FINANCING

ENTREPRENEURIAL RESOURCES

As a Business owner you must consider both the long term and short term capital needs for your company What are Short Term Needs?

Start Up Costs – Property / Licenses or Permits / Inventory

What Are Long Term Needs? Future Growth – Equipment or Technology / New Property or Facilities /

Research and Development

BOOTSTRAPPING

Cutting any unnecessary expenses Hiring as few employees as possible – Do the work themselves if

possible Employees are expensive – Wages / Benefits

Leasing vs Buying Don’t need down payments / Can hold on to more cash at the beginning

Be Creative Having Friends or Family Help

FINANCING THE START-UP

Typically personal resources What are the sources?

Personal / Friends and Family / Private Investors / Partners

Equity Capital Cash in exchange for a % of Ownership

Think Shark tank

Debt Capital Taking out Loans

Banks / Small Business Loans

OBTAINING FINANCING

You must have Predictions for your company

Income Statement / Cash Flow Statement / Balance Sheets

Expectations Private investors typically want to be involved

Banks want you to repay the loan

5 C’S

Character Reputation as a person and in business

Capacity Can you repay the loan? Your cash flow

Capital Net worth of the business. Do assets exceed liabilities?

5 C’S (CONT.)

CollateralAssets you agree to give the lender if you can’t repay the

loanConditions

Environment or circumstances at the time of the loanGrowth Potential / Competition / Location / Ownership Type

DUE DILIGENCE

Investigation and analysis of a business before making business decisions / investing in a company Why Important?

Background checks of owner(s) and business

CALCULATING START-UP CAPITAL NEEDS

Start-Up Costs What do you need from suppliers / vendors / manufacturers /

distributors Determine what you need and how much it costs What are things every start up business will need?

Operating Costs Working Capital – Amount of money needed to carry out daily

operations What are daily costs of all businesses?

Contingency Funds Money saved for the unexpected

Examples?