7 sources of Capital

. Personal investment
When starting a business, your first investor should be yourself—either with your own cash or
with collateral on your assets. This proves to investors and bankers that you have a long-term
commitment to your project and that you are ready to take risks.

2. Love money
This is money loaned by a spouse, parents, family or friends. Investors and bankers considers
this as "patient capital", which is money that will be repaid later as your business profits
increase.
When borrowing love money, you should be aware that:

• Family and friends rarely have much capital

• They may want to have equity in your business
• A business relationship with family or friends should never be taken lightly
3. Venture capital
The first thing to keep in mind is that venture capital is not necessarily for all entrepreneurs.
Right from the start, you should be aware that venture capitalists are looking for technology-
driven businesses and companies with high-growth potential in sectors such as information
technology, communications and biotechnology.
Venture capitalists take an equity position in the company to help it carry out a promising but
higher risk project. This involves giving up some ownership or equity in your business to an
external party. Venture capitalists also expect a healthy return on their investment, often
generated when the business starts selling shares to the public. Be sure to look for investors
who bring relevant experience and knowledge to your business.

BDC has a venture capital team that supports leading-edge companies strategically positioned
in a promising market. Like most other venture capital companies, it gets involved in start-ups
with high-growth potential, preferring to focus on major interventions when a company needs a
large amount of financing to get established in its market.
4. Angels
Angels are generally wealthy individuals or retired company executives who invest directly in
small firms owned by others. They are often leaders in their own field who not only contribute
their experience and network of contacts but also their technical and/or management knowledge.
Angels tend to finance the early stages of the business with investments in the order of
$25,000 to $100,000. Institutional venture capitalists prefer larger investments, in the order of
$1,000,000.
In exchange for risking their money, they reserve the right to supervise the company's
management practices. In concrete terms, this often involves a seat on the board of directors
and an assurance of transparency.
Angels tend to keep a low profile. To meet them, you have to contact specialized associations or
search websites on angels. The National Angel Capital Organization (NACO) is an umbrella
organization that helps build capacity for Canadian angel investors. You can check out their
member’s directory for ideas about who to contact in your region.
5. Business incubators
Business incubators (or "accelerators") generally focus on the high-tech sector by providing
support for new businesses in various stages of development. However, there are also local
economic development incubators, which are focused on areas such as job creation,
revitalization and hosting and sharing services.

Commonly, incubators will invite future businesses and other fledgling companies to share their
premises, as well as their administrative, logistical and technical resources. For example, an
incubator might share the use of its laboratories so that a new business can develop and test its
products more cheaply before beginning production.

Generally, the incubation phase can last up to two years. Once the product is ready, the
business usually leaves the incubator's premises to enter its industrial production phase and is
on its own.

Businesses that receive this kind of support often operate within state-of-the-art sectors such as
biotechnology, information technology, multimedia, or industrial technology.

MaRS – an innovation hub in Toronto – has a selective list of business incubators in Canada,
plus links to other resources on its website.
6. Government grants and subsidies
Government agencies provide financing such as grants and subsidies that may be available to
your business. The Canada Business Network website provides a comprehensive listing of
various government programs at the federal and provincial level.
Criteria

Getting grants can be tough. There may be strong competition and the criteria for awards are
often stringent. Generally, most grants require you to match the funds you are being given and
this amount varies greatly, depending on the granter. For example, a research grant may require
you to find only 40% of the total cost.

Generally, you will need to provide:

• A detailed project description

• An explanation of the benefits of your project
• A detailed work plan with full costs
• Details of relevant experience and background on key managers
• Completed application forms when appropriate
Most reviewers will assess your proposal based on the following criteria:
• Significance
• Approach
• Innovation
• Assessment of expertise
• Need for the grant
Some of the problem areas where candidates fail to get grants include:

• The research/work is not relevant

• Ineligible geographic location
• Applicants fail to communicate the relevance of their ideas
• The proposal does not provide a strong rationale
• The research plan is unfocused
• There is an unrealistic amount of work
• Funds are not matched
7. Bank loans
Bank loans are the most commonly used source of funding for small and medium-sized
businesses. Consider the fact that all banks offer different advantages, whether it's personalized
service or customized repayment. It's a good idea to shop around and find the bank that meets
your specific needs.

