Tuesday, August 27, 2019

Bus. Research and Writing Essay Example | Topics and Well Written Essays - 2500 words

Bus. Research and Writing - Essay Example Selecting the best form of financing is critical for the success of any business venture and this should be guided by the amount required. Ideally, this paper recommends that the business should settle on the cheapest and most available form of financing. They should also establish the amount required before settling on a particular source of financing. Moreover, when seeking debt financing the business should ensure that all the paperwork must be made available. These may include the business plan, bank statements, business history and references. Most business start their operations before the owners decide to expand. This can be done by establishing new ventures or expanding. Some of the new ventures that can be explored include developing new product lines, creating and sustaining a presence in a new geographical area and establishing a new market. Each one of the ventures requires funds in order to be successful. The funds that are required by businesses, organizations or enterp rises either to start up new ventures or to bolster already existing ventures may be acquired through external sources or internal sources. The sources of capital usually depend on whether the business or organization is at an early stage of rapid expansion. The first source of capital for any corporation is usually the retained profits. The corporation has to approximate the amount of money required. The retained profits are the profits that are kept by the corporation rather than being distributed as dividends to the shareholders. The profits are retained in the organization and invested in new business ventures. A business can choose to opt for debt financing. This form of financing allows the borrower to use the money borrowed for a specified period provided they repay the money with some interest. In most instances, the terms of the loan are usually outlined in the loan agreement. To ensure that the repayment of the loan is guaranteed, the loan may be backed by â€Å"collatera l† for the sake of a secured loan or â€Å"cash flow† for the sake of unsecured loans. A corporation can raise capital through the sale of shares. Essentially, shares relate to public limited companies or private limited companies. â€Å"Shares† are self-explanatory and once one buys a shares form a particular company, they in turn own a share of the company. Shares are ideal forms of funding majorly because they are non-redeemable, that is, they form a permanent source of finance and they are usually non-refundable. 2. Introduction Most organizations seek to expand their operations by exploring the prospects of undertaking new ventures. Some of the ventures may include the production of new product line, entry into a new geographical area or the establishment of a new market. With the primary aim of expanding its operations, our firm is intending to create a presence in a new geographical area. For this to happen we will definitely require two considerable sums of money. Some of the notable sources of financing the business may include financing by debt, engaging private investors/angels, selling of shares, early stage venture capital, and expansion stage venture capital (Matthew2011). The companies that are in their early stages may receive their financing from the founders and this may be supplemented by some other financing from friends and family. The founders may also seek financing from other financial institutions but this is usually

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