Sources of Funding
Generally, to start and manage a business enterprise requires capital to facilitate the whole process. Starting the apparel firm needs adequate funding to cater for initial expenses like purchasing or hiring building, decorations, acquiring inventory, and to pay for the workers. To obtain such a huge amount of funds requires an investor to have a proper plan. An individual should identify various types of funding that can suitably provide start-up cash for the business. This research paper will focus on strategies of obtaining funding for Mommy and Me Apparel Company and include sources that would not be appropriate for sourcing finance.
The business will require $450,000 as start-up capital to ensure the requirements, including inventories, stores, office equipment, and workers’ salaries. The firm will employ one manager and eight staff members to lead and oversee the operations. It will need a departmental store that holds both the office and various stores containing the stock. The company will use various strategies to obtain the funding, including self-funding, government grants, family and friends, angel investors, and strategic partners.
Self-funding
Self-funding involves using personal savings or properties to raise the necessary capital for the business. I will use a print-on-demand company to obtain some capitals that aided in starting the clothing firm. I would take the available bank balance, cash at hand, land, building, and other resources I own, then convert them to money to provide the necessary amount for starting and managing the operations (Zhao, 1). The approach will allow me to have full control of the firm since all the contributions are individual based.
Family Members and Friends
To obtain the required funding to establish the firm, I would seek financial assistance from relatives and friends who are able and willing to donate resources. I would encourage them to organize fundraising so that I can achieve the needed capital. Collecting contributions from the families would be effective since they will also feel part of the enterprise thus can offer any support in the future.
Government Grants
Government grants are also an effective source of funding for business operations. I would ensure I seek the available state grants and contracts to raise the capital. Financing is essential since the money is not paid back in the future, which results in total control of the apparel business (Wiener, 2). The capital can be essential in starting and advancing the growth of the business organization.
Angel Investors
This strategy involves looking for potential investors who are willing to invest in the industry. To obtain the start-up funds, I would ensure I develop a strong network with people and share my business idea with them (Mason, 3). Using the technique, I might find an individual interested in investing in the business, giving capital to initiate the project. Angel investors can provide huge funds that can enable the effective and efficient growth of the business.
Rejected Sources of Funding
When evaluating the sourcing of capital to initiate the business, I had to ignore both bank loans and small business administration loans because they required interest to be paid monthly. This would cause the cost of the capital to increase, therefore leading to less return from the operations. Funding through loaning mounts more pressure on the business when trying to repay the borrowed amount of money.
In conclusion, starting a business operation requires funding to obtain the necessary capital. Individuals should use various strategies, including self-funding, family, and friends’ contributions, looking for angel investors, and government grants to raise the required capital. In the process of identifying sources, it is appropriate to avoid some categories that would require timely payback with accrued interests. Such funding will reduce the possibility of the business expanding its operations because the profits will be used to settle the capital plus its cost. When people research sources of funds, they should consider funders that do not require an immediate refund and interest rate for start-up businesses.
Sources
- Liang Zhao, 2021, Skin in the Game: Self-funding and Reward Crowdfunding Success. Web.
- Melanie Wiener, 2020, The Shift towards Entrepreneurial Universities and the Relevance of Third-party Funding of Business and Economics Units in Austria: A Research Note. Web.
- Colin Mason, 2018, Early Sources of Funding (2): Business Angels. Web.