ENTREP REVIEWER

business plan is a selling document

BUSINESS PLAN that conveys the excitement and
promise of your business to any
- Venturing into a new business or potential backers or stakeholders
doing any form of innovation in (David E. Gumpert)
business organization demands or
necessitates a plan. A business plan
that is well-researched and
well-done is by itself an insurance
against the illusive success that
every entrepreneur is looking
forward to.

CONCEPT OF A BUSINESS PLAN

- "A well-written business plan is
one that contains all information
necessary for the financing source to
make a decision even without taking Principles of Planning
the entrepreneur. " 1. Planning must be realistic.
2. Planning must be based on felt needs.
DEFINITION OF A BUSINESS PLAN 3. Planning must be flexible.
- written document prepared by the 4. Planning must start with simple
entrepreneur that describes all the projects.
relevant external and internal
elements involved in starting a STAGES OF BUSINESS PLANNING
venture. It also addresses both by Prof. Philip Kotler
short-term and long-term 1. Unplanned stage. (owner-manager is
decision-making for the first three busy looking for funds, customers, materials
years of operation. a business plan and equipment. Has no time for planning,
also takes care of the concerns of attention is devoted to daily operations of
the potential investors in the business.)
business project, the suppliers, the 2. Budgeting system stage.
funding requirements, and all (owner-manager realizes the need to
required to commence the business develop and use a budgeting system.
and hopefully make it a successful Estimated incomes from sales and expected
business venture. expenditures are made. )
(Authors Hisrich and Peters’ ) 3. Annual Planning stage.
(owner-manager drafts an annual plan.
- A business plan is a document that They can use either the top-down
convincingly demonstrates the planning or the bottom-up planning. Top
ability of a business to sell its down planning, the manager provides the
products or services to make goals and let the employees comply.
satisfactory profit and be Bottom- up planning encourages
attractive to potential backers. A
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employees to participate in the planning 4. to serve as reference or guide to policy
of the goals and strategies.) formulation and development;
4. Strategic Planning stage. As business 5. to serve as guide for operational matters;
becomes bigger, long range planning is 6. to serve as a reference for a bank loan or
needed. 3-5 year plan. Has flexibility to financing purposes;
adjust to changing conditions. 7. to determine/estimate the detailed
technical and financial requirements;
COMPONENTS OF BUSINESS 8. to serve as an overall guide for the
PLANNING proponent or entrepreneur.
1. SWOT. (every product has its own
strength, weaknesses, opportunities and David Gumpert’s reasons for doing a
threats. Planning should include the business plan
improvement of the product/service in 1. to sell yourself as a business;
order to survive competition) 2. to obtain a bank financing;
2. Objectives (should be specific and 3. to obtain investment funds;
realistic, it can be daily, weekly, monthly 4. to arrange strategic alliance;
or yearly. Environmental factors should be 5. to obtain large contracts;
considered. ) 6. to attract key employees;
3. Strategies ( these are ways of 7. to complete mergers and acquisition; and
accomplishing the objectives, stated in 8. to motivate and focus your management
financial, production, marketing and team.
organizational plans of the enterprise.)
4. Time Frame (must be efficient in time Obtaining the facts for a business plan
management. Every activity has its own 1. What personnel do I need?
time schedule,) 2. How will I organize my enterprise?
3. What kind of records do I need?
4. How much capital do I need?
Characteristics of a Sound
5. How profitable will the business be?
Business Plan 6. How financially healthy will I be?
1. Objective 7. What is my break-even point?
2. Clear
3. Logical and simple
OUTLINE OF A BUSINESS PLAN
4. Flexible
From Hisrich and Peters
5. Stable
I. Introductory Page
6. Complete and integrated
A. Name and address of business
B. Names and addresses of the
WHY DO WE NEED A BUSINESS PLAN?
principals
1. to project general picture of the business
C. Nature of Business
project;
D. Statement of Financing needed
2. to serve as a guide in implementing the
E. Statement of confidentiality report
business or project;
II. Executive Summary
3. to serve as a major input to investment
