Creating, Financing, And Marketing A Business

1301 words - 6 pages

Creating, Financing, and Marketing a Business
Kimberly M. Albuquerque
Business 100
Strayer University
26 February 2013

Creating, Financing, and Marketing a Business
When creating a business, entrepreneurs start with goals that help them create, finance and market their business. To stand up their business, they must decide what form of ownership they will use. This decision will affect the establishment and operation of their business, including financing and regulation, as well as marketing.
One form of ownership commonly used in the United States is a partnership. This is where two or more people enter an agreement and become co-owners of a firm. There are limited ...view middle of the document...

A lawsuit can be filed against any partner or all partners regardless of who caused the action. This means if you have more to lose than the other partners, you could be targeted even if you didn’t participate in the fault. (2). Potential for disagreements. This can cause friction within the business, affecting the morale and welfare, while undermining cooperation essential to keeping the business on track. Disagreements can also complicate decision making among the partners. (3). Lack of continuity creates uncertainty of how long a partnership will remain. If a partner decides to withdraw, the course of the business relationship changes and possibly ends the partnership. For this reason, continuity is key because the remaining partners may decide to bring someone else on board or just be able to pick up where the former partner left off.
When it comes to funding a small business, most new firms are started with the founder’s personal resources, such as their own money or family, friends or credit cards. Other options include bank loans, investors and venture capital firms. Lenders are sometimes hesitant to fund new businesses and most require a minimum of 25 to 30 percent of startup costs from the entrepreneur. The Small Business Administration (SBA) gives partial loan guarantees from local commercial lenders. They also have a microloan program which lends small amounts (roughly about $13,000) through community nonprofit organizations. Angel investors are wealthy people who seek to invest in new businesses with the goal of profiting for themselves. They look for companies that are likely to grow 30 to 40 percent per year. Venture capital firms invest in new companies with high potential, but in exchange for shared ownership which can be as much as 60 percent. However, the economic crisis has greatly impacted this type of funding.
Managerial accounting is designed to meet the needs of company managers. They rely on accountant reports, analysis and other information to make important decisions. One of these important decisions is product costing and the allocation of funds associated with it. In order to set prices, determine variety in products, and depict efficiency, managers must have an accurate measure of costs associated with their goods and services. Other costs include production facility costs, or overhead costs. These consist of property taxes, insurance policies, and general maintenance costs. Recently, managerial accountants developed a new approach to cost allocations called activity-based costing (ABC). This is a more complex approach but will likely provide more results based on what drives overhead costs.
Incremental analysis takes a look at financial impacts of different alternatives in decision making. For example, if a firm is trying to decide whether to repair its equipment or replace it with new equipment, the managers can use this analysis to make an informed decision based on the impact of the...

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