FINANCING OPTIONS AVAILABLE TO ENTREPRENEURS - PART IV (CONCLUSION)

CONCLUSION

As an entrepreneur myself, the decision on making use of debt financing and equity financing is faced on a regular basis and without a deep understanding of both options it would be very difficult to make a choice or very easy to make the wrong choice.

This series has taken a look at both options highlighting the pros and cons of each and arriving at the conclusion that one is not necessarily better than the other but depends in part to the entrepreneur’s personal preferences with regards to potential profitability, financial risk and degree of control and his or her understanding of debt and equity financing.

This series has also shown that the safest option is a combination of both debt and equity financing, maximizing profitability, reducing financial risk and retaining a reasonable amount of control over the company.   Utilizing both at the start of the business or separately in different stages of the business keeping in mind the difficulties of securing debt financing or if found the ability to negotiate a satisfactory interest rate. As such though the ideal option is to utilize a mix of both equity and debt financing, providing a definite formula or ratio is more subjective than objective.

Thanks for following the series. I hope it has been of benefit to you.

Look out for the next series - A PRACTICAL USE OF BLUE OCEAN STRATEGY (Creating a new market space and making the competition irrelevant)

REFERENCES

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<!--[if !supportLists]-->10.  <!--[endif]-->Jefferson, Steve. "When Raising Funds, Start-Ups Face the Debt vs. Equity Question." Pacific Business News, 3 August 2001.

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<!--[if !supportLists]-->13.  <!--[endif]-->Roger S. (2009) Entrepreneurial  Finance: Finance and Business Strategies  For The Serious Entrepreneur, 2^nd Edition. Published by McGraw Hill.

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<!--[if !supportLists]-->16.  <!--[endif]-->Thefreedictionary.com (2011) Defintion of Financing. Retrieved Febuary 14, 2011 from http://www.thefreedictionary.com/financing

<!--[if !supportLists]-->17.  <!--[endif]-->Barney, J.B. (1986) Factor Markets: Expectations, Luck, and Business Strategy. Management Science 32, 1986, pp. 1231-1241.

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