Funding a Business
Kimberly Waite
AIU Online
Abstract
This paper will describe the different types of funding available to begin a business. These include borrowing money, selling stock, and technology licensing. This paper will discuss the meaning, function and importance of the stock market, investment banking, financial management, and risk financing. This paper continues with a scenario with a future business owner and the decision making of how to fund his business. This paper concludes with a decision on what type of funding he should chose for his business and the advantages and disadvantages behind that decision.
Funding a Business Every business needs cash to function (Ebert & Griffin, 2011). Deciding how
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All of these steps will help with the financial planning and growth of any company and without them loss of revenue is inevitable. As a business owner, you must also consider the costs associated with selling stock and hiring an investment banker. Do you have enough money to begin that journey? Do you have enough money and know how to manage the business long term. Are you ready and willing to accept the all the risks? As an alternative to selling stock and looking to investors for money, our businessman could consider licensing his techology. He would contine to own the technology and could keep control over the sales and manufacturing and license the technology to an endless number of compaines if he chose to. This would allow for easier expansion into different markets and better manufacturing capabilities (Nanayakkara, 2002). While he may not make as large of a profit on the front end, this could provide for an opportunity for long term gains without having to manage all the risks associated with owning and operating a business. All of the topics, and more, dicussed in this paper should be evaluated when considering how to fund a business. All the options should be
Now that the small business idea has become more that just fine print, it is time to put together a loan package that explains the story of the company. There are important questions to answer, demonstrating the company’s ability to correctly make important financial decisions, and detail how the business will pay off the loan. This paper will include the requirements of a loan package, creditor requirements, a ratio analysis, loan justification, and how the company plans to use the proceeds.
Introduces the concepts of finance. Reviews the basic tools and their use for making financial decisions. Explains how to measure and compare risks across investment opportunities. Analyzes how the firm chooses the set of securities it will issue to raise capital from investors as well as how the firm’s capital structure is formed. Examines how the choice of capital structure affects the value of the firm. Presents valuation and integrate risk, return and the firm’s choice of capital structure.
When contemplating expansion and growth, it is imperative to understand the advantages and disadvantages as they relate to funding. Internal financing, or using profits for new investments, is advantageous as it is available immediately, there is no associated interest, there aren’t any restrictions imposed by outside parties, and overall, grants flexibility. However, it can be disadvantageous, as it is not tax-deductible, capital is not increased, and there is more available capital available on the outside market.
There is always a risk when financing a business. Whenever a new business fails, I wonder did they weigh the risk involved prior to starting up their company. Risk financing is having money to cover an unexpected loss in the company. By
Entrepreneurship is one of the hardest investments to make because it requires more than just money. Consequently, it is also an ownership investment with extremely large potential returns. By creating a product or service and selling it to people who want it, entrepreneurs can make huge personal fortunes. Bill Gates, founder of Microsoft and one of the world's richest men, is a prime example.
To start a business there can be few major financial options available and most of it would be greatly used, provided the risk analysis is done
Starting up a new business is an activity that requires the use of capital to ensure that the business is successful. However, in most cases, business organizations do not have adequate capital to implement the business ideas. On the other hand, the owners of patented products may face the challenge of making decisions on how they should venture into the market due to lack of capital. There are many options available to start-ups on how they can succeed in the market. For instance, franchising, licensing or securing loans from banks may be among the options utilized by owners of patents (Maynard & Warren, 2014). Making decisions on the best option may be a tough task since all the options have advantages and disadvantages. Through a
The essential question deals with your start-ups ability to create revenue. If you are a start-up working in the traditional industries, such as retail and manufacturing, you are more likely to start generating a steady revenue stream right from the get-go. Therefore, debt financing can be quite a good option for your business, as repaying the loan won’t be too big a problem.
The financial decisions of any type of an organisation can be divided into two categories. The first of these is concerned with spending – what spending decisions should be made in order to suffice a particular organisation’s future goals, which might be expressed in terms of profits, success in competition, new product development, growth and so forth. However, in order to realise these visions, each company necessarily needs to make decisions falling into the second category which is concerned with raising money for its spending. Spending financing represents an important issue in each company’s existence as the decisions within this category can have a wide variety of influences on the present and future of each organisation. A
The financing of every business is the most fundamental aspect of its management. Get the financing right and the company will have a healthy business, positive cash flows and ultimately a profitable enterprise. The financing can happen at any stage of a business 's development. On commencement of your enterprise the business entity will need finance to start up and, later on, finance to expand.
Identifying resource requirements, cash flow, and estimate revenue and profit is one of the important areas that new ventures need to consider as every business need finance for a successful launch and operation (Allen, 2012; Timmons and Spinelli, 2009). Feasibility analysis in financial conditions by creating financial model helps ventures depict the potential to success and the worthiness in executing the new business (Allen, 2012; Cooper et al.,
The business I am going to be talking about will be a shop called news, food and wine. This shop can use a wide variety of different internal and external sources, this is why I’m going to be using this business. A shop will need business finance because they might want to expand the business, they can’t afford to pay workers or the bills or they have just started up.
1. The company knows with certainty the annual use ( consumption ) of a particular item in stock.
Abstract Background: Growth oriented entrepreneurial businesses need funding for the development of their idea, technology, product etc. However, for
A small business with no revenue, no track record and no sales screams high-risk. Luckily, there are other pockets to pick to help your small business get the financing it needs to grow and thrive .In these essay want to explain about other potential sources of financing for Jacqui LLC . And I explain about the advantages and disadvantages of using equity capital and debt capital to finance a small business's growth. And I give for Jacqui Rosshandler to investment offer from Arthur Shorin.