4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 1/6MODULE 6.2Building a Lasting Company andEnding the VentureIntroduction:Once a business has passed the launch phase and moves through thestages of maturity, entrepreneurs, need to be able to consider what it is thatthey need to do to build a lasting venture. Entrepreneurs need to know howto value the organisation, and in the event, where the venture is going toend, ways in which this may happen such as a merger.Building a Sustainable VentureWhat is it that makes one venture last longer than another? While theproduct/service, management team, economic conditions, consumer tastesand buying behaviour all inÖuence this, Hisrich (2014) suggests that thereare three general things, which have signiÕcant impact on a venture beingable to grow and reinvent itself when needed to achieve sustainability.1. Identifying and preserving the core values of the venture wediscussed this in Module 6.1,2. Setting action goals and objectives to be achieved these need to bequantiÕable, measurable and reachable,3. Develop basic processes that allows the venture to continue after theentrepreneur is gone.Valuing the Venture4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 2/6Below are some common methods of working out the value of a businessthat have been identiÕed by the Department of Industry, Innovation andScience (2018):Look at current marketplace value and your industry: How you valueyour business can depend heavily on the industry youre in, and thecurrent marketplace value of similar businesses within that industry.Use the return on investment method to calculate value: The returnon investment (ROI) method uses your business net proÕt to workout the value of your business. Selling price = (net annual proÕt / ROI)x 100Use your business assets to calculate value: When calculating yourbusiness asset value, its important to include both tangible andintangible assets of your business. Tangible assets are physical thingsyou can touch such as tools, equipment, and property. Intangibleassets are things that cannot be touched but are still valuable such asintellectual property, brands and business goodwill.Find out the cost of creating your business from scratch: The cost ofcreating your business from scratch can be used as a benchmark forvaluing your business. This is the estimated cost to build a similarbusiness in your industry from scratch within the current market.Estimate the future proÕt of your business: You can estimate thefuture proÕt of your business by looking at any trends in yourbusiness Õnances from past years. You can also investigate the trendsof similar businesses in your industry to see how your businesscompares and how the market is going. This information may beuseful when negotiating the Õnal selling price of your business.MergersA merger is the combining of two or more business entities. When peopleuse the term merger, they often are referring to a merger of two companiesof the same size deciding to combine to form one.Sanders (2018) goes on to explain that there are diàerent types of mergers.Exxon-Mobil is an example of a horizontal merger, where two companiesthat used to compete with similar products came together. Another type is a4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 3/6vertical merger, when two companies whose business complements eachother merge. A bottler merging with a soda company is an example. Aconglomeration is a merger of two companies with two completely diàerentproducts, such as luxury goods purveyor Louis Vuitton merging with Moetand Chandon.BankruptcyBankruptcy is a process where you are legally declared unable to meet yourdebts. When you apply for bankruptcy you will be released from most of thedebts you owe and debt collectors will stop contacting you. Bankruptcyprocesses and rules diàer in every country. Since failure is so common inventures, it is import
ant for an entrepreneur to be aware of their countrysbankruptcy laws and how is may aàect them.In this weeks material, we have covered a number of items worthconsidering when thinking about what it is that is needed to build a lastingventure and in the event where the venture is going to end, ways in whichthis may happen.References:ASIC. (2018). Bankruptcy. MoneySmart Financial guidance you cantrust. Retrieved from https://www.moneysmart.gov.au/managingyour-money/managing-debts/trouble-with-debt/bankruptcyAustralian Government. (2018). Value your business. Business.Retrieved from https://www.business.gov.au/closing/selling-orclosing/value-your-businessHisrich, R. (2014). Advanced Introduction to Entrepreneurship, EdwardElgar Publishing Limited.Sanders, M. (2018). What Is a Company Merger? Small Business Chron.com. Retrieved fromhttp://smallbusiness.chron.com/company-merger-21903.html4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 4/62 hoursEssential Resources:Advani, A. (2018). How to Value Your Startup. These threesteps will help you determine what your new business isworth. Retrieved fromhttps://www.entrepreneur.com/article/72384This article discusses three steps to help you determine what abusiness is worth.Grocer. S. (2018). US posts record $US2.5 trillion of mergersin Õrst half of 2018. Retrieved fromhttps://www.afr.com/news/world/north-america/us-postsrecord-us25-trillion-of-mergers-in-Õrst-half-of-2018-20180704-h129hkMore than $US2.5 trillion ($3.4 trillion) in mergers were announcedduring the Õrst half of the year, as fears of Silicon Valleys growingambitions helped drive a record run of deal-making.eHow. (2008). Starting a Business: Selling a Business.YouTube. Retrieved from https://www.youtube.com/watch?v=txP-DKmpL9Q4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 5/62 hoursSelling a business depends on the current status of the market. Sell abusiness with tips from a successful business owner in this free videoon business tips.Australian Government. (2018). Value your business.Business. Retrieved fromhttps://www.business.gov.au/closing/selling-orclosing/value-your-businessWorking out the value of your business is hard. This article provides asystematic process that you can use to achieve appropriate valuationof your business. It also provides useful links for you to explore thevaluation process further.ASIC. (2018). Bankruptcy. MoneySmart Financial guidanceyou can trust. Retrieved fromhttps://www.moneysmart.gov.au/managing-yourmoney/managing-debts/trouble-with-debt/bankruptcyThe bankruptcy laws and regulations are diàerent for each country.This short but interesting article explains the process and implicationsof bankruptcy in Australia.Learning Activities:Learning activities are not part of summative/graded assessment; however,they are designed to prepare you for incremental graded assessment andexpand your learning. These activities encourage a community learningexperience between peers, and provide opportunities for facilitators to oàerformative feedback, throughout a module, to the student cohort. Studentsshould spend 1-2 hours per module on learning activities.4/15/2021 Laureate International Universitieshttps://laureate-au.blackboard.com/webapps/blackboard/content/listContent.jsp?course_id=_100594_1&content_id=_9717562_1&mode=reset 6/6Learning Activity 6.3: Personal ReÖective JournalPlease go to the ReÖective Journal link in the mainnavigation menu and complete the activities in the journal instructionsfor Module 6.2This journal is for your own personal learning. It is conÕdential andwill not be available to anyone except you. Your journal will be animportant resource for preparing your submissions for assessments.Now that you have reviewed the material for Module, 6.2; Do youthink that it is necessary for successful entrepreneurs in the 21stcentury to follow a sequence of events / processes (formally orinformally, deliberately or in deliberately) that we have studied in thissubject in order for their innovation to be successful in the market?