Exercises

    • Chapter 29: Exit Strategies

  • 29.1 Working in the Business or on the Business?
  • 29.2 Liquidation of a Business
  • 29.3 Business Valuation
  • 29.4 Sale of a Business
  • 29.5 Initial Public Offering
  • 29.6 Chapter Summary
  • 29.7 Exercises
  • 29.8 Case Study: The Northfield Country Market

    • Part 6: The Appendices

    Appendix A: Basic Excel for Entrepreneurial Finance

  • A.1 Basic Calculations in Excel
  • A.2 Row Labels and Column Headings
  • A.3 Copying Formulas
  • A.4 Formatting Columns
  • A.5 Formatting Numbers
  • A.6 Creating a Profit and Loss Statement in Excel
  • A.7 Calculating Percentage Change in Excel
  • A.8 Exercises

    • Appendix B: Planning Your Business

  • B.1 The Purpose of Your Business
  • B.2 The Products and Services You Plan to Sell
  • B.3 Your Strategies
  • B.4 Your Suppliers
  • B.5 Your Margins
  • B.6 Your Cash Collection Cycle

    • Appendix C: Making Your Business Legal

  • C.1 Planning Your Legal Structure

    • Appendix D: Planning Your Accounting and Taxes

  • D.1 Accounting Structure
  • D.2 Tax Structure
  • D.3 Federal and State Income Taxes

    • Appendix E: Startup Expenses

  • E.1 Asset Purchases
  • E.2 Initial Inventory and Raw Materials Expenses
  • E.3 Other Startup Expenses

    • Appendix F: Sales and Cost of Goods Sold Forecast

  • F.1 Product Name
  • F.2 Average Price per Sale
  • F.3 Cost of Goods Sold per Sale
  • F.4 Inventory and Raw Material Purchases
  • F.5 Payment for Purchases
  • F.6 Unit Sales
  • F.7 Payment for Sales

    • Appendix G: Monthly Expenses

  • G.1 Operating Expenses
  • G.2 Financing Activities

    • Appendix H: Cash Needs Forecast

  • H.1 Sources of Startup Cash
  • H.2 Projected Cash Flows
  • H.3 Additional Cash Needs

    • Appendix I: Sensitivity Analysis

  • I.1 Revenue
  • I.2 Cost of Goods Sold
  • I.3 Unit Sales
  • I.4 Operating Expenses
  • I.5 Congratulations!

    • Appendix J: Business Forecasting Model

  • J.1 Business Forecasting Model Template

    • Appendix K: Case Study Templates

  • K.1 Chapter 3 Case Study Template
  • K.2 Chapter 6 Blue Ridge Safari Park
  • K.3 Chapter 10 Tesla Template
  • K.4 Chapter 11 Scotts Template
  • K.5 Chapter 12 Westside Plaza Template
  • K.6 Chapter 13 Treatment Center of the Rockies
  • K.7 Chapter 14 Broadway Dinner Theater
  • K.8 Chapter 15 Ratio Match Game Template
  • K.9 Chapter 22 Martino’s Family Restaurant
  • K.10 Chapter 23 Personal Medical Device Template
  • K.11 Chapter 26 Superior Electric Template
  • K.12 Chapter 26 New England Chair Part 2
  • K.13 Chapter 29 Country Market Case Data Template
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    William S. Hettinger FlatWorld

    William S. Hettinger is an internationally known educator and consultant with more than twenty-five years’ experience in finance, entrepreneurship, real estate, and leadership. He is a principal at the Institute for Finance and Entrepreneurship and president and founder of Prosperous Communities, a housing and economic development consultancy. He has taught finance and entrepreneurship to graduate and undergraduate students for over a decade and is currently an adjunct professor at Albertus Magnus College and Bay Path University.
    Dr. Hettinger has been featured in publications including the Wall Street Journal, Bloomberg Businessweek, CBSNews Money Watch, the Associated Press, and the Kauffman Foundation’s Entrepreneurship.org. He has also been a guest on NPR and numerous local TV and radio shows.
    Dr. Hettinger earned his Ph.D. in International Development from the University of Southern Mississippi, where his research focused on resident housing in resort communities. He also earned an MBA from Rensselaer Polytechnic Institute and a BA in Mathematics and Economics from the University of Buffalo. His research interests include professional financial literacy, market failures, and workforce housing.

    John Dolan-Heitlinger FlatWorld

    John Dolan-Heitlinger is a nationally known consultant and business executive with more than twenty years’ experience as a CEO and senior executive in financial institutions. His national consulting practice assists financial institutions and small businesses with governance, planning, financial management, mergers, and regulatory issues. He has chaired and served on many civic, not-for-profit, and government boards. Mr. Dolan-Heitlinger earned his MBA from the Johnson School at Cornell University and a bachelor’s degree in history and economics from SUNY Potsdam. He is a nationally recognized speaker and regular contributor to professional journals. He is retired from the U.S. Coast Guard Reserve as a Commander.

    Additions & Errata

    3/18/24:

    Chapter 14, problem 7. June 2022 Gross Revenue should be $24,400 instead of $320,128.

    Chapter 29, problem 14:

       Sale Activities
     
     
     
    Gross Revenue
    $320,128
     
      Less: Returns
    $27,552
     
    Net Revenue
    $292,576
     
    Cost of Goods Sold
    $137,760
     
    Gross Profit
    $154,816
     
    Operating Expenses
     
    Selling Expenses
    $32,656
     
    Overhead Expenses
    $73,498
     
    Depreciation
    $5,681
     
      Total Operating Expenses
    $111,835
     
    Operating Profit
    $42,981
     
    Interest
    $7,557
     
    Inventory Losses
    $2,480
     
    Profit before Taxes
    $35,424
     
    Income Taxes
    $7,439
     
    Net Profit
    $27,985
      

     

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