There are several ways a business can obtain needed financing. One way is to get loans from banks or investors. Another is to sell partial ownership in the company in the form of stocks. While yet another ways is to license the use of a product or technology. A management decision needs to be made as to which form of financing best suits the firm and product. Once the decision is made the possible pros and cons should be analyzed as well as alterative to the chosen financial decision. Funding being the most important and necessary part of starting a new business, the use of financial management is imperative. An investment banker would be very beneficial in the planning of our firms financial growth and sustainability.
Funding for New Firm
A management decision concerning how to fund our new firm needs to be made. We will first be going through some key financial terms and giving definitions and descriptions of the particular term. We will then identify our preferred source of funding based off of the information available. A description for why a particular form of funding will be supplied. We will go through all the pros and cons of the funding choice we will be going with. Finally, an alternant source of funding will also be identified.
Let us first identify the term investment banker. This individual can be of great importance to the new firm, particularly after the transition from a partnership to a corporation. The investment banker will handles the selling of our company stock and offer financial strategies as our company grows. The investment banker will help develop financial plans and most importantly, be instrumental in implementing them.(The Princeton Review, n.d.)
The second term we must identify is a stock market also known as a stock exchange. A stock market is a supermarket of sorts for publicly traded company stocks. This is where our company stocks will be bought and sold once our firm becomes a corporation. The investment banker will be helping to facilitate the selling and buying of stocks by way of the stock market.(Marshall, 2000)
The third term is financial management. Financial Management is the planning for the future of a business to ensure positive cash flow. This also includes the managing and maintenance of financial assets. The primary concern of financial management is the assessment of risk rather than the techniques of financial quantification. Financial Management is a key necessity for all business and ours will be no exception.(Economy Watch, n.d.)
The fourth and final term is risk financing. Risk Financing is a process to determine the strategy that creates an optimal balance between retaining and...