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There are many challenges for an entrepreneur in finding funding for a new business venture. There is research that needs to be done on the business they are about to start up. Entrepreneurs' need to be stable and well prepared as this paper is going to show. Owning ones own business can and will be very scary, as there is a lot involved in setting the business up. There are several cycles involved, including financing, operations and growth and the psychological cycle.
When a person wants to start their own business and join the world of entrepreneur's, they are going to have to master the entrepreneur life cycle, the psychology of successful entrepreneurs and knowing that the challenges are going to be very critical. They will need to be prepared for all of the cycles of starting a new business.
Researching a new business venture will take time. A person must know the type of business that they wish to start; they need to check out the business market to make sure that their market is not saturated and that the location that they wish to start their business is not overly saturated either. According to the Essentials of Entrepreneurship and Small Business Management, "because of their low start-up costs, service businesses have become very popular among entrepreneurs." (pp. 15)
After investigating the type of business to own, the next step would be to investigate where their financing is going to originate from and to know the operations involved in running their business and the funds needed to make that business grow year after year. Keeping this in mind, a person must learn their own boundaries and know how to cope with what may come their way.
New Business - 3 Financing is going to be one of the hardest hurdles a person will face. With the economy the way it is today, finding financing will stretch a person to their limits Those that are willing to take such a risk, must know that they will go into debt for quite a few years, usually five, before seeing a profit. In the long run though, perseverance will pay off for them.
Where a person finds financing is going to take a lot of research and a lot of hard work. To start with a person must know how much money they will need to start their business and what exactly their beginning expenses will be. To start a business, monies needed will be to either lease or buy a building in the location that they wish to be in; monies will be needed for utilities and also for starting inventory. Starting inventory is going to have to include every little piece that will be involved in a business, from a simple pen to the largest item. For instance, if your business is going to be a computer repair shop, than the largest purchase will most likely be parts.
After financing is all figured out and arranged, which of course there will always be something a person has forgotten, but the next step is going to be to arrange for the operations and growth of a business. To show how a person can start their own business and keep on growing, we need to take a look at Mark Toon who was a Baylor University Graduate (BBA 1986; MBA 1987), he was a punter on a Chicago football team and now has a third company with a second partner. His business is called Equaterra, which has risen to 140 employees and is spread across two continents and is now considered a leader in value improvement strategies. "This man loved challenges", according to Sinha. (Sinha, 2008, pp. 44-45)
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In order for a business to grow and to keep growth as one of the most important aspects of a business, a person must be willing to get out into the public and sell their services and be willing to advertise and to offer excellent customer satisfaction. Word of mouth is one of the quickest ways for a business to grow.
An entrepreneur needs a good business plan and must be able to follow the plan as closely as possible. For instance, the first thing is a person should understand is how their business is going to operate and who is going to handle each aspect of the business. The plan needs to include who is going to handle the finances, who will handle inventory, who will handle sales and service, just to name a few.
According to Gary Horn, President of Horn Murdock Cole, "debt represents another challenge that crops up during a new business venture's growth and operation stage 'a successful entrepreneur has the ability to take risks, but the intelligence to mitigate those risks'" (Sinha, 2008, pp. 44-45) Mr. Horn is so right when it comes to starting a new business venture, working all of these challenges into the business plan will only make a business a little stronger.
There is a group called the Small Business Administration who are there to help businesses grow and expand on their current plan or to help a person start their own business with many resources. According to their website, their role "provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing." (www.sba.gov) There are also several different services available including a business planner, services, tools and local resources. Included in their services is everything from financial assistance to special
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audiences. They have been around to help individuals with planning how to start their business and where to get financing and grants to counseling services which have different organizations to help a person with additional resources.
All of these steps are going to go a lot more smoothly if a person's psychological state is sound; if that person is able to handle the stress and the ups and downs of starting a business. Every entrepreneur has to go through the learning stages of building an outstanding company. The key point is to do this while keeping your senses straight. One must take the good with the bad, where one day business could be great and the next day not as good. Being prepared for either case emotionally will help keep the life moving along. An 85 year old man by the name of Professor William Miller wrote "if you live long enough you will live forever" (Knell, 2005, pp. 2-9) apply this to the everyday business world, and a person shall succeed.
Every person, no matter how young or how old, will feel the effects of trying to start their own business, or once having done so, keeping the business afloat. According to Gunjan Sinha, "to manage the inherent volatility of startups and have enough energy to carry on with ones' task, a balanced psychological temperament of being 'special and humble' is essential." (Knell, 2005, pp. 2-9)
There are many possible challenges of funding for new ventures in business, as has been learned from the articles, books and even internet research. It is known that an entrepreneur must know where to look for funding, purchasing and running a company as well as the psychological side in the business world.
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Before starting a person's business, it is necessary to check out every little minor detail before vesting the time into that business. It is necessary to make sure that all loans are secured, that the location is set and that the necessary inventory is available to open your doors on the first day. A business plan is definitely a must, along with talking with consumers, other business people and most of all, with future employees or business partners. Communication is a must in the business world. Be sure to ask one's self before getting into owning a business, "Can I handle this, am I ready for the pressures, for the let downs, and for the good?" Also keep in mind that regular, everyday people, just like yourself, have started from scratch and so can you.
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Sinha, G. (2008) Psychology of Successful Entrepreneurs. Siliconindia, 11(2), (pp. 44-45), Retrieved from Business Source Complete database.
Krell, E. (2005). Mastering Entrepreneurial Life Cycle." Baylor Business Review, 22(2), (pp. 2-9). Retrieved from Business Source Co. mplete database.
Zimmerer, T., Scarborough, N., & Wilson, D. (2008) Essentials of Entrepreneurship and Small Business Management. (p. 15)
SBA's Role. Retrieved from www.sba.gov on April 6, 2010.