Funding And Business

Bus105-0904B-37 Funding 2

Funding is one of the most important things to think about when creating a business plan. Deciding how to your business is going to be funded has the potential to decide if your business will be financially successful. The wrong decision could bring your company crumbling down.

I have a new product that is going to revolutionize the way families do things around the house. However, getting my product off the ground is going to take some smart financing to get my product onto the market. To get started I feel that I would have to go to banks to borrow money. An upside is I would be able to start licensing technology, and traveling to secure clients. However if for some reason the company goes under, the loans would still have to be repaid. If I set up a loan where I used collateral, I could lose whatever I used to secure the loan.

To raise funds for my new company, I would begin by licensing the technology. By licensing the technology I would be able to sell the product to several different appliance companies in foreign and domestic markets and receive a royalty, known as a licensing fee for sales on the product being sold in stores.

With every up there is a down... When licensing technology, there is always a chance that a company that you have made the licensing agreement with could go out of business. When the company goes under you lose the royalties that could be made and possibly royalties that are owed to you if the company went bankrupt. Also a downside to licensing the technology is that you have to share profits from the sales with a partner.

The second avenue of receiving funding for my new company is to sell stocks on the stock markets, The New York Stock Exchange, if the company meets the requirements to be listed on the NYSE index, the NASDAQ or the SP 500. As long as share prices are up, profits can come in fairly steady.

Us105-0904B-37