Aquiring & Utilizing Capital for Start-up, Growth & Ongoing Operations

   For this assignment I will continue to use MobileSmart Phone & Tablet Repair from my previous assignment as the hypothetical business. I found a website, http://www.businessfinance.com/,  that has over 4,000 sources for small business loans! They include sources for small business loans, working capital, commercial finance, equipment finance, equity investments & commercial mortgages. You can find the link through Dr. Lahm’s webpage, http://paws.wcu.edu/rjlahm/ , along with many more great links. The average startup needs about $25k & slightly more than 50% use debt vs equity(Five Myths about Financing Start-ups that Hurt Entrepreneurs, Scott Shane, January 14, 2008, Startup Trends, http://smallbiztrends.com/2008/01/five-myths-about-financing-start-ups-that-hurt-entrepreneurs.html)  To start, this business is intended to be homebased & mobile using a vehicle for pickup & delivery. The homebased aspect would only need a small table, a plastic foldable 3×6 table is sufficient. The vehicle used need not be new or large. A small & economical car is the best option, but whatever the business owner is currently using is sufficient. Assuming the business owner has the home office space & vehicle, which I do, then the only other initial startup costs will be advertising, inventory which I have found comes in kits that include the tools. I will budget $1.5k each for advertising & inventory. This gives me an initial startup need of $3k. This is an amount I have readily available & is known as “Bootstrapping”. That is starting a venture without the use of outside funding. A person using their own money & other means, home office & car, & with no outside funding. This provides the lowest risk but also the slowest growth & the chance of lost opportunity due to lack of funding. This amount is also well within the average for the SBA microloan of about $13k (http://www.sba.gov/content/about-microloan-program).  This type of loan can be used for the inventory or supplies & also for the working capital. Another option at startup to raise money is friends & family. This is a popular & widely used way to raise initial capital for a venture. In my previous assignment the Yardhouse Restaraunt is an example of this.
As this business enters its growth phase the amount of capital needed for growth & operation may be more than I have available at the time it is needed. The options for growth include debt or equity for financing. Debt has higher risk & equity lower risk. A home equity loan is one option with a limit of the equity available in the home. For the business that I envision I want to minimize my risk but at the same time grow & maintain full control of my metropolitan area. To this end I have the option for growth that suits me best – a business opportunity or franchise for other entrepreneurs with specific area’s of operation based on population. The basis for this business is the niche of providing fast quality service that is not the forte of a larger company. Having other entrepreneurs who maintain their own area allows for growth on a national scale much faster than I could do myself if I am bootstrapping. It also does not put my capital at risk & maintains my control by using a non-compete agreement. By giving entrepreneurs the opportunity & blueprint for their designated area they required to sign a non-compete agreement. The franchisee can bootstrap, borrow from family or friends, or get a microloan & open their business. At this point all businesses involved would be using their own preferred method for growth & managing ongoing operations. This business was really intended as a small owner operator venture with little overhead & easy to manage yet profitable.  

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