RECORD KEEPING
Type of record

• Bank record
• Contract
• Accounting & book keeping record
• Employee record
• Correspondence
• Marketing record
• Advertising record
• License & permits
• Tax record
• Stock records

Need of records
 • To control expenses
• To monitor inventory
• To determine profit margin
• To improve cash flow
• To measure performance
• To meet our payroll requirements

Importance of record keeping

• Evaluation performance of business
• Helps in future planning
• Helps in forecasting future

Process of recruitment
A. Internal
B. External
A. Internal
• Job Posting
• Self Selection
• Proficiency surveys
• Returns
B. External
• Training institutions
• Advertisement
• Self Presentation
• Employment agencies
• Other professional institutions

Common recruitment mistakes

• Emphasizing certain skills
• Poor interview techniques
• Relative comparisons
• Presenting a poor job description
Poor advertisement

Financial control
It refer to the control of all financial activities aimed at achieving objectives & returns tools of financial
control
• Financial statements
• Financial ratios
Financial Statements
• Balance Sheet
• The Income Statement
• The Cash Flow Statement

Financial Ratios- All ratios for judging financial position

Marketing Control
It is that process of monitoring the proposed plan as they proceed. It involves measurement, evaluation &
monitoring.

Approaches to control
• Ratio Analysis
• Quality control
• Sales analysis
• Market share
• Cash flow statements
• Location of Buyers
• Distribution support
• Market section

Marketing Planning & Control Process

• Research (Marketing Mix & Control)
• Financial forecasting
• Objective setting
• Marketing Strategy & Action Program
• Control

E-Commerce
It refers to a wide range of online business activities for products and services. It involves parties interacting
electronically
Types of E-Commerce models:-
1. B 2 C (Business to Consumer)
2. B 2 B (Business TO Business)
3. C 2 C (Consumer to Consumer)
4. P 2 P (Poor to Peer)
5. M-Commerce
 6. B 2 G (Business to Government)
7. B 2 E (Business to Employee)

Benefits of eCommerce for Entrepreneurs

Owing to the increased utilization of smart-phones, easier access to internet, and the growing offerings of eCommerce stores, there is
a big shift in the buying preference of people. Actually, the arrival of the internet has changed the mode of communication, exchange
of information and most promptly the business.

In such scenarios, it is quite difficult for entrepreneurs to thrive. However, eCommerce is offering various opportunities to these
entrepreneurs. Let’ see how they can utilize e-commerce for growth.
The eCommerce Advantage

It is easy for today’s entrepreneurs to run an internet business, as they are technology savvy and able to leverage technology for a
head start in the industry. If I talk about online business, it has numbers of benefits. Entrepreneurs can save a lot of costs that they
have to spend on managing a brick and mortar store. Instead of running such store, an online store offers them the option to receive
orders online, accept payments, ship product and reach to the customers available all across the world.

Besides, the cost of setting up an e-commerce website is inexpensive, though to build a strong foothold, it is important to utilize the
tools of interest to the public such as social media, e-mailers, videos and more. With these things, here are some advantages that
entrepreneurs can get from e-commerce.

Global Reach

There is no doubt in saying that brick-and-mortar stores are bound by location and most importantly depend on the service and
product you are offering. If you want to run a local business, this could be a key for higher revenue, though to expand globally you
need to take help of e-commerce. Websites allow you to reach the customers available all across the country or nation, and global.

