Main Sources For Business Startups example essay topic

435 words
The greatest amount of money can be taken for startup from Venture Capital Funds (VS). The companies are quite different from previous ones. They invest much larger amounts of money, taken from other people. Usually they invest several million dollars. As a rule they come later in the life of a startup. They have direct obligations and terms.

VC companies are organized as funds. There is a great risk of taking money from less known firms, because they have less reputation to protect. You can become a victim of different tricks, thats why some VC firms have such a bad reputation. Having examined the main sources for business startups, we can estimate pros and cons of them. I think the most reliable way is to start working with seed companies, because they were established for this purpose; they can offer you advice and risk can be diminished. Though, may be, the most successful startups is to get money from different sources.

The lifeblood of a small business is cash flow. It is an indicator of a company's financial strength, because it is some kind of insurance that staff and creditors will be paid in time. It is necessary to forecast cash requirements (as carefully as possible) while planning any type of funding requirements. As usual cash inflows can be received from sales, bank loans, disposals and other income. Cash outflows mean payments.

A firm can pay suppliers and staff, dividends, taxation etc. The indicator of your business is the difference between sales and costs. It does not mean pure profit. Profitable does not mean developing. Lack of cash flow is a real purpose for troubling. Though sometimes the payment may be fulfilled in a form of credit to the customer.

But payments to suppliers, staff must be made. In this case sales and costs cannot be associated with cash inflows and outflows. Any firm should make cash flow planning to indicate the net cash flow. It is the difference between the cash in- and out-flows in a given period. For many business startups credits are necessary. And the main suppliers of credit are commercial banks.

Different programs were issued by the U.S. Small Business Administration (SBA) with the purpose to satisfied needs of different types of companies. Each of the programs has its advantages and disadvantages. Lets examine the main three: SBA 7 a loan, SBA 504 loan and an SBA Low Doc loan..