Assignment 4: Final Business Plan

Running Head: STARTUP FUNDS 1

STARTUP FUNDS 1

Startup Funds

Startup funding is the amount of money needed to start up a new business. Working capital is the difference between existing business assets and liabilities. Business assets include cash, raw materials, and finished products. Business liabilities can be said to be money that the business is supposed to pay off. When a company has enough working capital can sustain its activities and make a profit. Research has shown that 94% of new businesses fail in their first year of venturing into a business (Cavallo et al., 2019). This happens because they lack money to fund and sustain their business activities. This paper discusses methods of obtaining business funds, what it takes to have the best business plan, and the best way to communicate to sell the business.

Developing a business plan is the most crucial part of starting up a business. A business plan is necessary because potential investors and money lenders will demand to see before loaning out money. There are five steps followed when formulating a business plan (Lee, 2011). First is researching the industry and the behavior of customers using sources such as articles, interviews, databases, and document the findings. The next step is to strategize on how to start and run the business. Make all the calculations on the costs to incur in the business set up and draft every section of the business plan. The last step in the business planning process is revising the plan by proofreading and makes corrections where necessary.

There are different funding sources when planning to start up a business. The best source of money that is used to start a business is the self-funding source or rather the bootstrapping. For business starters, it is always hard for them to get funds without showing their potential ability to succeed. Using personal savings and family support is the best way to fund business because it ties one to the business. Other entrepreneurs' sort to acquire business funds by taking a loan from a bank or any other financial institution (Dos Santos, Patel, & D'Souza, 2011). 

The communication process with the investors is very paramount because it determines the progress and success of the business. As a business owner, one should communicate effectively to convince the investors to fund the business. While addressing the whole process, it should be clear regardless of the mode of communication used (Lev, 2012). Show the investors that you have a clear goal and let them know how you value them as much as the business idea.

References

Cavallo, A., Ghezzi, A., Dell'Era, C., & Pellizzoni, E. (2019). Fostering digital entrepreneurship from startup to scaleup: The role of venture capital funds and angel groups. Technological Forecasting and Social Change, 145, 24-35.

Dos Santos, B. L., Patel, P. C., & D'Souza, R. R. (2011). Venture capital funding for information technology businesses. Journal of the Association for Information Systems, 12(1), 2.

Lee, J. (2011). The Right-Brain Business Plan: A Creative, Visual Map for Success. New World Library.

Lev, B. (2012). Winning investors over: Surprising truths about honesty, earnings guidance, and other ways to boost your stock price. Harvard Business Press.