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Startup and Working Capital

8/20/2017

Startup and Working Capital

Working capital refers to the financial resources that any business uses to motivate daily expenditures and operations. Working capital may arise from the revenues generated from the activities of the company. The financial resources are invested back to the company to enable it continue achieving its objectives in the market. Working capital serves an engine of a business’ operations in any given competitive environment (Julio & Yook, 2012). The above is because it allows a business to continue prospering while strengthening its capital status. On the other hand, startup capital is a term that refers to the initial stages of a business. It refers to the first financial resources that are invested in a company to enable it to pick from the beginning. Startup capital boosts a company when it is at its ideation phase. Startup capital comes from different sources.

Some of the sources may include the owners of the business and other venture capitalists who are interested in having stakes in any given company. There are several approaches that may be employed when it comes to the collection of revenues to influence the development of a business (Eiteman, Stonehill, & Moffett, 2016). The first approach may include pitching the business idea to several investors and making them become the initial individuals to put their money to enable the business to grow. The second approach entails sourcing for a loan to start a business. financial institutions such as banks are an advent to providing a company with enough finances to enable them to start and continue to survive amidst challenging business situations (Dow & Raposo, 2005). The third approach can include borrowing money from friends and family to start a business. The attachment with friends and family members makes it easy for them to invest in the business.

References

Dow, J., & Raposo, C. (2005). CEO compensation, change, and corporate strategy. The Journal of Finance, 60(6), 2701-2727.

Eiteman, D., Stonehill, A., & Moffett, M. (2016). Multinational business finance (4th ed.).

Julio, B., & Yook, Y. (2012). Political uncertainty and corporate investment cycles. The Journal of Finance, 67(1), 45-83.