III. Industry Analysis
decisions or major expenditures.
A. Future outlook and trends
B. Analysis of Competitors
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C. Market segmentation OUTLINE OF A BUSINESS PLAN 2
D. Industry Forecasts • Cover sheet: Name of business, name of
IV. Description of Venture principals, addresses, and phone numbers
A. Product(s) • Business Goals
B. Service(s) • Strategies
C. Size of Business • Table of Contents
D. Office equipment and personnel
E. Background of entrepreneurs Section 1: The Business
V. Production Plan A. Description of Business
A. Manufacturing Process (amount B. Product/Service
subcontracted) C. Market
B. Physical Plant D. Location of Business
C. Machinery and Equipment E. Competition
D. Names of suppliers of raw materials F. Management
VI. Marketing Plan G. Personnel
A. Pricing H. Application and Expected Effect of
B. Distribution Loan (if needed)
C. Promotion I. Summary
D. Product of Forecast
E. Controls Section 2: Financial Data
VII. Organizational Plan A. Sources and Application of funding
A. Form of Ownership B. Capital equipment list
B. Identification of partners or principal C. Balance Sheet
shareholders D. Break-Even Analysis
C. Authority of principals E. Income Projections (profit and loss
D. Management-team background statements)
E. Roles and responsibilities of members a. Five-year summary
of organization b. Detail by month for first year
VIII.Assessment of Risk c. Detail by quarter for second, third,
A. Evaluate weakness of business fourth, and fifth
B. New technologies d. Notes of explanation
C. Contingency plan F. Cash Flow Projection
IX. Financial Plan a. Detail by month for first year
A. Pro forms income statement b. Detail by quarter for second, third,
B. Cash flow projections fourth, and fifth years
C. Pro forma balance sheet c. Notes of explanation
D. Break even analysis G. Deviation Analysis
E. Sources and applications of funds H. Historical financial reports for existing
X. Appendix (contains back-up material) business
A. Letters a. Balance sheet for past five years
B. Market research data b. Income statement for past five years
C. Leases or contracts c. Tax returns
D. Price list from suppliers
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Section 3: Supporting Documents its chapters or major topics in the right order
Personal resumes, personal balance or sequence.
sheets, cost of living budget, credit reports, 2. It must be of right length and have the
letters of reference, job descriptions, letters right appearance - not too long and not too
of intent, copies of leases, contracts, legal short, not too fancy and not too plain.
documents, and anything else relevant to 3. It must give a sense of what the
the plan. founders and the company expect to
accomplish in the immediate (3 to 7 years)
STEPS IN BUSINESS PLANNING and into the future.
1. Evaluate your personal resources and 4. It must explain in quantitative and
interests, and the resources of the qualitative terms the benefits to the user.
community. 5. The company's product or service and
2. Analyze your market. the business as a whole.
3. Choose a proper business location. 6. It must present hard evidence of the
4. Prepare a financial plan. marketability of the product or service.
5. Prepare a production plan. 7. It must justify financially the means
6. Prepare an organizational plan. chosen to sell the product or service.
7. Prepare a management plan. 8. It must explain and justify the level of
product development that has been
SOME RULES TO OBSERVE achieved and describe inappropriate detail
1. Make it neat. Appearance is important of the manufacturing process and
and it can reflect the personality of the associated costs.
maker. 9. It must portray management as a team
2. Make it grammatically correct. Be sure of experienced people with complementary
to have a final version of the write up business skills.
corrected or edited by professional or 10.It must contain a believable and
qualified editors. verifiable market as well as financial
3. Make it honest. Do not exaggerate or lie. projections, with the key data explained
Tell or write exactly as it is. and documented under assumptions.
4. Write in layman's language. 11.It must be easily and concisely
Communicate in simple language and explainable in a well orchestrated oral
not in technical jargon, unless it is really presentation.
called for.
5. Do not overemphasize your product or
your business. Product or service is just
part of the business itself, and it requires a
lot of other resources that are dependent on
one another.

MUSTS FOR BUSINESS PLAN AND

FEASIBILITY STUDY
1. It must be arranged appropriately, with an
executive summary, table of contents, and
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BUSINESS PLAN PART 2 Step 3: Analysis of the situation
There are three sub-areas to be analyzed:
the resources of the entrepreneur and the
PLANNING AND ORGANIZING THE
firm, the environment, and the entrepreneur,
ENTERPRISE
values represented by the aspirations,
Why Prepare a Plan?
goals, vision, and mission of the firm.
• Minimize, if not eliminate, the risk of losing
money on a poor business idea.
Resource analysis. This simply requires
• Save on costly mistakes.
the would-be entrepreneur to evaluate
• Determine your financial requirements.
what knowledge, skills, and material
• Program your activities in advance.
resources she has available to use in the
• Evaluate actual performance against set
business. These resources are known as
targets,especially in terms of sales, costs,
the 7 "M’s": Money, Materials, Manpower,
and profits.
Machines, Methods, Management, and
Moment (time). You either have these
Enterprise Planning
resources, have them in limited amounts, or
Step 1: Idea generation and opportunity
have none of them at all. Having them
Identification. It is important to point out that
represents your strengths. Having little or
you should open your mind to all the
none at all represents your weaknesses
opportunities that you see so that you
will be able to explore all possibilities.
Environmental analysis. There are many
The method used in this process is
factors or conditions in the environment,
brainstorming.
which can affect the business that you are
planning to set up. There are factors which
Step 2: Informal screening
have a positive effect in your business and
After generating so many ideas and
you may consider them as opportunities. On
possible opportunities to be pursued, you
the other hand, you may take note of
should now select about 10 project ideas.
conditions, which will affect your business
negatively; these are otherwise known as
Enterprise Planning
threats.
Choose the best ideas based on the
following
Values Analysis. Doing this requires the
criteria:
would-be entrepreneur to examine his
a. Marketability of the product
aspirations or vision and mission about the
b. Availability of raw materials
business. It also represents the kind of
c. Availability of technology for making the
service he wishes to provide his
product
Customers. Resource analysis will tell us
d. Availability of skilled workers
what the company is capable of doing at
e. Investment requirement
the start of the business; in other words, it
f. Perceived profitability
indicates what a firm can do; environmental
g. Government priority or support
analysis will tell us what the firm may do;
h. Environmental considerations
and value analysis will tell us what the firm
wants to do.
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customers and the situation in the
Matching the entrepreneur with the environment, the proponent will now
project describe the product features, the
What the firm can do and what it wants to promotional activities, the channels of
do, given the opportunities and threats distribution and the pricing.
facing it, do not always match. Therefore, a
matching process is required. This matching Production Plan
process is done by preparing a detailed 1. Product specification
plan of all the functional areas of 2. Production Process (flow chart)
business, namely: marketing, 3. Production machinery and equipment
production, organization, and finance. In 4. Have a list of equipment, raw materials
addition, a social cost benefit and and other supplies.
environmental study is sometimes also 5. Describe the utilities, i.e.. water and
Prepared to ensure the sustainability of the light, the location and layout, and waste
project or business. disposal method. For the location and
layout, you will need to make drawings.
Market Plan 6. Prepare a production schedule.
In preparing the market plan, the person 7. Determine your manpower requirements.
first has to study the existing situation in 8. You will also need a schedule of inventory
the market, what the competitors are doing you would like to keep for the raw materials
in terms of product or service lines, their and other supplies, as well as the
promotional activities, the middlemen who finished products.
are handling their products,
and their pricing schemes. After knowing Organizational Plan
what the competitors are doing, the next The organization plan follows the marketing
step is to make estimates of the supply plan and the production plan.
and demand, literally counting the volume In writing the organization plan, the first
produced by the different suppliers as thing to do is to describe the form of
against the volume needed than by buyers. ownership of your firm. Next, prepare the
volume If the needed volume produced by organization structure. Usually, this is
all the known suppliers is more the buyers, done through an organization chart - usually
then, it is logical not to enter this type of organized according to the four functional
business; on the Other hand, if the volume areas: marketing, production, finance, and
supplied is less than what is needed by administration. The organizational chart is a
the buyers, then, the business offers useful tool to indicate the hierarchy or the
good market opportunity. levels of authority, that is, who is
responsible for whom and who reports to
Once the prospective entrepreneur sees whom. At the same time, the chart visually
good opportunities to go into the business presents how the different tasks are
he has in mind, then, he should now grouped or divided among the various
prepare a detailed marketing plan. This plan personnel.
will show the target market or the specific
group of customers the firm wishes to serve. The organization plan also requires you to
Knowing the type of
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describe the duties and responsibilities of sources of borrowed funds are known as
all those involved in the enterprise, the creditors.
required qualifications for the tasks, the
corresponding salaries and benefits, and Financial statements
the number of personnel required. • Profit and Loss Statement (P&L)
Finally, you are also to present the presents details regarding sales and
pre-operating activities through a Gantt expenses incurred or will be incurred by
chart. the business as of a given date.
• Balance Sheet - presents details of what
Financial Plan the business owns (assets) and its value. It
The financial plan translates into presents the equity contributions of owners
monetary terms the various plans you and liabilities to the creditors.
have for the business. From the marketing • Cash Flow Statement - presents in detail
plan, you get information on sales; from the the projected cash expenses and
production and organization plans, you get disbursement for a given period.
information on expenses. From these varied
data, you can compute whether your Financial analysis
business can make money or not. Financial analysis basically consists of
computations of profitability, liquidity, and
Among the financial schedules you are to marketability (if applicable) of the enterprise
present is the Total Project Cost, which is based on the information from the profit and
made up of the following items: total fixed loss statement and the balance sheet.
assets, the working capital, and the pre In this sense, the enterprise is like a human
operating expenses. Examples of fixed person. A health-conscious person regularly
assets include building, land, and goes through a physical examination -
equipment used in the business. Working taking several tests to analyze the fitness of
capital refers to amount of funds you need her heart, lungs, blood pressures, eyes,
to pay for expenses, such as materials and cholesterol level, and others.
supplies, labor, and utilities needed for
production within a relatively short period Social-Cost Benefit Analysis
(say two weeks or one month) after which Social-cost benefit analysis requires you to
the products can be sold; thus, generating look at the benefits and the costs that will
funds for use by the business accrue to society in general if your
prospective business is established.
Source of financing. This section of the Examples of benefits include employment
financial plan will simply indicate where the generated (you will be providing jobs to the
funds for the business will come from. This unemployed) and taxes paid (you will be
presupposes, ofcourse, that the proponent contributing to government revenues which
has determined the total project cost. The can in turn be used in building roads and
funds may come from him and other other facilities for the benefit of the general
co-owners, if any, in which case they are public). These benefits are quantified in
known as equity contributions. It may come your business plan.
from borrowing money from relatives,
friends, banks, and other sources. These
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Small Business Enterprise is hires more employees, usually relatives
Manageable and townmates.
According to Stanley and Morse, a small 7. Capital is usually financed by the family
enterprise is sometimes defined as "a through its own savings and/or loans. If ever
manufacturing or service enterprise wherein business is funded by a small group, it
the owner manager is not actively comes from relatives and close friends.
involved in production but performs the 8. The area of operation is small. It is
varied range of tasks involved in community-based. The owner and
guidance and leadership without the employees live in the community where the
help of specialized staff." enterprise is located.
9. The size of the enterprise is small in
Common Characteristics of a small relation to the industry.
business: Example the shoe industry is a large one.
1. it is privately-owned; Clearly, one shoe store cannot dominate the
2. it has few or no layers of management; market for shoes.
3. generally, it has insufficient resources to
dominate its field of Choosing Your Own Role in the Business
Consider the following factors;
The Magna carta for small Enterprise 1. Your education and training.
(R.A. 6977) 2. Your experience.
Defines small and medium enterprise 3. Your interest and aptitude.
Micro: less than - Php 50,000 4. Your time.
Cottage: Php 50,001 - Php 500,000 5. The advantage of having a broad view
Small: Php 500,001 - Php 5,000,000
Medium: Php 5,000,001 - Php 20,000,000
Choosing People to Work with You

Features of a Small Business Enterprise • Marketing - Who will sell the products?
1. It is low in capital, but high in labor Who will deliver the products to the buyers?
intensity, and has insufficient financial To the distributors? Who will handle
resources. promotion and advertising? Who Will take
2. It is efficient in specialized skill and care of the customers after the products
service. have been sold?
3. They succeed in small isolated or • Production - Who will make the products
overlooked markets in rural communities or deliver the service? Who will operate
with few residents. the equipment? Who will maintain them?
4. Feasibility study may not be required. Who will take charge of inspection and
5. They conduct their operation right inside quality control? Who will keep track of raw
the marketplace' closer to the buyer with material stocks and finished product
first-hand information about their taste and inventory?
preferences. • Finance - Who will keep the records? Who
6. Generally, in a small enterprise, the will do the accounts? Who will prepare
owner-manager employs his wife and
children. If business grows, the owner
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the weekly payroll? Who will collect the - All the partners share profits equally,
receivables and settle the payables? Who unless otherwise stated in the
will hold the petty cash? Partnership Agreement.
• Administration - Who will take care of
ordering supplies, preparing sales contracts, CORPORATION
and renewing business permits? Who will - corporation or a company involves
handle personnel records? Who will handle five or more persons owning the
business communications, inquiries, and business.
other administrative matters? - A corporation is a "legal person" in
the eyes of the law.
2. cross out the tasks that you are taking for - has legal rights and responsibilities;
yourself. . Translate the tasks into job - can sue and be sued in court;
designations or titles. Determine how many - can own and dispose of property;
employees you will need for each job title - can enter into contracts.

3. List all the qualifications required in terms The ownership of a corporation is divided
of skills, education and training, experiences into units known as "shares of stocks."
and personal characteristics BUYERS ARE CALLED STOCKHOLDERS.

4. Determine salaries and wages to be paid Unlike the first two legal forms, the life of a
for every position. Applicants need to know corporation does not end with the death of a
how much you’re willing to pay them. stockholder or by the stockholder's disposal
of his stocks.
SOLE PROPRIETORSHIP
- business owned by only one person. COOPERATIVE
- It is the simplest organization to - cooperative is a group enterprise
form. - made up of a number of producers,
- you and your business are one traders, or consumers who want to
- Business income is taxed as produce or trade as a group so that
personal income. they may avail themselves of
- Decision-making is centered on the economies of scale, which
owner or proprietor who assumes individually, they will not be able too
total responsibility for all decisions.
- When the sole proprietor dies, the
life of the business also ends.

PARTNERSHIP
- Formed when two or more partners
come together to be joint owners of
a business.
- A partnership allows the pooling of
resources (money and other
business assets) and talents (skills,
experience' management know-how)
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BUSINESS MODEL CANVAS

• TOOL TO CREATE AND ANALYZE
BUSINESS
MODELS
• YOU CAN:
– CREATE NEW BUSINESS MODELS
EASILY
– ANALYZE AND UPDATE YOUR
EXISTING BUSINESS MODEL

