Financing a Small Business Research Paper Example | Topics and Well Written Essays - 1250 words

Financing a Small furrow - Research Paper ExampleLuckily, there atomic number 18 still many airs which a languish and proactive someone can use to make his living. Something which is better than his previous job infact. This is to start his induce caper. One might ask why anyone would want to start his own business and go by means of such a huge risk of investing so such(prenominal) and finding out in the end that it was all a bad idea and loses all his capital. Well the answer is already given over above. But apart from not having any other choice, it is wrong by many people to intend a business as a risky investment because a business is as skilful as you want it to be. If you start out with a stupid idea which only you believe is deprivation to sell, well then you will lose your money. On the other hand, if you value your investment a quid and do not want to take big risks, you can start something simple same(p) a general or medical store. This type of business wil l give you lesser profit and it will be stable and will involve routine supply chain techniques which will wherefore lowering the risk to a minimum.Now comes the most crucial part, one which actually makes a person decide on his destiny. Its how to finance his business. The first thing a person films to answer is how much investment is he going to need. If his business plan is well defined and thoroughly covers the default cinque year plan technique, he will know exactly how much he will need in order to express it started. He will also know in how much m he will be able to reach break-even for his investment therefore answering his second head of repayment of his installments. There are several ways a person can finance his business, for the plan of simplicity, we will discuss three of the most common ways which are used by mild businessmen and even by big multinational giants (James E. Burk, Richard P. Lehman, 2006).Personal CreditThis technique is primarily designed for small businessmen deciding on opening a low risk and stable earning platform. This is because as the name suggests, the businessman will borrow money from his personal contacts either by formal or informal agreements. These personal contacts are usually family members who come in the businessmans trust circle like his parents and siblings. This is the safest way of acquiring money for investment because there is a lot of flexibility involved in the process. Also, the business man will be more careful of investing it wisely as his share is the highest in the whole investment and he cannot gamble with it too much.Upon interview of selected people on whether they would lend money to a close relative, the answers received were highly unexpected. 80% of people interviewed said they were not comfortable in lending their hard earned money as they were not sure if they would be able to get it back once they lend it. On the other hand, people also said that they would not like to ask their f amily members for help as they do not want to parade about the fact that they are starting a business as they might become prey to extreme jealousy.Bank contributeThis technique is the most common used in the business world today. Even banks offer special(prenominal) packages to customers seeking money for investing in their own small business which are good because they involve lower markups and they are granted more easily thanks to governmental