Write a 1,050- to 1400-word paper on funding a business, in which you: Describe

Question

Write a 1,050- to 1400-word paper on funding a business, in which you:

Describe the various types of funding available to a business, and include at least three examples.

Explain the advantages and disadvantages of each type of funding.

Identify the best source of funding for your business, and explain why you selected this source.

Explain how you plan to grow and support the business over the next 3-5 years.

Describe the major costs that you will need to cover prior to generating any revenue, and how you plan to cover your cash management.

Determine your anticipated "break-even" point at which you expect to start seeing a return on your investment (for both your investors and you).

Explanation / Answer

Giving a Jist, Elaborate in your own words

Different types of funding are available for businesses. The choice of which will depned upon the motive behind the funds, the time lag, the size and nature of the company and its operations.Three major types:

1.Bank loans: This is the easiest way of obtaining funding for a business, especially for small companies, informal units such as SHG, cottage industries etc.. The comes comes with submitting you rcollateral with the bank and interests rates associated with the loans.

2.Venture capital: This is the most less risk investment where you approach a venture capitalist, according to the nature of your business and the interest of the capitalists. VC cvome forward in funding small but exceptionaly creative and growing startups. VC work in various fields, one has to choose based on this. They help you with funding and training but take a share(agreed upon) of your profits once you start growing.

3.IPO/share: This the most difficult and risky funding measures taken by big and famous(brands and patents) companies where they offer their share to the common public.This involves huge costs for the company but it an effective means of publicity of the company.

For example, If i have a company that is coming up with a software to help with sex education for school children , The VC would be a the wisest choice.

If you have a small business VC are the most convienient and less risk funding options. They come not only with money but also give you training and help in skill development. VC generally take a copule of companies working toward the same goals or the same sector. This enables the company to form connections with other companies and enhanes exchange of production techniques and knowledge.

VC funds in rounds depending upon the growth of the company. If the company goes you can expect undisturbed and timely funding by the VC. It is also a great platform to connect with different VC working in the same area and henc ewidens your options for acquiring funding.

To come up with a cost analysis and expansion, the company has to do market ressearch on the need for the software. This is usually happend before the funding and hence you should have a perfect idea for the questions What, Why, HOW, For Whom , where, when..

Major revenue would be what you earn by selling the software to schools and tutoring centres. Major cost would be the costinvolved indeveloping and maintaining the software along with the salaries and other miscellaneous office charges. Mind that the owner and entity are different and hence the capital put up by the owners is a liability to thew company.

Divide the cost into capital and operational costs. Determine the price for your software(although marketinf technisques such as a few free demonstrations is needed). Determine the target market. Do a thorough study of the market, the various stakeholders etc.

After the tabulation of market, prices,costs and revenue sources , one can understand the approxiamte time the company would take to Break-even.

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