Financing and Credit
In the beginning of a business, and over time, you may need to borrow money for a short time (revolving credit or short term loans), or a long time (a mortgage, or an equipment loan, for example).
- Given your profit and loss projection from last week, do you anticipate needing to borrow money for any reason? Keep in mind the seasonality of your company. You might make a lot of money in the winter, and have essentially no business in the summer — think of how that is true for a ski resort, for example.
- If you foresee having to use someone else’s money, how do you anticipate getting that? Discuss using both debt and equity financing. Also think about how you can use other people’s money (like suppliers). Be sure to address any bootstrapping measures you might take.
- Even if you plan to keep your business small, imagine what you would need to do if you wanted to grow. This exercise requires you to use your imagination. The only wrong answer for these discussion purposes will be if you state you do not need money now and never will. Even if that is true, imagine what you would do if you needed it.
………………..Answer preview……………………
I anticipate needing some money in the future to grow my business. Short term loans will be the best for now as the business is still small and large loan amounts could greatly compromise the business. The best way of course to get the money is to borrow from financial institutions. They offer the best rates and good repayment periods and thus will be my first priority. However, the idea of using other people money such as suppliers could also come in handy……………………………
APA
150 words