Funding a Business Venture By Ericka Smith-Williams American Intercontinental University July 30, 2010 Abstract Investment Bankers, Stock Market, Financial Management, and Risk Financing all play a role in funding a business venture. This paper will discuss what and why investment bankers, stock market, financial management and risk financing are important to businesses. This paper will also talk about what form of funding is best to use and why. Funding a Business Venture Funding a business venture takes some smart thinking and good strategies.
When running a business you need to understand how to make the best decisions for your company’s benefit. Funding a business is crucial to decision making, because there are several ways to fund the business. You can sell stock, borrow money or license the technology. Investment bankers are the underwriters or agents that serve as the intermediary of issuer and the investing public. Investment bankers make outright securities from the issuers and distribute them to dealers and investors.
Investment banking deals with decisions and techniques the deal with the ins and outs of company’s finances and capital. Basically investment bankers are bankers that give expert advice and guidance. The majority of investment bankers maintain broker-dealer operations. They are usually wholesale and retail client brokerage and have advisory capacities. The stock market it a public market for trading of company stock and derivatives. Stock markets are important to companies because it’s a good source for raising money for businesses.
Businesses are allow to publicly trade or raise additional capital for expansion by selling shares of ownership of a company in a public market. Investors in the stock market may take or move financial prices away from their long term aggregate price tends this may only happen temporarily. If a newly own business owners has little knowledge about the stock market, it can be quite unforgiving. Investors that are inexperienced rarely get assistance and the support they need. Financial management is comprised of accountants that can demonstrate their knowledge of financing.
Financial management also helps control a company’s operation. Financial management deals with the break – down of revenue and the cost between different factories, departments or products to provide data and help reveal profitable and unprofitable activities. Financial management is also important because a crisis may occur such as lawsuits, natural disasters, or financial collapses. When a crisis may happen unexpectedly these are what corporations call unpredictable events that have a negative impact on the company’s products and services.
Risk financing is investing in someone’s idea. It is investing in a small business venture. The proprietor, partners, or corporation have to rely on family members, friends, or lenders to start up a business or an invention. Before a family member, friend, or lenders invest in a company/invention they want to know if it’s worth taking a risk on their idea. So, the person or persons needing financial support has to have a plan and need to be able to present it in a presentation. This presentation should include the pros and cons of the company and or product.
This presentation has to have detail specifics about the product. And, the entrepreneur and the investors need to understand the risk of investing in the company/product. Home appliances change all the time, someone or companies almost always find better ideas for and appliance to work better or be better for the environment. To get this project funded companies can sell stock or take on added debt by receiving loans from lenders, either way they are receiving money from outside the company.
Coming up with an idea and putting it to work can be difficult if you don’t know anything about manufacturing the product. There are some companies that can design products so that they are saleable or they can come up with new concepts for a product. These companies are known as design firms. They can sell their ideas to a manufacturing company or can choose to license the technology to a number of firms. By selling stock to finance a business or invention can be good or bad. The upside is that the business can be a success and can get investors to invest in the company.
The downside is that it could fell and the money you invested will not be recovered, total lose. As far as and invention goes especially if it’s a kitchen appliance it’s usually a success because there is always a better way to improve an appliance. And, as stated before there are companies that can actually design products so that they are saleable or they can come up with new concepts for a product. References INVESTMENT BANKER. (2006). In Dictionary of Finance and Investment Terms. Retrieved from http://www. redoreference. com/entry/barronsfin/investment_banker Stock exchange or stock market. (2006). In Collins Dictionary of Economics. Retrieved from http://www. credoreference. com/entry/collinsecon/stock_exchange_or_stock_market Financial Management2006). In Collins Dictionary of Business. Retrieved from http://www. credoreference. com/entry/collinsbus/financial_management entrepreneurship. (2003). In The New Penguin Business Dictionary. Retrieved from http://www. credoreference. com/entry/penguinbus/entrepreneurship