Unit 2 Funding My New Business

Funding my new business

William Secoy

American Intercontinental University

Abstract

I have my new invention and my wife’s blessing. I am ready for the next step “Funding”. In this paper I will choose a first and second choice funding method. I will explain why I choose them. I will also try to explain the pros and cons of these two choices.

I will describe what an Investment banker is, what he or she does and the importance of having one. Just what is the Stock Market I will try to explain? What is Financial Management and Risk Financing are they important.

Funding my new business

I have decided to start a small business, my first questions is how to raise money to finance my business operations. I have spent long hours developing a business plan. I think I am ready to go forward with financing plans.

My business plan states I will be forming a S Corporation. With that in mind and little funds of my own I am looking for three investors. I am going to give them 24.7 % ownership for 33.31% financing each. I am maintaining control with my 25.9% ownership. I have a couple family members and a friend who have expresses interest. This type of financing is called equity financing.

The Pros of equity financing is I can use the money they invest for all the startup cost and don’t have to take on any type of debt. That eliminates a large payment to the bank during the crucial startup time.

The con of equity financing all my investors own a piece of my business, I are expected to act in their best interests as well as my own. If I fail to I could open myself up to a lawsuit.

My optional business plans shows I will form a straight Corporation. I will be using another method of financing. I will use that method if I want no investors and want total control of the business myself. I will pursue debt financing in order to start up my business. I am unable to tap my own sources of funds. Such as using personal loans, home equity loans, and even credit cards....