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unit 2 notes - o Small businesses may not have enough money...

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AN J0E325318261309 AN 36028667 AN 48219380 AN 1996-97728-002 Debt financing – Borrowing money from friends, relatives, investors or financial institutions Money must be paid back over time most likely with interest Most likely method for new businesses Best to start with your local bank Advantages o Borrowing from people you trust o Friends and relatives are willing to take the risk o May not charge interest Disadvantages o Less formal structure – terms can change o Have to pay off debts before you profit
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o If you use a bank formal structure with interest costs o Bank has a claim to your business. Equity Financing – Selling stock or shares (partial ownership) of your company in order to raise capital. Buying stock and investing can help you make money from money Advantages o No Interest o You don’t have to pay it back o Company builds equity and establishes stock price and value Disadvantages o Giving up partial ownership o Give up control on decision making o Must provide more public information
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Unformatted text preview: o Small businesses may not have enough money to invest in stock market o Investment comes with risk Simple business plan outline 1. Executive Summary : Write this last. It’s just a page or two of highlights. 2. Company Description : Legal establishment, history, start-up plans, etc. 3. Product or Service : Describe what you’re selling. Focus on customer benefits. 4. Market Analysis : You need to know your market, customer needs, where they are, how to reach them, etc. 5. Strategy and Implementation : Be specific. Include management responsibilities with dates and budgets. Make sure you can track results. 6. Web Plan Summary : For e-commerce, include discussion of website, development costs, operations, sales and marketing strategies. 7. Management Team : Describe the organization and the key management team members. 8. Financial Analysis : Make sure to include at the very least your projected Profit and Loss and Cash Flow tables....
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