Answer to Question #50785 in Management for lee

Question #50785
If an entrepreneur approaches you for an advice regarding financing of a project wherein he intends to expand his existing project. What resources you should suggest him to raise his funds?
Expert's answer
Answer on Question #50785, Management, Other Entrepreneurship is an initiative independent economic activity of citizens and their associations. It is carried out on a continuous basis, aims to meet the needs of society and making a profit through the best using of economic resources of the subject of a market economy, which bear the full financial responsibility for its performance and are subject to the legislation of the country of registration.The most important task of business is to ensure the effective functioning of the enterprise (company) or an individual entrepreneur, which implies an orientation on innovation, the ability to attract resources from a variety of sources for the task. Basic conditions for the development of entrepreneurship and the following:· Relatively isolated and self-employed;· Ownership of the means of production and the final product;· Economic responsibility for the results of operations;· The presence of market space;· The development of commodity-money relations.Entrepreneurship involves the organization and management of the economic process, regardless of the type and scope of the company or individual entrepreneur. Economic activities may include the following types: innovation, production and sales, trade and mediation, consulting, engineering, patent-licensing et al., Including securities trading. Business Administration covers both industrial relations and relations with other participants of the market economy - financial, legal, settlement-related merchandise, insurance, storage, rental of goods, advertising products and services, and others.Firstly entrepreneurs are encouraged to investigate their funding options and conduct comprehensive market research to fully understand their potential targeted consumer base and any major competitors.In order to increase the capital of the project, there are several ways to achieve it. To begin it should understand what industry activities relate this project. Must be carefully prepared information about the market for which is a project-oriented, what is the target audience, what are the prospects of investment funds or other sources should be considered raising capital project. After the defined above questions, we can explore the sources of funding. There are different types of financing that will enable an entrepreneur to raise its capital of a project.Equity financing; this is a type of financing is essentially an exchange of money for a piece of ownership in a new business. This type of financing can usually be provided by venture capitalists and angel investors. An advantage of using equity financing as a way to raise capital is that the new business owner can pay back the loaned amount throughout a fixed duration of time. One possible disadvantage of utilizing equity financing to raise capital is that the new business owner may lose partial or complete autonomy over their new business.Then it can be using personal finances or “bootstrapping” as the first sources that an entrepreneur may consider using when they decide to raise capital for project. Money can be obtained from personal checking and savings accounts, credit cards, and retirement accounts. In addition, equity can be collected from the sale of real estate properties, vehicles, recreational equipment, and even rare collectibles.The next way to raise capital is self-financing, family members and friends can provide an additional funds. Many of these loans can be made available rather quickly because these families and associates know the entrepreneur personally and enjoy the excitement of the new business venture.It can also raise capital from investors and venture capitalists through equity financing. By investing in the equity of a business, investors and venture capitalists expect a large return on investment in the form of an acquisition, IPO, or stock buy back in the future. While this may not seem the most attractive, it is certainly an avenue to explore, especially if all traditional routes to raise capital have been exhausted. For many entrepreneurs, investors and venture capitalists may be their only resort to raising capital for the project.An entrepreneur can also raise capital through debt financing. In its simplest terms, “debt financing” means a loan. Usually, this form of capital for a new business is offered by banks and accredited government agencies, such as the Small Business Administration. An advantage of debt financing as a way to raise capital is that the entrepreneur can able to retain maximum control over their new business. In addition, interest on debt financing is often tax deductible. However, one disadvantage of debt financing is that the high debt may look unattractive to other investors who are also involved in the project. This money owed may discourage other financiers from lending further funding and can often disqualify a new business owner from the opportunity to raise capital in the future.Many financial lenders can now offer entrepreneurs the opportunity to raise capital for their new businesses by applying for a bank loan online. Upon application receipt, the new business owner’s information will be thoroughly analyzed for approval or rejection. All the information completed by the new business owner is strictly confidential and is transmitted through a secure server. If the entrepreneur needs an estimation of how much funding is needed to raise capital for their new business or inquires about the costs of monthly payments, they can utilize an online loan calculator which is provided by many financial institutions. Online loan applications are a fast way for new business owners to raise capital.

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