1. What sources of funding are available to entrepreneurs at the early stage of the Company?

• Friends and family.
• Small business grants.
• Loans or lines of credit.
• Angel investors.
• Venture capital.
• Form a partnership.
• Commit to a major customer.

 

 

2. What are “virtual” companies? What tools help them function? Why are they of interest to an entrepreneur?

 

Is a company with no office and minimized costs that takes in advantage the flexibility and new technologies to run the business.

This is an interesting way of doing business for start-ups or to introduce new products in the market because it allows to adapt quickly and you don’t need to get liabilities and run into higher costs without knowing how the market would react.

 

3. Describe seven techniques for bootstrapping that you could use if you started a company.

 

Batering for goods and services. When you provide services to a company that provides you a determined good as a way of payment.

Renting or leasing equipment. When the company rents machinery instead of buying it so you don’t need to run into high cost at an early stage.

Used equipment. Buying used equipment or machineries instead of brand new ones, would avoid lots of cost and may work at the same levels of new ones.

Access to Expensive Equipment. Having access to University government labs or foundations can give this companies access to expensive equipment with a lower price.

Cooperative Purchases. Is another way to purchases goods with other companies to share expenses and costs.

Outsourcing. Using other companies to purchase services the company doesn’t need often, and having people working for these needs in the company would be more expensive.

Credit Cards. The business should have a credit card supplier so the customer have any possibility to purchase the products.

 

4. Why is bootstrapping important for (a) closely held companies and (b) early-stage, high-grow companies seeking equity investors?

 

Bootstrapping, getting a lot done on very little cash, is a common practice for early stage companies. For most start-ups, bootstrapping is an essential first stage because it:

• Demonstrates the entrepreneur’s commitment and determination.
• Keeps the company focused.
• Allows the business concept to mature more into a product or service.
• Gives the concept a chance to be vetted by the market.
• Allows some milestones to be achieved.

 

 

5. What is meant by factoring of purchase orders?

 

It’s a way of financing from private lenders instead of banks, and you take purchase orders as a security for the loan. The lender base the loan on a percentage of the sales and the company pays high interest rates.