Understanding of sources of finance

Jun 27th, 2015
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As a Employee: to know the financial position and hence the stability of a company is at a given point in time. As a Investor: to know if a company is financially good and in a position to deliver good returns As a Lender: want to know whether the company would be in a position to pay back interest and principal.

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SourcesSources ofof Financing:Financing:DebtDebt andand EquityEquity1Copyright 2008 Prentice Hall Publishing CompanyRaising Capital Raising capital to launch orexpand a business is a challenge. Many entrepreneurs are caughtin the credit crunch. Financing needs in the $100,000to $3 million may be thetoughest to fill.2Copyright 2008 Prentice Hall Publishing CompanyThe Secrets to Successful Financing1. Choosing the right sources of capital is a decisionthat will influence a company for a lifetime.2. The money is out there; the key is knowing where tolook.3. Raising money takes time and effort.4. Creativity counts. Entrepreneurs have to be ascreative in their searches for capital as they are indeveloping their business ideas.3Copyright 2008 Prentice Hall Publishing CompanyThe Secrets to Successful Financing5. The World Wide Web puts at entrepreneursfingertips vast resources of information that can leadto financing.6. Be thoroughly prepared before approaching lendersand investors.7. Entrepreneurs should not underestimate theimportance of making sure that the chemistryamong themselves, their companies, and theirfunding sources is a good one.4Copyright 2008 Prentice Hall Publishing CompanyLayered Financing Entrepreneurs must cast awide net to capture thefinancing they need to launchtheir businesses. Layering piecing togethercapital from multiple sources.5Copyright 2008 Prenti

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