The financing / capitalization of appropriate companies is a problem for all small businesses at all stages of the economic cycle. Companies organized as companies and LLC are required by the State granting of the Charter of Companies to be capitalized adequately. The challenge here is that there is really no clear definition of adequate capitalization.
The purpose of requiring adequate capitalization is to ensure that the business entity has the capacity to carry out its business activities without submitting those working with this company, including employees, financial loss. Appropriate protection against financial loss also requires a company to deal with potential liability issues.
Funding requirements differ considerably from one company to another as well as the economic cycle stage that the company occupies. One of the most difficult steps to finance is generally observed with small business start-ups. New business businesses can have good ideas and potential for success, but do not have a history of success or have produced financial results. These realities make it difficult to secure funding. Financing problems, however actual, do not relieve the owner of the responsibility business to provide adequate capitalization for their business.
There are many sources of funding available in the small business market and LLC, each with unique advantages and disadvantages. The best source of funding will depend on the particular circumstances of the search for funding and may include the use of a combination of several different sources. In particular, starting funding is a very specialized world and looking for experienced and competent assistance is strongly recommended.
Here are the four most common sources of funding for businesses:
1. The cash investors of the founders of the company – generally the easiest to obtain and the least expensive of all forms of capitalization.
2. Commercial Operations Income – This may be the best source and generally the cheapest, after the founder’s investment, the source of funding and the capitalization of a company. This is usually more readily available for operational businesses for some time, while a start-up business can find this source difficult or impossible.
3 Bank Loans – If the Bank Banks Banks Bank Loans update is inexpensive in today’s environment, but can be difficult to get. This is especially true for start-up companies and those who are not financially strong with good positive cash flow.
4. Cash Venture and Angel Investors – These sources of funding can be good and offered to these companies capable of demonstrating a company and a solid product with excellent high returns potential. The compromise with these sources is that often they require a significant percentage of the company’s ownership to encourage them to invest. It’s not necessarily bad, be just aware of this because you start. In addition, in many cases they may need a business they finance to go to the public within a specified period. Once again, not necessarily a bad requirement.
As with all sources of funding, it is a financial necessity to carefully examine the conditions and structure of funding.
The lack of adequate capitalization / financing has led to a failure of many promising companies before starting to start. In addition, incorrectly structured funding has been the cause of new and mature business operations to fight financially and in many cases fail.