(Blog Repost from March 18, 2013)
Entrepreneurs are the headmasters of their organizations and the taskmasters that seek funding for their businesses, whether for initial start-up, to continue operations or to expand. While changes in banking have altered the financial landscape and closed a few doors to funding opportunities, innovative ideas have opened the doors to others. USA Today’s Small Business Columnist, Steven Strauss (2011) explains two kinds of financing: (a) debt financing; and (b) equity financing. Debt financing requires the entrepreneur take on debt to finance the business, whereas equity financing entails bartering or selling a portion of the venture in exchange for cash that does not have to be paid back (Strauss S. , 2011).
In the meantime, contemporary business leaders use a combination of resources to fund their ventures. Some of these include more unorthodox methods of financing like: personal savings, retirement funds, credit cards, online grants, business plan competitions, peer-to-peer lending, a variety of loans including friends and family plans, as well as crowd funding and microloans. There also the more conventional methods available from traditional financial banking institutions and business oriented organizations like SBA.
Some entrepreneurial organizations engage in a variety of strategies as leverage for resources. For instance, entrepreneurs that are in the storming and norming stages of their organizational venture, can invest personal capital in small increments from billable service profits. The pros of personal investment are: (a) interest free resources, (b) no approval is required from others for expenditures, and (c) there is no liability to others. On the other hand, some of the cons for using personal resources include: (a) the depletion of funds which may be required for a rainy day, and (b) it is not always enough. Strauss’s book, The Business Bible recommends a few other inexpensive ways to attract more business revenue with mobile marketing strategies and other social media outlets like Facebook, Twitter, YouTube and LinkedIn. These are some of the innovative resources available that are great for free advertising as a cost effective way that can assist to further expose a company’s brand and services (Strauss S. , 2012). When an organization has cash flow challenges and are unable to secure more financing for budget expenses, capital and headcount, other services some entrepreneurs consider, is raising capital from short video ads on social media outlets like YouTube with the intent of making it go viral. A smart entrepreneur understands that in today’s marketplace, a viral video can become a capital resource game changer.
There are no secrets to success. It is the result of preparation, hard work, and learning from failure. – Colin Powell
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Strauss, S. (2012). The small business bible (3rd ed.). Hoboken NJ: John Wiley and Sons, Inc.