Bootstrapping to fund a business venture

Assignment Help Business Management

Reference no: EM13797381

Question 1:

"Early Stage Funding" Please respond to the following:

Describe a business idea that will require early-stage funds to get started. Using that business idea, provide an estimate of the amount of start-up capital needed to fund the venture for one year. Create an outline that details the funds needed and why they would be required.

From the e-Activity, rate each of the resources that you located on a scale of 1-10 (with 10 being the best) in terms of the ease with which a start-up could obtain funds. Explain how you determined the rating.

Question 2:

A business idea that would require early stage funding would be a Sno-ball stand. Sno-ball stands are popular here in the south and can be very profitable. I estimate that the start up cost for this type of venture to be around 15-25 thousand dollars. This money would be used to secure a property to rent or lease. These funds would also be used to purchase equipment which can cost $2,500 for a sno-wizard ice shaving machine. Other funds will go to stocking the location with the different syrup flavors and other snacks. It will cost the venture money for licenses and taxes to operate. I would also set some cash on the side for emergencies and petty cash.

One of the two resources to fund my venture would be a SBA loan. This micro loan program is most suitable for small home based business and the average loan is $10,500 and can be as much as $35,000. This would be perfect or the amount of money the start up would need. I would rate this method at a 7.

The second resources I would select would be to look for family or friends to help with raising capital. If a few people can go into a partnership they could raise this money with ease. I would rate this method at 5 because if feel there is still a lot more risk when you get family and friends involved in business affairs.

Question 3:

"Bootstrapping to Fund a Business Venture" Please respond to the following:

Bootstrapping allows founders to have more control and give up less of their company to investors. Yet continually living on limited resources can take its toll on entrepreneurs. Examine the pros and cons of both working full time and taking a part-time job to help finance a new business.
Prepare a plan that describes how a new entrepreneur can manage his or her personal credit prior to starting a business so he or she can qualify for bank loans and other sources of funding.

Question 4:

Both part time and full time working jobs are good ways to help financing a new business. Both have pros and cons.

Full Time Job:

Working a full time job will give an entrepreneur access to more money to fund their business. This will also allows for a "nest egg" in the event of a failed business. This also insure that after you pay the bills that come with your business you will still have money in your bank account. On the other hand working a full time job in order to fund a business comes with risks. One runs the risk of stress. Having to work a full time job and run a business could be very stressful. Also one would not be able to give the necessary attention to a new business that it needs.

Part Time Job:

Working a part time job has its benefits when it comes to having a job and starting a new business. This too allows for a constant income. Working a part time job allows for more free time to devote to a new business in order to nurture it and help it grow. Working a part time job is no with out its faults. Using a part time job in order to fund a new business is risky. The schedule is not consistent. You could work one Monday, Wednesday, and Sunday one week and the next week it could be something completely different. Although a part time job would allow more time to devote to a new business it would also allow for less income.

When preparing to open a new business an expiring entrepreneur should get their finances in order. I would suggest that someone should pay off any and all debt that she/he has. Old medical bills should be taken care of first. Next should be any student loans because they sometimes add interest. Clearing up any previous debt will look good to any bank. This shows that you pay your bills and can be trusted to pay back a loan.

Reference no: EM13797381

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