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Chapter 6

MGT 3806 Chapter Notes - Chapter 6: Quick Ratio


Department
Management
Course Code
MGT 3806
Professor
M I K E M A D O R E
Chapter
6

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Part 2: Financing The Small Business
SMALL BUSINESS FINANCING
Management problems affecting financing
underestimating financial requirements
lack of knowledge of sources of equity and debt capital
lack of skills in presenting a
proposal for financing
failure to plan in advance for
needs
poor financial control of operations
The entrepreneur often require financing not only to start the business but also to
provide capital to fund ongoing operations
The Importance of Capital and Planning
How much do you need ?, When will the funds be used ?
How long will the money last ?
Where can the money be raised and what type of financing (debit versus equity)
will be used ?
Do you need funds immediately ?, Will I get anything else besides money ?
DETERMINING THE AMOUNT OF FUNDS NEEDED
Start-up Costs
initial inventory
First few months of:
Payroll
Utilities
Rent
Initial Advertising
Prepaid items (deposits, rent and insurance)
License & Permits
DETERMINING TYPES OF FINANCING
Business Stages and Financing
The type (equity & ownership) of financing entrepreneurs can access is usually
dictated by the stage the business is in and the type of opportunities the
company is pursuing
Startups
Ongoing concerns
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