Online business and entrepreneurship form a core component of a sound national economy. Regardless of the particular finance methods discussed, however, certain topics are repeatedly brought up throughout most of the financial publications listed in this reference: Understanding entrepreneurship risk and the effort necessary to begin a business; The importance of building organizational capital; Why banks are not an excellent source for venture capital funding; Why Internet business opportunities are so attractive to individual entrepreneurs; and How to choose a business plan that’s right for you.
In this EBSco study on entrepreneurship and small business economics, several themes emerge regarding what entrepreneurs need to know. First, as EBSco points out, entrepreneurs have two primary options when considering entering entrepreneurship. First, they can start from scratch, “rolling with the punches.” Alternatively, they can “roll up their sleeves” and begin to create an online business from which they can extract revenues. Both approaches have their own advantages, but the nature of each presents unique difficulties that must be overcome.
Those who start-up as resellers do not have as great of a choice as those who decide to create a brick-and-mortar company. Most small businesses need to rely on credit scores to get started. Once operational, they need to raise money to finance growth, pay employees, and make any big purchases such as trucks or airplanes. Those who lack access to credit scores find themselves at a distinct disadvantage when trying to compete with larger companies with better finance terms.
The other theme touched on in the above article is the need for independent business professionals to understand the economics of start-ups. EBay is not an independent business. It belongs to eBay Inc., which is, in turn, owned by the business professionals who sell on eBay. In short, the eBay Store owners are business professionals. You might say they’re eBay store owners with a managerial mindset.
Yet another potential source of start-up capital is personal savings. These days it’s more common than not for those with some income to tap into their savings and finance their own start-up ventures. Still, in today’s business world, many small business start-ups cannot generate the cash they need in order to survive until they generate enough business to support themselves. This means that even when you tap into your own personal finance you may be limited in your options when it comes to financing.
Some small businesses start out with venture capital from friends and family. For these ventures, personal finance is usually part of a diversified portfolio of assets used to acquire and monetize the opportunities offered by emerging markets. Venture capital for small businesses can also be helpful for funding growth or other strategic objectives.
Most successful small businesses often utilize an independent business loan for their start-up. The most common of these loans is a Small Business Administration loan, which is granted by SBA small business programs. But there are also unsecured business loans available from various banks and credit unions that are particularly suited for small businesses with poor credit histories. These loans are much easier to obtain and process than traditional small business loans.
There are also many small business grants available from the federal government and from state and local governments. Unfortunately, many small businesses simply do not realize that there are free business start-up financing options available to them. The Small Business Association provides many guides and application instructions online. There is even a government-sponsored program called Business Start-Up America. Still, many entrepreneurs who are planning to start their own business often have little money to tap into sources of start-up capital. This often leads to costly mistakes and delays that can be very costly indeed.