"Running head: JACQUII LLC 1JACQUII LLCPaul Anthony CourtneyMGT 662-2017 CT6JACQUII LLC 2Introduction, Findings, and Conclusion ‘Should a young entrepreneur accept a potential investment offer that can cause the lossof ownership of his/her business’? This essay presents an analysis of Case Study#3 depicting theproblems faced by a start-up founded by an Australian entrepreneur, Jacquii Rosshandler. Shelaunched a breath-freshening product ‘Eat Whatever’ in New York by developing a company‘Jacquii LLC,' however she faced challenges in its widespread distribution and as a result salesdid suffer. Through her trials and tribulations, Jacquii has presented an opportunity from ArthurShorin, a successful entrepreneur who just had recently sold a business and was seeking anotherchance to be in business (Scarborough., Cornwell, 2015). The major dilemma faced by Jaquii in this regard is that she has to give up to 75% stakeof ownership to Shorin. In this context, the report has evaluated other potential sources offinancing for Jacquii LLC, the advantages, and disadvantages of using equity and debt capital.Also, the report discusses the measures that can be adopted by Jaquii for overcoming the cashflow problem of its company and analyzing whether Jacqui Ross should accept the investmentoffer of Shorin.DiscussionExploring Potential sources of financing for Jacquii LLC recommended to Ross handler The possible source of funding for Ross handler rather than giving up her ownership in thecompany can be as follows: ? Loans: Loans are the long-term debt capital acquired by a corporation from banks,finance companies or micro finance institutions for which it has pay interest annually orhalf-yearly at a pre-determined rate. There are various terms and conditions provided bybanks or other financial institutions of borrowing funds. The start-up businesses can ac- JACQUII LLC 3quire funds from a combination of domestic and international leads for meeting the capi- tal need of their business. Jacquii handler can avail the opportunity of taking a smallbusiness loan by a microfinance institution that involves low-interest.? Government Grants: The Company can also take a grant from the U.S. government byexplaining the primary reason behind the initiation of the start-up project. The main ad- vantage of government grants for the company is that these are not to be paid back andthere is no control taken over of the business (Smith, 2017). Advantages and the disadvantages of using equity capital and debt capital to finance a smallbusiness’s growthEquity Capital The equity capital refers to the capital acquired in exchange for a portion of its ownershipin the company. The major advantages and disadvantages of using equity capital for financing asmall business such as in the case of Jacquii LLC are as follows:Advantages? The equity financing does not have a requirement of a fixed payment, and thus it does notraise the fixed costs for small growing businesses.? It also provides an advantage of utilizing the dividends and cash generated to operate thebusiness activities as per the need? It helps in promoting the long-term growth of a business rather than emphasizing on pay- ing good dividends to the shareholders.? Also, the equity investors are not concerned with a pledge of collateral, and thus the as- sets purchased from equity capital can be used for securing long-term debt (Parker andPraag, 2010).JACQUII LLC 4Disadvantages? The profits realized by a business are entitled to be received by equity investors that an- ticipate a higher return on their investment.? Also, equity investors implement broad restriction on a capital structure that impedes thelong-term growth of a business organization.? The equity investors also have governance rights and thus possess power to elect theboard of directors as per their desire (Vantilborgh et al., 2015).Debt Capital Debt capital refers to the money acquired by a business entity through taking loans that have tobe repaid in the future course of business. Its advantages and disadvantages are as follows: Advantages? The debtors generally do not have right to interfere with the business activities and pro- cedures. Also, they do not have a stake in the ownership interest of a company.? The small growth businesses can also have the benefit of reducing their debt cost by de- ducting the interest incurred on loan from tax return? The businesses can also plan for repaying their loan and interest obligations? The business can also easily raise debt capital as they do not have the necessity of com- plying with the state and federal securities laws and regulations (Smith, 2017).Disadvantages? The businesses are required to incur fixed payments on the interest charges for incorpo- rating debt capital. This poses a large problem in front of small-growth businesses. Theincrease in interest cost during difficult financial situations can result in causing insol- vency for small business entitiesJACQUII LLC 5? The large debt-equity ratio increases the risk factor for small businesses and also restrictstheir future growth potential (Schmidt, 2014). Steps were taken by Ross handler to avoid her company's cash flow problem? Maintaining a Cash Flow Forecast:The Company Jacquii LLC is required to maintain aspreadsheet that will help in tracking its income and costs on a periodic basis. The main- taining of cash flow forecast will assist in identifying the potential reasons of lack of cashflows. The spreadsheet can be maintained by the company that will help in recording thecash inflows and cash outflows and supports the decision-making process of the man- agement reading the future cash-flows of the company (Najim et al., 2013).? Stock Management: The efficient management of stocks of the company will also help itin managing the cash flows by appropriate identification of the stock left, and that needsto be reordered. This will assist in decreasing the hold on stock period and thus enhancethe cash flows. The reduction in inventory cost through the adequate management of in- ventory would help in improving the cash flows for a start-up business that cannot man- age to incur huge inventory cost. Thus, stock management is highly essential for smallbusinesses for reducing their operational costs and increasing the cash flows (Robinson,2013). ? Seek Retainer: The biggest problem faced by the self-employed business entrepreneur isthat income varies on a monthly basis as a single period is required to perform varioustasks such as production, inventory management and marketing such as in the case ofRoss Handler. Thus, start-up businesses can improve their cash flows by gaining helpfrom clients that will guarantee a specific amount of return each month. The client will "