By Jason McDonald What are some of the most common ways that people earn money to start their own businesses? While some save over the cou...
What are some of the most common ways that people earn money to start their own businesses? While some save over the course of time, and others borrow from their friends and family members, others may end up turning to investors. Equity finance, which is a topic that Robert Jain can expand upon, is relatively common, but it's a process that must be handled with care. Here is what you should ask about the topic at hand, as the knowledge will help you grow your business that much more.
"What is equity finance?" According to reputable names on the matter like Bob Jain, equity finance is the process of raising money for business, not through one's own efforts or borrowing from close relatives, but with the help of investors. The idea is that investors will buy company shares in exchange for percentages of what said company makes. As a result, they become business owners in their own individual regards.
"Is there more than one type of equity financing?" Yes, equity financing is broken up into a number of subtypes, some more common than others. These categories include, but aren't limited to, family financing, small business investing, and royalty financing. As you might imagine, these categories differ in terms of where money is coming from. Nonetheless, it's worth researching the options at your disposal to find which one will serve you best.
"How do I benefit from equity financing?" One of the upsides of equity financing is the fact that you'll be working alongside those that have an interest in your business. What this means is that they'll be more likely to work with you and perhaps even provide insight when needed. Furthermore, business owners won't have to commit as much of their own resources. Reasons like these should be enough to give equity financing serious consideration.
"What are the drawbacks of equity financing?" When it comes to downsides, it's worth noting that the act of finding investors can be difficult. This is especially true if you're new to business ownership, have few contacts, or are looking to provide a niche product or service. Additionally, your share in your company will be smaller if you have third-party investors working with you. Simply put, you should know the risks of equity financing.
"What is equity finance?" According to reputable names on the matter like Bob Jain, equity finance is the process of raising money for business, not through one's own efforts or borrowing from close relatives, but with the help of investors. The idea is that investors will buy company shares in exchange for percentages of what said company makes. As a result, they become business owners in their own individual regards.
"Is there more than one type of equity financing?" Yes, equity financing is broken up into a number of subtypes, some more common than others. These categories include, but aren't limited to, family financing, small business investing, and royalty financing. As you might imagine, these categories differ in terms of where money is coming from. Nonetheless, it's worth researching the options at your disposal to find which one will serve you best.
"How do I benefit from equity financing?" One of the upsides of equity financing is the fact that you'll be working alongside those that have an interest in your business. What this means is that they'll be more likely to work with you and perhaps even provide insight when needed. Furthermore, business owners won't have to commit as much of their own resources. Reasons like these should be enough to give equity financing serious consideration.
"What are the drawbacks of equity financing?" When it comes to downsides, it's worth noting that the act of finding investors can be difficult. This is especially true if you're new to business ownership, have few contacts, or are looking to provide a niche product or service. Additionally, your share in your company will be smaller if you have third-party investors working with you. Simply put, you should know the risks of equity financing.
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