In this assignment I to review the following article (web site HYPERLINK “http://www.entrepreneur.com/article/24380″http://w… – below also) and others you might find on raising money for a new business.
First you would need to establish how much money you need to start your business which we have worked on previously. For those of you who use a web site business plan financials you will find the startup costs listed in the beginning of the plan.
For the purpose of answering these questions let us assume that you need $200,000 to start your business. This is money that you do not have personally and must raise from family or friends. So now answer the following questions (please keep in mind that I do not expect nor want real names):
First question is “Where would you get this money?”
Second is “Can this friend or family member put his or her money at risk and why is this important?”
This article (below) tells you that it is important to put your money relationship in writing and formalize the method of repayment. How would you and your new business best be served given that your business will not generate adequate cashflow to repay a loan for two years?
If you were to determine that the best way to receive the money was for your friend or relative to be an owner, what type of organizational structure would work best for formalizing their ownership rights?