Financing Your Business

Kid-Fit will be a limited partnership. Limited partnership is a partnership in which only the general partner, who runs the business, has personal liability, while the limited partners, who are basically passive investors, can lose no more than their stake in the partnership. Our limited partner will be a larger established fitness company whose main focus is the adult population.

A new venture takes creativity, motivation, spirt, and capital. The beginning of any venture begins with analyzing ones financial markets and how best to place the vested capital to continuously have the company grow. In many aspects one may purchase an already established business, in this case the understanding of how the loan process works is imperative. One may purchase a building and start a business from the ground up, in this case one will also need to have a great understanding of how mortgages and lending works as well. Many lenders will look into the financial market of the business before considering a loan of any type. In this case good solid numbers and record keeping is important. Understanding that a financial market is based on traders who buy and sell stocks, bonds, derivatives, foreign exchange and commodities (Amadeo, 2015). Successfully analyzing and investigating all financial resources is crucial.

As a percentage of net sales, product cost of goods sold increased from 62.8% in 2006 to 66.5% in 2007 (Kimmel, Weygandt, & Kieso, 2009). Light freight and delivery costs increased as a result of increases in energy costs, such as oil used for fuel. Exchange of foreign currency on products manufactured in Canada has generated an adverse effect as well, even though sales growth has increased. Tootsie Roll Industries, Inc. has made efforts to offset the increases in costs of commodities through selective price increases and reducing costs where possible (Kimmel, Weygandt, & Kieso, 2009). However, the company has not been able to recover all of the costs associated with the increases in commodities.

The correct way to fund a business depends on the size, (ex small, medium, large) and type of my business (ex online, manufacturing, services). You can crowd source which involves asking publicly on websites such as Kickstarter. Go to a bank or any other lender and ask for a loan which you will have to pay interest on. Lastly you can take the tried and true method of asking family to give you money or use your own assets. For the purpose of this essay I will say that I am trying to start up my own cookie shop. Because it is a small business, it should not cost me enough money to warrent issuing stocks which would involve appealing to individual investors and potentially loosing control of the company that I just created. The store, employees,

It seems that the option of IPO is the better fit for the company. This type of financing would allow not giving up too much control. It would also require them to act in the best interest of their shareholders. These shareholders would want to see the stock price increase and make a better return on their investment. Therefore, if the company believes it can act in such a way and make decisions that would attract future investors, the initial public offering seems to be the best option for the company at the

Small business debt can cause lots of problems. It takes away the money and time you need to successfully run your business. When it becomes a burden to your company, it's time to think about small business debt consolidation.

Venture capital is another option for a start-up business, however, these types of companies tend to invest more in high-growth potential companies like those in the technology industry. Miller could also approach his corporate customers with a proposal for their investment. He could offer interest in his company in exchange for capital. (Shein, 2011)

Finance, understanding how it affects the smallest business to the largest organization, is the origin to financial success in businesses. According to Gitman (2006), finance is the art and science of managing money. Virtually every individual business and large organization, Be the organization for profit or non-profit, depends on the rates at which these entities earn, or raise money, and the rate at which they spend or invest these earned monies. Understanding these financial processes will enable the financial manager, or even the non-financial managers to more effectively interact with financial personnel, processes, and procedures.

Finance is the study of applying specific value to things we own, services we use and decisions we make. Financial management is the process for and the analysis of making financial decisions in the business context. The major subareas of finance are investments, financial management, financial institutions, market, and international finance. Risk is a potential future negative impact to value and or cash flow. It is often discussed in terms of probability of loss and the expected magnitude of the loss.

There are several advantages to accepting funding from a relative. The first, and most obvious, is that by entering into a partnership to pay back this relative, there is no high rate interest to worry about, as there would be with a bank loan. Also, the relative only has to agree to the assistance, instead of applying for bank approval. There is also no risk of depreciation, as there is with the stock market. However, there is also a very large risk with this type of funding. When using a short or long term loan with a bank, once approval is granted, the funding is guaranteed. When borrowing from a relative, he/she can decide at any time to stop funding for no particular reason.

Since I have estimated that I will need $1,000,000 to finance my business I have to now think of how I am going to raise this capital, the different ways to raise capital, would fall under two categories – equity and debt financing. I will begin to sell ownership shares of my business by approaching investors, I already have a friend who has informed me that she would be interested in my venture and would be willing to invest $100,000 in my business, I have my family too that has pledged to help me financially. I can ask them to become equity investors in my business; I could offer them a share in the ownership of my business. Depending on the success of my company I could agree to issue dividends to them too. Various governments also give out loans to new businesses, called small business loans to encourage new

With the high upfront cost, selling equity to raise capital is certainly an option. With a private corporation, we can sell shares, but still control them, as they are not publicly traded. This allows the 3 founding members to control who has stakes in the company, rather than open it up.

Raising Capital it one of the most important thing in any business. It's useless having a great idea and the right connections if you don't have the money to get it going. Without capital, your business can't get off the ground. You need it to buy products or materials, pay wages, have a secure cash flow and generally run your business on a day-to-day basis. The most common types of debt capital are bank loans, personal loans, bonds and credit card debt. When looking to grow, a company can raise funds by applying for a new loan or opening a line of credit. This type of funding is referred to as debt capital as it involves borrowing money under a contracted agreement to repay the funds at a later date. With the possible exception of

In the business world companies are always trying to maximize their earning potential by strategically investing in short-term financing. In terms of finance short-term may mean months or even a couple of years. The type of finance method that is used is contingent on the specific needs of the corporation. These methods include trade credit, bank credit, financing through commercial paper, foreign borrowing, and the use of collateral, accounts receivable financing, inventory financing and hedging to reduce borrowing risk.

Debt and equity financing are your two basic options to raise money for a start-up company or growing business. Debt financing includes long-term loans you get from the bank. Equity financing is private investor money you get in exchange for a share of ownership in the business. Now I want to explain about the advantages and disadvantages of using equity capital and debt capital to finance a small business's growth. The advantages of Debt is financing allows you to pay for new buildings, equipment and other assets used to grow your business before you earn the necessary funds. This can be a great way to pursue an aggressive growth strategy, especially if you have access to low interest rates. Closely related is the advantage of paying off your debt in installments over a period of time. Relative to equity financing, you also benefit by not relinquishing any ownership or control of the business. Interest on the debt can be deducted on the company's tax return, lowering the actual cost of the loan to the company. Raising debt capital is less complicated because the company is not required to comply