American Intercontinental University
Unit 2 Individual Project
BUSN 102 – Principles of Marketing 18 November 2012
This paper will give definitions, functions and importance of four different terms concerning funding a business. It will also give a decision on the funding type that is considered to be best, to include reasons, pros and cons of the decision and one other possible option for funding.
Unit 2 – The Money
Introduction As a potential business owner there are a lot of things to consider when thinking about having a business. Right at the top of that list is funding. Not having enough money to open, expand or operate a business can cause serious concern. Knowing what options are available can help ease some of that concern. Knowing which of the options is best for your business could be a determining factor in whether the business has a chance to succeed.
An investment banker can be a person or a company. The investment banker helps companies by determining the best strategy to raise capital. The investment banker does not provide funds for capital for the interested company but instead has a network of investors that trust the investment banker to procure them quality deals. They serve as the middle man between the company needing the funding and the investor, prepare all necessary paperwork and ensure that all government regulations are followed so that the interest of both parties are protected.
Stock Market The stock market is another way to raise capital for a business. The stock market is where stocks and bonds are bought and sold. Businesses sell stock to raise money. A person that buys a business’ stock is a shareholder in that company. As the business does well the stock increases and the shareholder makes money. If the business does poorly then the shareholder loses money.
Financial Management Financial management is the management of the business finances in accordance with the financial goal of that business. Financial planning and financial control are very important parts of financial management. Financial planning is when the financial manager, through decisions in keeping with the financial goals of the business, ensures that there are funds available when needed. Making sure that the business is meeting its goals by ensuring that assets are being used efficiently and that they are secure is financial control.
Risk Management Is figuring out what risk are associated with the business and making a contingency plan just in case any of those events happen. The risk could be to finances of the business, the actual building that the business is located in, the computers that house the reports and even the workers.
Funding Decision and the Pros and Cons Licensing the technology is the preferred choice of funding for this scenario. Licensing the technology is the best fit because what the inventor has made is an improvement upon an already existing product. This option was also chosen because it solves a lot of the problems for the inventor and there is less risk involved. The inventor has limited finances, enjoys working around the house and doing minor repairs, has little financial skills, and no management skills. Licensing the technology would enable the inventor to not be