Learning Team Reflection Week 3
Learning Team Reflection Week 3
Ian Adams, Evelyn Hunter, Maria Palakunnel, Jasmine Simmons
FIN/571
October 26, 2014
Richard Vermeer
Learning Team Reflection Week 3
Allen Litchman and Laura Trust a husband and wife who worked both worked for corporate firms purchased the Finagle A Bagel business in 1988 in order to relinquish themselves from having to work for others. They have consistently made good decisions and consequently have expanded the business to multiple locations. The team spoke about the importance of due diligence in evaluating conditions for opportunities and then verifying if the projected ROI were sufficient for the organization to undertake. They communicated about using pro forma financial statements to evaluate prospects, the importance of understanding the businesses cash flow and working thru the challenges of developing business acumen and using the tools to grow the business. The team shared the pros and cons to working with venture capital partners vs. taking on debt and offered this perspective as to which is least tolerable. They evaluated the opportunity costs of using their personal funds vs. debt as working capital for the company's operations. They offered that entrepreneurs must consider all available data to make knowledgeable decisions, including current interest rates, rent vs. lease vs. owning assets, and the long-term leverage opportunities that some owned assets present to improving working capital. An alarming cash flow concern was that of revenues; they presented that owners have to be cautious when working with large institutions as sometimes payments can be delayed. Even with negotiated terms there may be unknown administrative costs and delays, therefore it's prudent to have a line of credit, surplus liquid assets, and a good accounting department that will pursue outstanding revenues. Finally the owners offered that trade credit with suppliers and vendors is extremely important to business, it's perceived as
Ian Adams, Evelyn Hunter, Maria Palakunnel, Jasmine Simmons
FIN/571
October 26, 2014
Richard Vermeer
Learning Team Reflection Week 3
Allen Litchman and Laura Trust a husband and wife who worked both worked for corporate firms purchased the Finagle A Bagel business in 1988 in order to relinquish themselves from having to work for others. They have consistently made good decisions and consequently have expanded the business to multiple locations. The team spoke about the importance of due diligence in evaluating conditions for opportunities and then verifying if the projected ROI were sufficient for the organization to undertake. They communicated about using pro forma financial statements to evaluate prospects, the importance of understanding the businesses cash flow and working thru the challenges of developing business acumen and using the tools to grow the business. The team shared the pros and cons to working with venture capital partners vs. taking on debt and offered this perspective as to which is least tolerable. They evaluated the opportunity costs of using their personal funds vs. debt as working capital for the company's operations. They offered that entrepreneurs must consider all available data to make knowledgeable decisions, including current interest rates, rent vs. lease vs. owning assets, and the long-term leverage opportunities that some owned assets present to improving working capital. An alarming cash flow concern was that of revenues; they presented that owners have to be cautious when working with large institutions as sometimes payments can be delayed. Even with negotiated terms there may be unknown administrative costs and delays, therefore it's prudent to have a line of credit, surplus liquid assets, and a good accounting department that will pursue outstanding revenues. Finally the owners offered that trade credit with suppliers and vendors is extremely important to business, it's perceived as
References: Parrino, R., Kidwell, D. S, & Bates, T. W. (2012: Concept Review Video: Working Capital Management