Business Angels

In the mini Dragon Den exercise that we had made in our class, Ecem, Oya, Yigitcan and I were the Business Angels. The reason I volunteered to be one was because I thought that analysing a business, and deciding whether it is worth lending money or not is fun. And actually, it was. After reading both case studies about Soundmap, and Ice Cream, I had some questions in my mind, and actually I kind of decided which one I preferred. However, talking to the entrepreneurs, my ideas become neater. The questions that we asked were:

·      What is your business about?

·      What are your backgrounds?

·      What is the structure of your business?

·      What is your customer market?

·      Do you have any customers right now, or have you spoken to potential customers?

·      Do you have any competition?

·      How are you different?

·      What is makes your business preferable?

·      How will you understand that your business is successful?

·      What is your marketing strategy?

·      What is your cash flow?

Actually, I was amazed at the end of the exercise. I realized that by asking some general questions, which includes both the external and internal factors about the business, one could have a sense about the whole business. For instance, the customer market, and the competitors are some external factors, social and economic factors respectively. Or the question about the structure of the business, gives an idea about the internal factors of the business. As a result, I understood that the SWOT analysis of a business is very significant. Without settling down the external and internal factors, an entrepreneur will not be able to answer, every detailed question of the business angels. However, settling the SWOT analysis is not enough as well. The idea should be innovative, or different from its competitors. In other words, by this exercise, I kind of grasped in what point should a business be to start it. 

Quiz Quiz Quiz!!

1.         1.Two disadvantages of partnerships.

-      Decision process is slower/harder – you have to stand behind the decisions that your partners does

-      The profit is divided by the number of partners

-      If your partner is in dept, you will be in dept

o  IN PARTNERSHIP NO LIMITED LIABILITY

o  ‘LIMITED LIABILITY PARTNERSHIP’ they made something like this.

   

+ Partners need to have COMPLEMENTARY SKILL SETS (they should have different skills, for instance one can be good at marketing/advertisement, the other one should be good at finance – they should complete each other)

2.       2. What is limited liability?

-      It is a principle - protection to the investor if the business collapses – if your business collapses, you pay the money left in the company, not the whole loan, if you spent it you cannot give it, they cannot take your personal assets (unless you agree that they can)

Lender: he lends you the money, after a while he takes the money back; there is an interest amount as well. So you have to give the money back to him. Doesn’t own a part of the company (difference between shareholder and lender)

Shareholder: owns a part of the company rather than simply lending money

PE funds (Private – Equity (capital))  - funds that are basically contributed by people who have a huge amount of money – they look for ideas

Business angel: only interested in you business

Venture Capitalist: usually part of PE fund – he is considered about finding good companies to invest in

SME (Small Medium Enterprise) –

4.     Two reasons why a public sector is needed

            -The government wants to keep sources such as minerals and the untrustable things such as defense under control

-The private sector might lack capital so they want to control this

Out sourcing: For instance, Levis jeans are manufactured in China instead of USA. Denial of responsibility – make them do your job

-The public sector is able to provide goods at a lower cost

Private investors have no reason to provide public good because of the free rider (using something and not paying for it is a free riding problem) problem.

Education, schools, museums, health services, and libraries: MERIT GOOD – everybody need them but everybody cannot pay them – generally considered to be good for everybody – but the private sector cannot make it for everybody – so the public sector provide such services               –education- if they didn’t most of the people wouldn’t be educated, because they don’t have enough money 

So here is my mixed notes. I took these notes while we were reviewing the quiz. Out of these notes, 'Limited Liability' made me think for a while. It is obvious that it is an opportunity for the investors of the business. However what made me think is, the lenders does not have any advantages out of this 'Limited Liability'. Due to this Limited Liability, the investors are paying only the money left in the business when it collapses. So what happens to the lenders? They are not able to get the whole money they have invested if the business collapses. If they do not make a deal with the investors, they will be in loss. So why would a lender lend money to a company while knowing that there isn't any guarantee to get the money back? Of course there is the positive parts of this as well. If the business is successful, they will get the money back. This is obvious, but doesn't this limited liability make the lenders lend money more difficult. They have to think twice before lending money to a business because it can be a huge risk. 

On the other hand, I don't believe that the lenders should be able to get the personal assets of the investors, but I think a middle way should be found. 

Environmental and Political Opportunities and Threats of a School

Environmental:

threat: to much use of paper causes damage to environment, consuming too much energy, constructing a new road

strategy:

increase the amount of boxes to recycle paper in class, reduce the energy loss by using energy-saving light bulbs, using the roads that already exists or plant more trees 

opportunity: recycling, plant trees, collecting funds to help the environment(global warming, deforestation.. etc)

strategy:

they can increase the recycling boxes, collecting funds for plantation, do much more of funds from students and teachers to help environment

Political:

threat: using a different curriculum, changing the program when an inspector comes, self-managing( if it is not appopriate for the government)

strategy:

use the curriculum government gives, planning a proper program at the beginning so they don’t change later, it has to be proper for the government too( not too irrelevant)

opportunity: private (not depending on government for financial resources), not choosing a political side, more freedom in school managing, having students that have different types of religion (muslims, jews, christians )

strategy:

using money from Koç foundation, it is not only for one group of people where they choose the same political side, being independent and relaxed to run the school as they want

'Specialization is good, but not that good'

       The dictionary defines specialization as concentrating in a certain field. For example, a math teacher specializes on math. So how can we relate this to business?

