Assignment6 SBM - TESC October 2011 MAN432-GS009 Small...

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TESC, October 2011 MAN432-GS009 Small Business Management Assignment 6 1. Discuss reasons why an entrepreneur would use his/her own money (MOM) to finance a business. Then discuss reasons why an entrepreneur would use other people’s money (OPM). There are a large amount of reasons the entrepreneur would use his or her own money to finance a business. Personal assets are the way most start up business need to rely on heavily because investors, lenders, and banks are put in great risk when they finance venture capital for startup companies. Lenders tend to be more inclined to lend money when there is a track record or history of sustainability in the company. This leads us back to the reason most entrepreneurs use their own resources to finance the business they desire because there is usually few if any outside sources that will part take in the risk and unknown outcome of a business they are unsure of. A reason that entrepreneurs take the financial burdens onto themselves when starting a business is to maintain a larger portion of control and profits from the company they start. When involving investors and banks there is a drain on profitability because of the interest rates and share of the company they may have. By investing in your company with your own assets the profitability and control of the company remains in your hands as the owner. Entrepreneurs as stated above us their own personal finance to get their
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Assignment6 SBM - TESC October 2011 MAN432-GS009 Small...

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