Business Plan
...nd marketing of your business, and achievement of your goals and objectives.” (“Business”). A business plan can be the most difficult process of starting a business, but it is very necessary for the business to succeed. Forcing an entrepreneur to put their thoughts in writing will help them to have their business in running order before even starting. There are many programs and sources on the internet to help entrepreneur develop a well written business plan. The next crucial element in starting a business is finding financing. Equity and debt are the two kinds of financing. Equity financing is defined as the “use of common stock and/or retained earnings to raise long-term funding” (Ebert 528). Equity would include “friends, relatives, employees, customers, or industry colleagues” (“Financing”). Debt financing is “long-term borrowing from sources outside a company” (Ebert 526). There is a long list of sources such as “banks, savings and loans, commercial financing companies, and US Small Business Administration (SBA)” (Financing”). SBA offers loan programs, investment programs, and bonding programs. SBA’s loan program offers a federal backed guarantee to lenders for repayment of the loan. The Small Business Investment Company (SBIC) is SBA’s investment program that provides venture capital to new and established small businesses. Surety Bond Guarantee (SBG) is for eligible small and emerging contractors who cannot get bonds through commercial channels. (“SBA’s Role”) There are advantages and disadvantages for each source of funding. Equity financing is able to provide entrepreneurs with “more up front capital”, which would allow the business to grow sooner (Newton). However, “equity partners will have direct input into decision-making” (Newton). This can be a positive and a negative. Equity partners may have great ideas that the entrepreneur did not think of. On the other hand, they may have ideas that the entrepreneur does not agree with. Also, equity partners will require a part of the businesses profits, but they will also have liability for the loses, if any. With debt financing, creditors are concerned with the business generating enough money to cover the expenses of the debt. Creditors will require monthly installments, no matter how the company is progressing. In making these monthly payments, it takes away from the businesses profits. However, after the loans are paid off, the creditors will not receive any of the businesses cash flow. The entrepreneur will be faced with many legal issues when starting a business. BusinessLaw.gov, developed by SBA, provides legal information for small businesses. A major legal issue for small businesses starts with the hiring process. Business owners are legally liable for the questions that are asked on applications, and in interviews. At Inc.com, they have an article that lists these questions and th...