BS Week 7.docx - LA 1 Inez is a sole proprietor/owner of...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
LA 1 Inez is a sole proprietor/owner of New Tech, a computer and IT consulting business. Her clients are small to medium sized businesses, colleges, and individual home users. Inez wants to expand her business, buy new equipment, and hire an employee. She needs to obtain additional capital to expand New Tech, but she does not want to lose control of the business. Also, Inez has chosen not to take out any sort of loan or use a credit card to obtain additional capital to expand. As a sole proprietor, what is her best option to obtain additional capital to expand and yet retain control of the business? Why? Sole proprietors suffer from one hugely unattractive feature: unlimited liability. Since there is no difference between the owner and the business, the owner is personally liable for all the business’s debts and obligations. Unlimited liability puts all the personal assets of the sole proprietor reachable by creditors. Personal homes, automobiles, boats, bank accounts, retirement accounts, and college funds— all are within reach of creditors. With unlimited liability, all it takes is one successful personal injury lawsuit, not covered by insurance or exceeding insurance limits, to wipe out years of hard work by an individual business owner. The best way Inez can expand her company with almost no or little capital is through; Venture Capital Firms: Why? Venture capital firms combine funds from institutional investors and high net-worth individuals (known as angel investors) to identify promising start-ups, and to fund them in a private placement offering until the start-up has developed its technology to a commercially feasible stage. At that point the venture capital firm seeks an exit strategy, typically through offering sale of the business to the public in an initial public offering (IPO).
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern