Retail Book Store

Retail Book Store

Submitted by : Terri Woodard

Course : Business and Society 105

Instructor : Mark Preising

1 , July , 2008

Last year I had commenced a Used Book Store business and for its financing purpose I took assistance from my uncle , who is tremendously wealthy . When he listened to my idea and I told him about the present and future goals I had in mind for my business , it appealed to him so much that he agreed to provide financing for my business

If I continue to fund from my relative then

I would be given easy installment for payback but the fact that he can dictate his terms on me are also possible as he has invested most of the capital in the business . The fact that a family member is giving me funding for my business will make other feel that I am incompetent and can 't run the business on my own and that I need backing from a strong party to keep my business running . This will reduce my self-esteem and will make me feel less confident as the feeling that this success didn 't come because of my hard work but because of uncle benevolence on me will cross my mind and make my life miserable . There is also the possibility that my uncle and I have a fight and he withdraws all his investment from the business . So deciding on an alternative form of funding is very crucial and the no one knows what twist and turns the future has to offer

The alternative sources of funding that I can utilize for my business is primarily through debt or equity . I could either borrow funds or encourage people to invest in my business each of these alternatives will have different affects on the accounting statements and taxes for the business . In debt financing the company can take loans , bonds or even IOUs (any amount borrowed to be paid back with some interest

If I take loan money for my business the interest that I pay out will be an added expense for my business , loans do prove to be more expensive for the business . Additionally if my business suffers bankruptcy in the future the lenders will be the first ones to attain their share invested in the companion the flip side of the coin loans are easier to obtain from a bank or financial institution since the performance of my company is healthy it will be less complicated for me to get funds for my business and also as I have not taken any previous loans it will be simpler for me to manage getting loans . Also by going for a loan I do not have to share my ownership with other investors . It is easer to plan the payment period of a loan and attain loans for long and short term purposes

Equity is when you give your investors the right of ownership in the company that is for the amount of cash invested the...