Finance Questions on Small Business Startups

Finance Questions on Small Business Startups
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Entrepreneurial Hub Consultants, Inc. Memo
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Subject: Finance Questions on Small Business Startups
Entrepreneurship is growing increasingly popular given the potential for limitless fortune and freedom. However, starting own business can be tricky, considering financing options at every stage of business development and other independent variables. Below are the answers to some of the most persistent financing questions regarding small businesses startups. With an elaborate plan and adequate knowledge of business financing alternatives available to the proprietor, a business startup can blossom.
How much capital do startups need; how do existing small businesses finance expansion?
Varying business needs render it impossible to have a definite figure for capital necessary to start a business. For example, a business can fall into two broad categories: employer firms and nonemployer enterprise. Statistically, starting an employer business requires more capital than the background category. While 43 percent of employer firms spend more than $25,000 in startup capital, only 12 percent of nonemployer organizations fell in the same class (U.S. Small Business Association, 2016). In most cases, however, entrepreneurs require less than $5,000 to start their businesses, regardless of whether it is nonemployer or not, and there are instances when starting a business does not require any capital. Clearly, a startup’s financial needs can range from zero to over $25,000; the secret is to have a clear conception of business’ needs beforehand.
Implementing a business idea by starting a firm is usually the first part in a long chain of struggle to survive and thrive when opportunity allows. Business expansion is a resources gobbling undertaking that may stretch the enterprise’s limited resources. To circumvent this challenge, these firms make heavy use of personal equity in addition to traditional debt. As figure 1 below shows, personal savings is the most popular source of expansion capital followed ...