Introduction to entrepreneurship/IENT103/Financing/Why



Business owners need to consider finance options for all kinds of reasons. Here are just a few of the reasons why start-ups need funding.

Beginnings
A start-up company rarely begins without any funding whatsoever.

Even if you are the only person in the business to begin with, and you are working out of your bedroom, you still need funding for:
 * assets e.g. computer
 * materials e.g. raw materials for your product(s)
 * running costs / operating costs e.g. phone, website, insurance, printing...

Growth
As your business grows, you will want to expand capacity, either by producing more goods or offering your existing service(s) to more customers.

You will probably need new technology to match your competitors, new machinery to reduce costs and improve efficiency, and maybe more staff.

Research and development
New products or services require funding to develop. You will also need to undertake market research and test new markets.

Selling into new geographical areas or to new types of customers costs money (for example, to pay for new advertising campaigns, to open new retail outlets...).

Acquisition of another business
You may decide to buy another business to add to your portfolio.

References