Entrepreneurial Finance: Fundamentals of Financial Planning and Management for Small Business

CHAPTER 1 SMALL BUSINESS AND THE ENTREPRENEUR

1.1 What is Entrepreneurial Finance?

Finance, technically, refers to any transaction of money, or money-related medium of exchange and monetary measurement. More broadly, finance can be considered the art and science of money handling and capital management. Its significance lies in the understanding of how money works in a society, and how it is related to economic and legal systems, given the society's rules and regulations, and the structure of its financial institutions. The ultimate goal of finance is to achieve the highest efficiency in the way of using funds regardless of the nature and direction of the utilization of money. In this sense, and in the business domain, financial management would represent the firm's responsibility to plan, acquire, and manage capital to efficiently run the business as well as to grow it and further invest in its capital.

Entrepreneurial finance is the third major field of finance along with personal finance and corporate finance. It is all about applying the fundamental financial principles and basic theories in the domain of new and small-scale business firms. Furthermore, it is adapting those principles and theories for planning and developing, starting up, operating, growing and maturing, valuing, and harvesting entrepreneurial business projects. The nature, needs, and dynamics of a new venture and the entrepreneurial aspect are what primarily characterize and identify entrepreneurial finance ...