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Financial issues

Introduction

Finance is dealing with money, risk and revenue or loss.

Having access to capital is the first issue for an entrepreneur, financial needs can be covered in one of the following ways:

  • Contribution of the owners of the company,
  • Amounts obtained in the financial market that must be repaid (loan or debt),
  • Self-financing, generated by the company’s own activity (through depreciation of fixed assets or by increasing reserves with unpaid benefits),
  • Governmental funds,
  • Other financial alternatives.

Banks usually are the least likely option to borrow money from. One must think about other “creative” financial alternatives. For example, 3Fs (Family, Friends and Fools), Online lending, Angel investors, Venture capitalists, Invoice advances and Crowdfunding.

Moreover since entrepreneurship is a matter of great concern for public institutions several grants are available in order to reinforce it.

In any case, a credit business plan is highly recommended. This should particularly emphasize the financial performance of the new organisation, and prove how the business will generate sufficient cash flow to repay the loan, to cover operating expenses and for possible re-investments.

If you are interested in these diverse ways of getting funding, in the following module you will learn about:

  • Loans
  • Online lending
  • 3Fs: Family, friends and fools.
  • Angels investors
  • Venture capitalist
  • Invoice factoring
  • Crowdfunding