Reducing Cost

As I mentioned above, setting up a brick –mortar is cost draining. For entrepreneurs, this investment can both big and risky. In
comparison to this, using an online component doesn’t involve high risk-investment. Mostly, setting up an online store is a better
option than setting up a brick-mortar store. Besides, it lowers the cost of setting up the business. How? Take a look.

* Saving on Rent

For setting up an online store, Entrepreneurs don’t need to rent a big shop or property. They can easily begin with the initial cost for
web setup and maintenance such as creating and maintain a website, adding a Shopify into website and more. All these things take a
bearable amount per year, and in exchange of it, one can get features built as per the preference and can run an online business.

* Saving on Task-force

Entrepreneurs don’t need to pay to an in-person taskforce, actually, they can integrate various modern tools such as chatbot to
provide 24-hour customer support and can save a lot of costs.

Global Marketing and Recognition

In the presence of various business giant, it is hard for entrepreneurs to earn recognition among the industry. Though, with the help of
digital advertisement, they can reach to the consumers and earn recognition. There are other ways in this space, such as email
marketing, SMS marketing and more, which not just help in increasing revenues but also boosts business visibility.

Better Audience Targeting and Personalization

Online business opens the gate of numerous opportunity for entrepreneurs. Digital marketing and online selling model allow them to
collect, synthesize and use customer information. It is beneficial when they have to run various customer retention activities such as
loyalty programs and personalize offers. Entrepreneurs can track the buying habits of a customer from the beginning and can
comprehend the market demand. It also allows them to target a precise audience. It is also very easy to personalize offers with this
data, as customers preference can be comprehended by his behavior.

Apart from these, there are many more benefits of eCommerce integration for entrepreneurs. According to the WAKI experts, it is very
essential for entrepreneurs to be ahead of the market giant in this rapidly changing market space. As every business is striving to
leverage the internet to reach consumers and earn profits, entrepreneurs need to utilize the full-fledge capability of the internet to
ensure a higher return on investment.

Internet Advertising

Online advertising is an emerging form of advertising which has grown with the rapid development of Internet and
gradually becoming one of the most important advertising medium. Berthona, Pitt and Watson (1996) mention
Internet as a virtual place where consumers interact with different advertisers. From Internet, advertisers can sustain
and enhance the relationship with customers who come from worldwide, and “represent a remarkable new
opportunity for businesses to communicate with new and existing markets in a very integrated way.” According to
Smith and Chaffey(2005), online advertising is “the use of a company web site in conjunction with online promotional
techniques such as search engines, banner advertising, direct e-mail and links or services from other web sites to
acquire new customers and provide services to existing customer.”

Advantages of the Internet Advertising

A number of advantages of the Internet advertising can be cited as depicted in Figure 9.1 and explained as under:
 NEW VENTURE EXPANSION STRATEGIES & ISSUES