       Specialization is connected to the size/scale of organizations. Actually, it is directly proportional.  The bigger the company is, the more you need specialists and departments. Departments only exist because you have specialization fields.

       In my opinion, specialization is an advantage for companies. For instance, in the Kellogg’s case study, we saw that Kellogg’s only works in its specialist area, manufacturing. By concentrating in only manufacturing, they can manufacture better products and provide better services to their customers. Even though I strongly believe that specialization is good for companies, I agree with Mr. Sen also. He said that, if you, as a company, specialize too much, you can’t see the other connections between your job and other things. Well, I agree with this statement either. If a company is not aware of other sectors, it might have some difficulties. So, I ended up agreeing with the statement; ‘specialization is good, but not that good.’ 

System Diagram

Soooo, the example that helped me to understand this diagram better, was the school example. What was that school example?
      Inputs: In a school, inputs are desks, boards, chairs, teachers, students, books etc.
      Throughput (process): This is the education process. Students are educated and they graduate.
      Outputs: The students that graduated, the money they earned.
      Feedback: Actually all outputs are counted as feedback. For instance, the students who graduated, their success and comments are the feedbacks.
According to these feedbacks, our teachers and deans are able to analyze themselves. So it is a cycle, the feedback turns into an input and it continues like this.

Let’s catch up! Our diagram from the 4^th of October:

So how did we end up with this diagram?

We started the class by discussing whether ‘profit’ is the purpose of a business organization or not. To be honest, I taught it was; however the perfect example that Mr. Sen gave, made my understanding of a business purpose clearer. So I will explain my way of understanding, by using Mr. Sen’s example. Profit, for a business organization, is like eating, for people. So profit is not the purpose of business organizations; it is an essential factor for them to survive. Profits are required as a means to the purpose, not the goal. In other words, without profit, business organizations cannot continue working. It is the oxygen of businesses. After making this clear, we concentrated on the purpose of a company. If you’re looking at the purpose of a company, you must look at its mission. The purpose of a business simply defines the reason of its existence. The purpose of a business reveals the big picture of it.

After jumping from topic to topic, we ended up discussing about entrepreneurship, and that’s when we drew this diagram. We listed some of the qualities that an entrepreneur should have. An entrepreneur is the person who starts and manages a business. So an entrepreneur should be brave. She/he should be taking risks, in order to have a greater income. Other than that, they have to be innovative and creative. We supported this idea by giving ‘Sultanahmet Koftecisi’ example. This ‘kofteci’ is the combination of ‘fast food’ and ‘Turkish food’. It was an innovation, at the time it was created, and it is still very successful.

Actually this diagram fits for an IB student also!!

Rubric for our blogs

With my partner Oya Goksahin, we made this rubric for our blogs:

	Excellent  (5)	Good (4)	Satisfactory (3)	Mediocre (2)	Poor (1)
Engaging	The blog is very original, has great ideas supported with great comments. It is also visually great and attracts the readers.	The blog is original, has very good ideas supported with very good comments. It is also visually very good.	The blog is satisfactory, has ideas supported with comments. Colors are often used.	The blog is unsatisfactory, rarely has ideas and comments. Colors are rarely used	The blog is not original, doesn’t have ideas, nor comments. No colors or any other techniques are used to attract readers.
Informative	Information provided is excellent and is correct. It is also supported with other great resources and very accurate comments are made.	Information provided is very good, and it is mostly correct. It is also supported with other good resources and comments are made.	Information provided is good, but often not correct. It is also not supported with enough resources and mostly inaccurate comments are made.	Information provided is not good, and most of the time it is incorrect. It is supported with a few resources and inaccurate comments are made.	Information provided is irrelevant, and is incorrect. It is not supported with any resources and there are no comments made.
Persuasive	Fully concise and accurate interpretations. Rational comments, connected with the topic.	Almost fully concise and accurate interpretations. Generally rational comments and connected with the topic.	Often concise and accurate interpretations. Often-rational comments and mediocre connection with the topic.	Almost inaccurate. Mostly irrational comments and almost no connection with the topic.	Inaccurate. Irrational comments and no connection with the topic.
Language	Completely clear, logical and appropriate, using relevant business terms. Almost no errors.	Almost clear, logical and appropriate. Using some relevant business terms. Some small errors.	Often clear, logical and appropriate. Using few business terms. Few errors.	Almost unclear and inappropriate. Using almost no business terms. Some errors.	Unclear and inappropriate. Using no business terms. Full of errors.