Name: Joy Marie
Course: MG-340
Professor: Mr Adam Komm
Assignment 1—Financing Your Business Venture:
One of the most important aspects of starting a business is to secure financing for it. With several
options to finance a business venture including investors, loans, grants, savings, etc., one must
decide on the best option.
You are about to start a new business and are eager to secure the financing needed for it.
Research financing options available and write an e-mail to your business partner explaining the
pros and cons of each option and your recommendation. Be sure to justify your choice.
Dear Mark,
Establishing this new business venture will be a daunting journey, yet it will ultimately reward
us. However, it is important to note that one of the primary reasons why businesses often fail is
often due to lack of cash flow or the inability to anticipate sufficient funds in the initial start-up
phase. Thus, for us to succeed, we should seek the best financial option to help our new
establishment to be fully grounded and resilient. There are several options available to finance
this business such as investors, loans, grants, savings, and crowd funding.
Investors
Firstly, we may seek funding from investors in exchange for an ownership share and active role
in the company. So, this investment is not necessarily classified as a loan, it simply means that
there are no upfront repayments, no deadlines, and fewer worries. These investors can be
, prepared to take on more risk than traditional lenders. Therefore, unlike the banks which can be
reluctant regarding lending based on credit ratings and potential to repay, investors offer a more
flexible and rewarding opportunity for financial assistance. Also, silent investors only invest
their capital; it means business owners are still left to run the day-to-day operations as they wish.
Nevertheless, they can have high expectations about returns from the business, which will only
add more pressure on us and the business’ growth due to this partial ownership. Ultimately, this
can hinder the decision-making process as their primary focus is not so much the success and
growth of the business, but their personal investment.
Bank loans
Another financial option to consider is seeking bank loans. Unlike investors, taking a loan at the
bank is never going to interfere with how the business will be operated because they don’t care
what you do with the money, once they receive payments owed with added interest. Also, these
banks are rather convenient and easier to access, by contacting them and making the necessary
preparations to take out this loan. Thus, most of these banks have reasonable interest rates
regarding business loans. Moreover, we will be at liberty to expand operations without expecting
a return from the bank. On the other hand, there are lots of strict rules and conditions that banks
have in place when it comes to approving or rejecting business loan applications therefore not all
business may qualify. Also, the business loans are secured against the owner’s assets and
consequently be liable for seizure if repayments are not met. This is due to the forecasted
business profits are not as decent as one would hope.
Savings
Course: MG-340
Professor: Mr Adam Komm
Assignment 1—Financing Your Business Venture:
One of the most important aspects of starting a business is to secure financing for it. With several
options to finance a business venture including investors, loans, grants, savings, etc., one must
decide on the best option.
You are about to start a new business and are eager to secure the financing needed for it.
Research financing options available and write an e-mail to your business partner explaining the
pros and cons of each option and your recommendation. Be sure to justify your choice.
Dear Mark,
Establishing this new business venture will be a daunting journey, yet it will ultimately reward
us. However, it is important to note that one of the primary reasons why businesses often fail is
often due to lack of cash flow or the inability to anticipate sufficient funds in the initial start-up
phase. Thus, for us to succeed, we should seek the best financial option to help our new
establishment to be fully grounded and resilient. There are several options available to finance
this business such as investors, loans, grants, savings, and crowd funding.
Investors
Firstly, we may seek funding from investors in exchange for an ownership share and active role
in the company. So, this investment is not necessarily classified as a loan, it simply means that
there are no upfront repayments, no deadlines, and fewer worries. These investors can be
, prepared to take on more risk than traditional lenders. Therefore, unlike the banks which can be
reluctant regarding lending based on credit ratings and potential to repay, investors offer a more
flexible and rewarding opportunity for financial assistance. Also, silent investors only invest
their capital; it means business owners are still left to run the day-to-day operations as they wish.
Nevertheless, they can have high expectations about returns from the business, which will only
add more pressure on us and the business’ growth due to this partial ownership. Ultimately, this
can hinder the decision-making process as their primary focus is not so much the success and
growth of the business, but their personal investment.
Bank loans
Another financial option to consider is seeking bank loans. Unlike investors, taking a loan at the
bank is never going to interfere with how the business will be operated because they don’t care
what you do with the money, once they receive payments owed with added interest. Also, these
banks are rather convenient and easier to access, by contacting them and making the necessary
preparations to take out this loan. Thus, most of these banks have reasonable interest rates
regarding business loans. Moreover, we will be at liberty to expand operations without expecting
a return from the bank. On the other hand, there are lots of strict rules and conditions that banks
have in place when it comes to approving or rejecting business loan applications therefore not all
business may qualify. Also, the business loans are secured against the owner’s assets and
consequently be liable for seizure if repayments are not met. This is due to the forecasted
business profits are not as decent as one would hope.
Savings
