Funding Sources Essay

867 words - 4 pages

Costs “are the necessary expenditures that must be made in order to run a business”
(Encyclopedia of Business, 2014). In order to determine the amount of money needed to startup a business, all aspects that incur costs need to be accounted for in the business plan (Scarborough, 2011). Start up costs for any home based business include but are not limited to office space, computers, inventory, licenses or permits, utilities, insurance, professional fees and advertising costs (Encyclopedia of Business, 2014).
During the research of costs and funding sources for the business plan for Oma’s Loving Creations, it has been discovered that the initial amount of money determined was ...view middle of the document...

Microloans are through the Small Business Administration and can range from $100.00 to $35.000 (Scarborough, 2011). The maturity on these types of loans are from three to six years and offer less stringent requirements for receiving the loans (Scarborough, 2011). Over half of the microloans are given to women and minorities which may aid in receipt of this type of funding (Scarborough, 2011).
Angel investors are another consideration as the business grows (Scarborough, 2011). Angel investors will still invest on the low end of the range, around $10,000, while venture capitalists are looking for a minimum of $3 million (Scarborough, 2011). Besides providing lower monetary ranges, angel investors are also looking for niche markets which would fall into line with the products that Oma’s is offering (Scarborough, 2011). According to Scarborough (2011),
When evaluating a proposal, angels look for a qualified management team and a business with a clearly defined niche, market potential, and a competitive advantage. They also want to see market research that proves the existence of a sizeable customer base and a viable exit strategy, the avenue by which they get their investments back, ideally with a handsome return. (p.408)

Funds received from angel investors or microloans would be for expansion and adding employees. Part time help would be hired to make more products within a shorter time frame. Space would be leased within one or more craft stores to sell products from a ground store thus increasing the visibility of the business by having a physical presence as well as advertising online services (Scarborough, 2011).
Another consideration for future funding of Oma’s Loving Creations is partnering with an investment firm that has established a similar line but...

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