9 BUILDING BLOCKS
1. Customer Segment (which customers
and users are you serving?, which jobs do
they really want to get done?)
2. Value Proposition (what are you offering
them? , what is that getting done for them? ,
THE BUSINESS MODEL CANVAS do they care?)
3. Channels (how does each customer
A business model describes the rationale of segment want to be reached? Through
how the organization creates, delivers, and which interaction points?)
captures value 4. Customer Relationship (what
relationships are you establishing with each
segment? Personal? Automated?
Acquisitive? retentive?)
5. Revenue Streams (what are customers
really willing to pay for? How? Are you
generating transactional or recurring
revenues?)
6. Key Resources (which resources
underpin your business model? Which
assets are essential?)
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7. Key Activities (which activities do you
need to perform well in your business
model? What is crucial?)
8. Key Partners (which partners and
suppliers leverage your model? Who do you
need to rely on?)
9. Cost Structure (what is the resulting cost
structure? Which key elements drive your
costs?
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• Perils of individuals.
TOPIC 6: Ownership & • Limited skills and capabilities of the sole
owner
Organization

Things to consider in selecting the best Partnership

legal form of organization A partnership is an association of two or
• Ownership – how many owners will there more business partners who co-own a
be? Will their ownership be equal? business for the purpose of making a profit,
• Management – will the owners also the co-owners (partners) share the assets,
manage the firm? liabilities, and profits of the business
• Financing – how much money is needed according to the terms of the partnership
to start or purchase the business and what agreements.
source might provide it?
• Incentives – will the business be able to Types of Partners
provide the incentive necessary to attract 1. General partner. A general partner is
the managerial talent needed for growth and one who shares, ownership and
success? management of the business, and is
• Taxation – what legal form will minimize liable to the extent of his separate
the total tax load imposed on the business? property after all the assets of the
• Retention of income – which form will partnership are exhausted.
provide the maximum income?
• Protection – will the asset values 2. Limited partners. They refer to
developed in the business over time be partners with limited financial liability
preserved if key persons become and they do not take an active role in the
unavailable because of illness or death? management of the firm. A limited
partner is one who is liable only to the
Sole Proprietorship extent of his capital contribution.
The sole proprietorship or single
proprietorship is a form of business 3. Silent partners. They refer to partners
organization initiated, organized, owned, who do not take active participation in
or capitalized, and managed by a single the operation of the business, but they
person. are generally known to be partners of the
business.
Advantages:
• Easily created and terminated. 4. Dominant partner. They are neither
• Direct, undiluted action. active in the partnership nor are they
• All rewards to owners. generally known to be associated with
• Flexibility the business.
• Minimum regulations and taxation.
5. Capitalist partner. This is the type of
Disadvantages: partner who contributes money or property
• Unlimited liability. to the common fund of the partnership.
• Capital limitations.
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6. Managing partner. This is the partner because the life of the corporation is
who is designated to manage the dependent or distinct from that of the
operations of the business of the owners or stockholders.
partnership.
Advantages:
7. Industrial partner. This is the partner • Limited liability.
who contributes his knowledge or • Legal entity.
personal services to the partnership. • Obtaining capital.
• Employee benefits.
8. Secret partner. This is the partner who
takes an active part in the business, but is Disadvantages:
not known to be a partner by outside • Legal formality and cost.
parties. • Cost and time involved in the
incorporation process.
9. Nominal partner or partner by • Taxation.
estoppel. This is a partner who is actually • Potential loss of control by founders of
not a partner, but is held out or represented the corporation.
as a partner.
Cooperative
10. Liquidating partner. This is a partner Republic Act 6938, otherwise known as the
who is designated to wind up or settle the Cooperative Code or the Philippines,
affairs of the partnership after a
dissolution. Principles of Cooperative
• Open and voluntary membership.
Advantages: • Democratic control.
• Pooling of resources. • Limited interest on capital.
• Ability to obtain capital. • Division on net surplus.
• Simplicity and incentives. • Cooperative education.
• Limited regulations and taxation. • Cooperation among cooperatives.

