| Many would-be entrepreneurs dream of starting and managing their own businesses. Every year, tens of thousands of these entrepreneurs actually start a business and realize their dream. Many others just keep on dreaming. What key factors enable the dreamers to turn into business owners while others don't or can't fulfill their dreams?
Having access to capital is one of the prime factors enabling 'startup' businesses to get off the ground. Whether you're starting a business or expanding one, sufficient ready capital is essential. But it is not enough to simply have sufficient financing; knowledge and planning are required to manage it well. These qualities ensure that entrepreneurs avoid common mistakes like securing the wrong type of financing, miscalculating the amount required, or underestimating the cost of borrowing money.
There are two types of financing: equity and debt financing. When looking for money, you must consider your company's debt-to-equity ratio - the relation between dollars you've borrowed and dollars you've invested in your business. The more money owners have invested in their business, the easier it is to attract financing.
If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.
The SBDC at Daytona State conducts one-on-one, confidential Counseling to business owners who are in need of funding. Our analysts help explain the best sources of financing as well as the main steps you need to take to secure funding.
Our Where's the Money Business Financing workshops can also provide you with valuable information and resources in an interactive classroom type atmosphere. |
|
|
