ENTREPRENEURIAL FINANCE Case SolutionÂ
Under this approach, itâ€™s considered that when one person is going to start a business and it has behind some thousand dollars from the required initial investment. The approach says that when one person borrow this money from his friends, relatives or other nearby social or circle members would be referred as bootstrapping.
However, the idea was very popular at its initial time but later on, it reduced its worth and people started to consider loans from banks and other sources instead of bootstrapping. Nowadays, the idea is again getting popular after the worldwide recession when many people lost their jobs and now are willing to start small businesses. (Univeristy, 2016)
Slow money movement
It was the concept which was firstly introduced to facilitate small local entrepreneurs to invest in the food and segment since, the Americans were only spending 1% of their assets in food sector annually and due to this the food sector was declining in terms of revenues and profits. According to this approach, entrepreneurs were asked to take small loans and to invest in the agricultural sector and food industry. This task was done in the way that innovators buy seeds and then crop them in farms and afterwards, the final product will go to restaurants and hotels to be consumed.
Ultimately, the idea supported many industries directly and indirectly and it was noted that investors facilitated almost $134 million in this sector under this approach. (Foundation, 2016)
Overall these are the five basic approaches and trends which the entrepreneurial finance have. However, these options and their usage differs from case to case but in the whole study the analyst was asked to draw conclusions from three different trends which are most important, feasible and can be the movers and shakers of the industry. Therefore, the analyst have selected the following approaches.
3. Credit Unions
Reason for selecting the three approaches
The reason behind selecting these three approaches is that these are the most viable options for an innovator to raise funds from however, other options can also generate acceptable funds to start a new business but these approaches are far more feasible. Since, if the person want to start a small scale business, he can go for microlending and he can also avail loans on a very low or no interest rate. Furthermore, if an innovator having a substantial idea wants to start a medium scale business with loan on mild or moderate interest rate, can go for Crowdfunding and lastly, if the same person want to take loan by collecting a higher amount can move towards credit unions.
However, other approaches can be used under different circumstances and situations but the selected methods are the most appropriate tools to start new business having an innovative and new idea. However, these business will also considered as blue oceans strategies (finding the segment where demand exists but supply lacks) since, the funding is only made to substantial idea holders and innovators. In addition, these businesses can face threats in future when the segment is crowded by rivals but now these can make quantum margins for the innovators.
Finally, it can be summarized that there are numerous ways to raise equity either by debt or self-financing but to start a small business the discussed approaches are quite suitable since, these methods will allow the entrepreneur to start a business having a very low cost of debt and will be able to contribute a lot towards the society. Therefore, it can be concluded that innovators have to move towards starting their business to develop the society and economy………….
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