Disadvantage: Advantages and Disadvantages of

• Unlimited liability. Cooperatives
• Tenuous existence. • Tax privileges.
• Independence on management harmony • Ability to provide direct benefits to its
and coordination. members and the entire community it
• Problems in share liquidation. serves.
• Inequality of profit distribution.
Corporation • The pro-masses or pro-poor bias of the
A Corporation is an artificial being, invisible, cooperatives appear diametrically opposed
intangible, and exists only in contemplation to the entrepreneur’s idea of servicing a
of law. Its owners are the stockholders who market niche that is well-off enough to
can sell their interests in the corporation address its dream of profit.
without affecting the continuity of its
operations
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TOPIC 7 - FINANCING THE
The formal or informal source
VENTURE • By formal sources, it means sourcing or
borrowing funds from organizations or
- A new business project needs to institutions duly authorized by the
have substantial start-up capital government or by law to extend financial
requirement nor does one have to assistance or other forms of support
be a millionaire to start an services to business and industry. They
entrepreneurial business include banks (both private commercial
endeavor. Neither a building nor a banks or government owned or controlled
fully furnished office be made a financial institutions), investment houses,
requisite to be able to open the lending investor, mortgage bank,
business. In fact, many pawnshops, credit card companies, and
entrepreneurs have commenced others.
their business out of shoestring
capital or with little amount as what • Informal sources, on the other hand,
is in their savings account. include those fund sources other than
formal sources mandated by law to provide
Capital Requirements capital or financing to business
Capital comes in monetary terms and in organization. This group includes the
three forms as follows: entrepreneur’s parents, brothers and
1. Fixed Capital. value of capital assets sisters, relatives, friends, suppliers, and
available for production purposes at a given other fund providers outside of the financial
point in time system
2. Working Capital. money available to (i.e., informal sources including usurers).
meet your current, short-term obligations.
3. Growth Capital. an increase in the value Owners' equity
of an asset or investment over time. In a corporation, the contribution of the
owner to the capital of the business is called
Source of Capital equity and is evidenced by the Issuance of
stockholder's certificate issued by the
funds needed for the business can be corporation. It is also oftentimes referred as
generated either internally or the ownership in the corporation and the
externally. holders of stock certificates are called
stockholders.
Internal fund sources generally
refer to the funds which are owned by
the entrepreneur himself or the Long-Term Borrowings
company, whereas external capital 1. Mortgage.
essentially refers to those beyond the 2. Bonds.
means of the entrepreneur and the 3. Long-term commercial papers.
company, or those external to the
entrepreneur or the business Short-term creditors
organization 1. Commercial Banks
ENTREP REVIEWER
2. Merchandise Suppliers fresh capital from other sources who will
3. Credit card companies. charge you interest, money from private
4. Capital equipment suppliers investors or "angels" are not loans or
5. Leasing companies. interest-bearing capital sourced outside
6. Receivable factors. your pocket.
7. Deferral of payables in general.
The Stock market and the IPO
Going publics is either an opportunity or a
Venture capital companies threat. The rationale for going public,
vis-à-vis other options, rests largely on the
refer to private and for profit organizations contention that initial public offering – or IPO
that provide funds to new business ventures for short – provides higher evaluation than
by way of purchasing equity positions in what an entrepreneur could expect from
new or young businesses believed to have other avenues. If better price can be
potentials to produce maximum returns realized from going public, rather from being
within short period of time acquired or merging, the IPO is obviously
the logical choice
With funding provided for by venture capital
companies, the entrepreneur surrenders a
portion of the ownership and control of the
business as representatives of the venture
capital companies generally.

Other Sources
1. Lending investors.
2. Government institutions.
3. Non-Government Organizations (NGOs).
4. Political sources
5. Friends and relatives.
6. Purchase Order financing.
7. Employees.
8. Usurers.

Angel investors
While it is true that an entrepreneur's
concern is the profit motive for himself, it
is also a noble idea to share with others not
only the profit aspects, but also the risks
and burdens of the business. Hence,
entrepreneurs may share start-up capital
with private investors called "angels" as
referred to by the Entrepreneur's Magazine.
Unlike borrowing