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Business finance is a wide area and an exhaustive examination of each is not possible. However, the essay will bring out the disadvantages of each method of financing (Galloway 382). The bias may lie on the start-ups given that the initial stages of the business are the most difficult to finance since the risk is usually highest.
There are two broad categories of business finance: debt financing and equity financing. These are ways of sourcing the capital that a business requires either to start operating, continue its day to day operation operating, or to attain a given strategic objective. Debt financing has the characteristic that the business or the entrepreneur has to repay with interest. The debt capital is a liability. Equity financing is the investment of the entrepreneur and other owners into the business (Krulikowski 245). This is risk capital.
The distinction between debt and equity is that debt is a "loan" to the business while equity represents the extent to which one "owns" the venture. This leads to the issue of ownership and control of a business venture which complicates many startups. Debt financing maintains ownership while equity financing cedes some percentage ownership of the business venture. This is a significant consideration when choosing the type of financing for the business.
There is no shortage of investors in the world, but there is a shortage of successful entrepreneurs. However, regardless of the source of financing, the entrepreneur must carefully evaluate the type of financing that the business requires (Krulikowski 267). This will depend on several factors. Firstly, there is a distinction on whether it is a startup or an established business. The size of operations will also determine the financing.
The entrepreneur must have a business plan for the particular venture he or she plans to undertake. This means that
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Even research indicates that any entrepreneur is more likely to put greater time, energy and other resources in his or her business as compared to any other business manager (Gunn, 2010). More importantly, the attitudes, perceptions, and behaviors of any business manager concerning corporate social responsibility are most likely to be in line of the code of ethics, regulations, and ethical guidelines lay down by the company.
Without any doubts, entrepreneurs and small businesses play an important role in strengthening the economy of any country. They create jobs, contribute significantly to the GDP, induce investment, and spur consumer spending. However, this paper will not explore these above-mentioned aspects but it is an attempt to explore the proposition that “small businesses are indeed examples of entrepreneurship”.
This is fortunate; after all, entrepreneurs need employees. In retrospect however, the employee who elects to go for the imaginary security of a job is indeed clinging and gambling on the success of the business of the entrepreneur in the same way that this entrepreneur is clinging and gambling on his or her own success (Teece, 2012).
The main strength of most successful entrepreneurs is innovative ideas and solutions they apply to business environment. Strategic thinking plays an extremely important role in opportunity identification, because it enables entrepreneurs to understand the dynamic nature of an evolving opportunity and when it can best be exploited.
From this, it can be derived that an entrepreneur is "someone who perceives an opportunity and creates an organization to pursue it" (Bygrave & Hofer, 1991, p 14). Timmons, (1994) has identified three crucial driving forces of entrepreneurship, which include (i) the entrepreneur or founder, (ii) the recognition of opportunity and (iii) the resources needed to found the firm.
reneur can be described as a person who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize those (Zimmerer & Scarborough, 2002).
Furthermore if the business model was flexible enough to adapt as the business grew; and the venture capitalists held off installing a CEO until they had finally settled upon a business model then this would further increase the likelihood of success.
He then comes up with a business model in which he strategizes on how to tackle the particular needs while making income in the process (Clapperton 2014, 3).
The business model that the entrepreneur comes up with has to
The author states that creating the right business opportunity or innovatively formulating an idea is a difficult task. The first real task of any entrepreneur involves envisioning the idea. Entrepreneurs should be able to visualise what others cannot. While people around them see only problems, entrepreneurs should see great opportunities.
As an entrepreneur, he was able to identify a need in society. He demonstrates innovation and risk taking as he was able to start a business offering services that were already in the market (Bornstein, 2007). However, he offers the services in a different way to
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