Business Financing

5 Pages 1133 Words

Discuss various sources of financing , including gov't agencies and venture capital firms. Describe similarities and differences . Include creative means entrepeneurs use to start and stay in business. How are financial statements used in analyzing, forecasting and making management decisions.

One of the most important issues facing all businesses, whether a business in the

start-up phase or well-established, is the obtaining of appropriate levels of financing.

Whether it is needed for investing in land, buildings or equipment, hiring new

employees, investing in inventory or moving into new markets, obtaining

sufficient financing to accomplish these goals is a dilemma nearly

all business owners face The most common sources of business financing which

will be discussed in this letter are as follows: personal savings/"love money",

conventional debt financing (banks/credit unions), government

assistance, business partners/strategic alliances, venture capital

and "going public" The greatest percentage of businesses are financed for start up

using personal savings. The most obvious advantage of using personal

savings to start up or expand your business is that you relinquish no

control over your business. However, it is relatively rare for a business owner to have

sufficient personal savings to completely finance his or her business. Personal

savings are often used in conjunction with other forms of financing, i.e., bank loans.

Bankers tend to see a significant investment of personal savings as an

important indication of a business owner's commitment to the

business "Love money", a gift or loan from family or friends, is another

commonly used source of business financing, particularly in the start-

up phase. This also enables you to maintain control of your business.

However, in the event a business does not succeed and loans from

family and friends are unable to be ...