Prof. Bruno Pierri Lingua Inglese

Business English: Setting Up Business November 19th, 2009

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1) 2) 3) 4) 5)

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Business

Word commonly used in English and Italian Sometimes the Italian meaning is wrong Real meanings: lavoro, occupazione: are you here on business, or for pleasure?; he’s been talking business all day long Impresa, attività imprenditoriale in senso astratto: business trends; business week Impresa, azienda: a small business, a family business, business risk Settore economico (legale): business of travel, e-business Volume d’affari, fatturato: business year IT: il business della droga/EN: the drug racket

Start-Up

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A) B) Initial idea to set up a business Gap in the market Similar but more competitive product

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A) B) C) D)

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Initial sources of finance

Self-funding Backers Bank loan: house can be offered as collateral Venture capital (capitale a rischio) firm: Financing for new businesses. Money provided by investors (venture capital company) to start up firms and small businesses with perceived, long-term growth potential. This is a very important source of funding for startups that do not have access to capital markets. It typically entails high risk for the investor, but it has the potential for above average returns Venture capital can also include managerial and technical expertise. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a large portion of the equity

Business Registration: Sole Trader

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Once financing is safe, business is registered as legal entity: Sole trader (sole proprietorship) = ditta individuale

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The sole proprietor is a business with one owner who pays personal income tax on profits from the business. They are the simplest business to set up, making them popular among individual self contractors or business owners

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Sole proprietorship is also known as "proprietorship". The debts of the sole proprietorship are also the debts of the owner. However, all profits flow directly to the owner of a sole proprietorship The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is the difficulty to obtain capital funding, specifically through established channels, such as equity (selling shares) and obtaining bank loans or lines of credit.

Small-scale organization

Business Registration: Partnership

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Società: A business organization in which two or more individuals manage the business. Both owners are equally and personally liable for the debts from the business Partnership doesn't always mean two people. There are many large partnerships with thousands of partners

Small-scale organization

Business Registration: Limited Liability

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Società a Responsabilità Limitata

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A type of liability that does not exceed the initial amount a person invested into a partnership Limited liability refers to the terms of limited partnerships, which comprise at least one general partner, who takes on unlimited liability, and one or more limited partners, who would never lose more than their original initial investment in fulfilling the partnership's obligations. Additionally, limited liability can refer to an investment with limited downside risk, with which the investor can lose no more than his or her initial investment Small-scale organization

Holding Company

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A parent corporation that owns enough voting stock in another corporation to control its board of directors (and, therefore its policies and management) Board Of Directors - B Of D A group of individuals elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues Dividends A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders Dividends may be in the form of cash, stock or property High-growth companies rarely offer dividends because all of their profits are reinvested to help sustain higher-than average growth

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Large-scale organization

Cartel

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A small group of producers of a good or service who agree to regulate supply in an effort to control or manipulate prices The best known example of a cartel is probably the Organization of Petroleum Exporting Countries (OPEC) Large-scale organization

Trust

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A fiduciary relationship in which one party, known as a trustor, gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party, the beneficiary

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There are two types of trusts: 1. Living Trust: A trust in effect during the trustor's lifetime.

2. Testamentary Trust: A trust created through the will of a deceased person A trust can be used if a beneficiary is under age or has a mental disability that impairs the person's ability to maintain his or her own finances. Once the beneficiary is deemed able to manage the funds or assets by the terms dictated under the trust, the beneficiary will receive possession of the trust Large-scale organization

Multinational Corporation

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A corporation with facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co ordinate global management. Very large multinationals have budgets that exceed those of many small countries Advocates of multinationals say they create jobs and wealth and improve technology in countries in need of such development. Critics say multinationals can have undue political influence over governments, can exploit developing nations as well as create job losses in their own home countries Large-scale organization

Early life

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Risk of failure in first two years is very high and mainly due to: Cash flow: essential to solvency. Having ample cash on hand will ensure that creditors, employees and others can be paid on time. If a business does not have enough cash to support its operations, it is said to be insolvent, and a likely candidate for bankruptcy. The company has to wait for invoices to be paid, while debt pile up and bank credit is extended up to a certain point

Organic Growth

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A) B) C)

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When critical mass of customers is reached, business is well established in the market From now on, it enters growth phase: organic growth Turnover increase More staff employed Supply network development Most companies carry on like this, growing and shrinking according to managerial skills and market conditions

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A) B)

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Acquisition Growth

The founder can sell to: A competitor A company willing to expand into that market In this case, the buyer pursues a strategy of acquisition growth (takeovers)

Going Public

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The process of selling shares formerly privately held to new investors for the first time. Otherwise known as initial public offering (IPO) When a company "goes public," it is the first time the general public has the ability to buy shares

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Initial Public Offering - IPO

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded IPOs can be a risky investment. For the individual investor it is tough to predict what the stock will do in the near future because there is often little historical data with which to analyze the company Most IPOs are of companies going through a transitory growth period, subject to additional uncertainty regarding their future values IPOs bring huge amount of money, some going to owners, some to reinvestment

Business Fail

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Poor initial market research Cash flow problems Failure to listen to customers Bad business location Ineffective marketing Overexpansion Overspending Poor customer service Underestimating competition Failure to change