The Business Professor
Vision Statement in a Business Plan
What is the Vision Statement in a Business Plan? A vision statement is a written declaration clarifying your business's meaning and purpose for stakeholders, especially employees. It describes the desired long-term results of your...
The Business Professor
Venture Capital Method - Business Valuation
What is the Venture Capital method of business valuation? “Venture Capital Method” for determining a company's valuatio involves multiplying the company's projected revenue with its projected margin and industry price-to-earnings to...
The Business Professor
Value of Dividends Method - Business Valuation
What is the Value of Dividends Method of Business Valuation? This method relies on the idea that a stock is only worth what it will provide to investors in future dividends. If a business does not currently distribute dividends, the...
The Business Professor
Total Quality Management
What is Total Quality Management or TQM? Total quality management consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on demand products and services...
The Business Professor
Theory of Constraints
What is the Theory of Constraints? The theory of constraints is a management paradigm that views any manageable system as being limited in achieving more of its goals by a very small number of constraints.
The Business Professor
Term Sheet Provisions
What are Term Sheets? What are the primary term sheet provisions? A term sheet often covers four main categories: the deal economics, the investor rights, the governance and oversight, and the exit terms. A term sheet must communicate...
The Business Professor
Special Employee Provisions - Term Sheet
What are the Special Employee Provisions in a Term Sheet? The parties often negotiate numerous employee-related provisions into the term sheet. These provisions serve as control mechanisms to either incentivize current management or...
The Business Professor
SAAS Business Model - Explained
What is a SAAS Business Model? SaaS, or software as a service, is a delivery model in which a centrally hosted software is licensed to customers via a subscription plan. Any company that leases its software through a central, cloud-based...
The Business Professor
Registered Agent in Delaware
What are the requirements and options for securing a Registered Agent in Delaware? If the Registered Agent is a person, they must live in Delaware. The Registered Agent must be available in person to sign for any correspondence during...
The Business Professor
Redemption Rights - Preferred Shares
What are Redemption Rights attached to Preferred Shares? The right of redemption is the right to demand under certain conditions that the company buys back its own shares from its investors at a fixed price. This right may be included to...
The Business Professor
Public Offering - Exiting a Business
What is a Business Exit Event? How is a Public Offering a business exit event? An Exit Event is an event where founders and early investors can sell their interest in a company for cash. An exit can be an initial public offering (IPO) or...
The Business Professor
Protective Provisions - Term Sheet
What are Protective Provisions in a Term Sheet? Protective provisions are terms that allow preferred shareholders to veto or block specific corporate actions. Protective provisions can help protect the interests of minority shareholders...
The Business Professor
Preferred Stock - Liquidation Preference
What is a liquidation preferenc in preferred stock? A liquidation preference is a clause in a contract that dictates the payout order in case of a corporate liquidation. Typically, the company's investors or preferred stockholders get...
The Business Professor
Preemptive Rights - Preferred Shares
What are Preemptive rights for preferred shareholders? Preemptive rights give a shareholder the option to buy additional shares of the company before they are sold on a public exchange. They are often called "anti-dilution rights"...
The Business Professor
Pre-Money and Post-Money - Business Valuation
What is pre-money valuation? What is post-money valuation? Pre-money valuation refers to the value of a company not including external funding or the latest round of funding. Post-money valuation includes outside financing or the latest...
The Business Professor
Performance Prism
What is the Performance Prism? Breakthrough measurement techniques for achieving breakthrough business results! Measuring "all" the relationships that matter: with customers, investors, employees, suppliers, alliances, regulators, and...
The Business Professor
Performance Evaluation - Management
What is Performance Evaluation for managers? A manager performance evaluation is an assessment that a supervisor conducts to determine how well a manager is fulfilling their duties. This kind of performance evaluation can consist of a...
The Business Professor
Participating Preferred Stock
What is Participating Preferred Stock? Participating preferred stock is preferred stock that provides a specific dividend that is paid before any dividends are paid to common stock holders, and that takes precedence over common stock in...
The Business Professor
Participating Convertible Preferred Stock
What is Participating Convertible Preferred Stock? A participating convertible preferred (PCP) share is a financial term referring to a security most often issued as part of a venture capital financing deal before a company experiences...
The Business Professor
Option Pools & Capitalization
What are Option Pools? How do Option Pools affect company capitalization? An option pool allows startups to budget out how much equity they will reserve for hires between each funding round. Without an option pool, employee equity would...
The Business Professor
Obtain a Business License
How do I Obtain a Business License? Most small businesses need a combination of licenses and permits from both federal and state agencies.
The Business Professor
Marketing Mix - Physical Evidence
What is Physical Evidence within the Marketing Mix? Physical evidence is everything your customers see when interacting with your business. This includes the environment where you provide your product or service (either physical or...
The Business Professor
Marketing Budget
What is a Marketing Budget? A marketing budget is an outline of the costs that a company will spend to market its product or service. The marketing budget covers a finite period of time, the length of which can be anywhere between a...