Verified Document

Financing A New Business Essay

¶ … Consultant, I starting a business developing business plan. I'm advice start forming business. I financed I partners. I interested learn intricacies options determine proceed plan. Dear Mr. Owner:

Business financing is naturally one of the most important concerns of any individual beginning a new enterprise. In general, business owners have two available options: to seek out loans from a variety of available sources or to seek out equity financing from investors. There are advantages and disadvantages to both choices.

Many business owners first seek out loans from friends and family members. This has the advantage of a (usually) low interest rate: however, the cash supply is limited and owners do not always want to create bad blood between themselves and their relatives. Another option is seeking out loans from a bank. "To secure this loan, financial institutions will require several years of financial information on both the business and the entrepreneur. They will want collateral to secure and guarantee a loan" (Hall 2012). Thus, a loan from a bank is not a guaranteed source of revenue and must be paid back with interest. The interest on the loan payments, however, is tax-deductible as a business...

And for some types of enterprises, such as LLCs (limited liability corporations), the owner is not personally responsible for the debts incurred by the business. A final, perhaps least desirable option of using debt to finance a business is using credit cards: interest rates can often be prohibitively high, however (Allen 2014). When taking on any type of debt it is important to remember that statistically speaking, most businesses fail rather than succeed.
The other option for securing financing is seeking out investors in the form of equity financing. 'Angel' investors are often sought after: "this affluent individual -- or a group of individuals who pool their research and resources -- provides capital for a business start-up usually in exchange for convertible debt or ownership equity" (Hall 2012). The advantage is that this is an investment, not a loan, so if the business undergoes financial difficulties it does not…

Cite this Document:
Copy Bibliography Citation

Related Documents

Financing Community Business the Importance of Small
Words: 4518 Length: 14 Document Type: Essay

Financing Community Business The Importance of Small Business in the Economy Canadian Federal Support for SMEs Tackling SME Tax and Fiscal Priorities Rebalancing Canada's EI System Assist Small Business Owners with Succession Plans Growing Small Firms into Larger Firms Federal Support for SMEs Depleted Communities in Canada Distressed Communities in United States Community Economic Development Investment Funds Community Economic Development Funds in U.S. Non-Bank Financing Community-based financial organizations have been developed in many countries to serve the critical needs of small to medium

New Business Plan Swot Analysis
Words: 2049 Length: 7 Document Type: Essay

SWOT Analysis Description of New Venture The new venture being proposed will be a company seeks to develop an app that will determine optimal weather days in different locations. The tool will take a massive data set of historical data for all the geographies available – in the US and throughout the world’s major tourist areas to begin with. The user will enter the location, their desired activity and a span of

Create New Business Mini Business Plan
Words: 2979 Length: 11 Document Type: Business Plan

Equipment Needed Market Analysis Situational Analysis Target Market Segmentation Geographical Segmentation Demographic Segmentation Market Targeting Differentiation and Positioning Strengths and Weaknesses of Venture Market Opportunities and Threats Competitor Analysis Management Plan Founders Experience Organizational Chart Financial Plan Project Investment Startup Costs Essentials of financial Plan Pro forma income statement Pro forma Balance Sheet Assessment of Risk External risks Financial Risk Contingency Plan Production Plan Manufacturing Process Machinery & Equipment Equipment Required Operational Plan General Operating Hours Flow of order for goods and services Layout Human Resource Technology utilization Abstract The paper is a business plan for a new business which is aimed to create a new

Issues in Starting a New Business
Words: 1912 Length: 7 Document Type: Term Paper

Starting a New Business There are several issues that one need to consider in starting a new business. These issues relate to marketing research, competitive analysis, and financial matters. Below, we define some of these issues on detail. To finish my projects I contacted over ten professors at our university and other institutions, and have obtained valuable advice from them. I was fortunate enough to receive the valuable advise from two

Staffing and Financing New Enterprises
Words: 3173 Length: 9 Document Type: Essay

Staffing process of which I was a part focused on two primary considerations: first, the functionality of the employees within the organization and the need to ensure the new workers had the necessary qualifications to excel and secondly the extent to which the employees' personalities suited the organizational culture. In retrospect, I think there should have been a greater focus upon employees having the necessary interpersonal vs. technical skills. In

Business Plan Product Description Market
Words: 4066 Length: 15 Document Type: Business Plan

As part of the research triangle, Raleigh has a significant portion of its population that fits the target market. For the Farmery to succeed, it only needs to capture a small portion of the market share. This is especially true because the store has a small footprint, and has the flexibility to set up on vacant lots without the costs of either renting or developing fixed real estate. The

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now