Getting financing Essay Example | Topics and Well Written Essays - 1000 words

Getting financing - Essay Example The inadequacy of working capital has prevented many companies from exploiting potential market opportunities that are available to them. This paper tends to explore the scope of raising finance for my business ‘JBR Watches’ located in Los Angeles. Obviously, it is difficult for an entrepreneur to meet all capital requirements for business expansion all by oneself. Hence, for opening a showroom in Los Angeles, I should seek various sources of financing. At this juncture, it is important to identify significant tactics that an entrepreneur can initiate. The most notable factor that denies a firm’s access to financial sources is its negative market stature. This bad situation can be changed if the company deals with large contracts because they offer comparatively higher profit. At the same time, majority contract terms insist that the supplier must provide 30 to 60 days for the client to pay his invoices (Burstnet). So as to meet these credit requirements of the cu stomers effectively and to earn more profit from large business contracts, it is advisable for the JBR Watches to try for venture capital. Venture capital is an option for small companies that possess innovative business plans but have no adequate operating finance (venture capital). Generally, venture capitalists would not be willing to invest their money in risky ventures; hence, the JBR must formulate effective business designs in order to convince the capital provider about the potentiality of its business. Even though, venture capital is offered for a short period of time, JBR can make returns within this period and repay the amount before the maturity of the stipulated period. Similarly, my company may seek assistance from angel investors. An angel investor maybe a wealthy individual or group of individuals who wish to invest in pre-venture capital companies with the objective of uplifting certain communities (Angel Investors). In the case of JBR, the management can highlight the growth requirement of employees’ community; and it may assist the firm to get financial assistance from angel investors. So as to find a potential angel investor, JBR can employ the internet tools like Google search engine. According to Carbajo (2011) bank is another potential financial source for every business. However, it is observed that the banks do not provide loans and other credit facilities to small companies unless the companies possess substantial assets and all other financial records. Although JBR Watches is a notable concern in the industry, its decreased growth rate would not satisfy the banks’ credit criteria. In the opinion of Yates, banks provide credit facilities to small companies also if the business owners personally guarantee the credit repayment. This type of fund raising is a very risky practice for small companies if the business does not realize anticipated profit and the owner is unable to repay the loan amount. Therefore, JBR must be ve ry careful while applying this tool. Use of credit card is another method that can effectively contribute to the working capital requirements of JBR Watches. Credit cards assist the card holders to make purchases or obtain cash advances and pay them later. Business owners must note that credits cards are very expensive source of funding even if it has reasonably low interest rates. As in the case of bank lines of credit, the business owner personally guarantees the debt repayment while employing this technique also. Therefore, this