What are the risks involved in this funding situation?
Not what you're looking for?
Currently, you’re only funding for your business has come from your rich relative. What are the risks involved in this funding situation? If you didn't have a rich relative upon whom to rely for start-up funding, you could have pursued any of the following options:
Bank loans
Small Business Administration (SBA) programs (www.sba.gov)
Venture capitalists
Stock issuance
Bond sales
(List any/all others)
Select any two of the listed options, explain them, and identify the risks involved with them.
Purchase this Solution
Solution Summary
This solution expands on the student's response about types of funding for startup of a business. The risks involved in receiving funding for a business from from a rich relative are explored and a variety of other types of funding are discussed e.g. banks loans, venture capitalists, stock, issuance, and others.
Solution Preview
Please see response attached for best formatting. I hope this helps and take care.
RESPONSE;
Solution:
Answer:
The risks involved in funding received from my rich relative would be that if the business failed, and I would have no way to repay her. As well, sometimes, money and family don't mix. If I am on a repayment schedule, and I miss one payment, for example, perhaps my relative would get upset mad or start to worry that her their investment is not safe. Words flow easier between relatives rather then between me and the Bank (meaning?). As well, other family members might get upset mad that the relative supported my business, and this could cause potential family rifts.
If your company does take off, it will require additional financing that your family and friends might not be able to supply. Then you'll have to approach other investors. If they invest, that will dilute your relatives' stake in your company and make it worth less. So it's best to think twice ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Behavior (OB)
The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.
Cost Concepts: Analyzing Costs in Managerial Accounting
This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
SWOT
This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.