A Joint Venture (JV) is a business agreement in which parties agrees to develop, for a finite time, new entity
new assets by contributing equity. They exercise control over the enterprise and consequently share
revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint
ventures limited by guarantee with partners holding shares.
With individuals, when two or more persons come together to fro a temporary partnership for the purpose of
carrying out a particular project, such partnership can also be called a joint venture where the parties are “co-
ventures”.
The venture can be for one specific project only – when the JV is referred to more correctly as a consortium
(as the building of the Channel Tunnel) – or a continuing business relationship. The consortium JV (also known
as a cooperative agreement) is formed where one party seeks technological expertise or technical service
arrangements, franchise and brand use agreements, management contracts, rental agreements, for one-time
contracts. The JV is dissolved when that goal is reached.
Some major joint ventures include down corning, Miller Coors, Sony Ericsson, Penske Truck leasing,
Norampac and Owens-Corning.
A joint venture takes place when two parties come together to take on one project in a joint venture, both
parties are equally invested in the project in terms of money, time and effort to build on the original concept.
While joint ventures are generally small projects, major corporations also use this method in order to
diversify. A joint venture can ensure the success of smaller projects for those that are just starting in the
business world or for established corporations. Since the cost of starting new projects is generally high, a joint
venture allows both parties to share the burden of the project, as well as the resulting profits.
Since money is involved in a joint venture, it is necessary to have a strategic plan in place. In short, both parties
must be committed to focusing on the future of the partnership, rather than just the immediate returns.
Ultimately, short term and long term successes are both important. In order to achieve this success, honesty,
integrity and communication within the joint venture are necessary.
• The objectives of the venture are not 100 per cent clear and communicated to everyone involved.
• There is a imbalance in levels of expertise, investment or assets brought into the venture by the
different partners.
• Different cultures and management styles result in poor integration and co-operation.
• The partners don’t provide enough leadership and support in the early stages.
• Success in a joint venture depends on through research and analysis of the objectives.
Embarking on a Joint Venture can represent significant reconstruction to your business. However favorable it
may be to your potential for growth, it needs to fit with your overall business strategy.
It’s important to review your business strategy before committing to a joint venture. This should help you
define what you can sensibly expect. In fact, you might decide there are better ways to achieve your business
aims.
You may also want to study what similar businesses are doing, particular those that operate in similar markets
to yours. Seeing how they use joint ventures could help you decide on the best approach for your business. At
the same time, you could try to identify the skills they use to partner successfully.
You can benefit from studying your own enterprise. Be realistic about your strengths and weakness – consider
performing strengths, weaknesses, opportunities and threats analysis (swot) to identify whether the two
businesses are compatible. You will almost certainly want to identify a joint venture partner that
complements your own skills and failings.
Remember to consider the employee’s perspective and bear in mind that people can feel threatened by a joint
venture. It may be difficult to foster effective working relationships f your partner has a different way of doing
business.
When embarking on a joint venture it’s imperative to have your understanding in writing. You should set out
the terms and conditions agreed upon in a written contract, this will help prevent misunderstandings and
 provide both parties with strong legal recourses in the event the other party fails to fulfill its obligations while
under contract.
A written Joint Venture Agreement should cover:
Action is more precisely referred to as a “merger of equals”. The firms are often of about the same size. Both
companies stocks are surrendered and new company stock is issued in its place. For example, in the 1999
merger of Glaxo Wellcome and SmithKline Beecham, both firms ceased to exist when they merged and a new
company, GlaxoSmthKline, was created. In practice, however, actual mergers of equals don’t happen very
often. Usually, one company will buy another and as part of the deal’s terms, simply allow the acquired firm
to proclaim that the action is a merger of equals, even if it is technically an acquisition. Being bought out often
carries negative connotations; therefore, by describing the deal euphemistically as a merger, deal makers and
top managers try to make the takeover more palatable. An example of this would be the takeover of Chrysler
by Daimler-Benz in 1999 which was widely referred to as a merger at the time.
Purchase deals will also e called a merger when both CEOs agree that joining together is in the best interest of
both of their companies. But when the deal is unfriendly (that is, when the target company does not want to
be purchased) it is always regarded as an acquisition, OR
Though the two words mergers and acquisitions are often spoken in the same breath and are also used in
such a way as if they are synonymous, however, there are certain differences between mergers and
acquisitions

Merger Acquisition
The case when two companies (often of same The case when one company takes over another
size) decide to move forward as a single new and establishes itself as the new owner of the
company instead of operating business business.
separately.
The stocks of both the companies are The buyer company “swallows” the business of
surrendered, while new stocks are issued afresh. the target company, which ceases to exist.
For example, Glaxo Wellcome and SmithKline Dr. Reddy’s Labs acquired Betapharm through
Bechcam ceased to exist and merged to become an agreement amounting $597 million.
a new company, known as Glaxo SmithKline.

The franchisor’s success depends on the success of the franchises. The franchisee is said to have a greater
incentive than a direct employee because he or she has a direct stake in the business.
Thirty three countries, including the United States, China and Australia have laws that explicitly regulate
franchising, with the majority of all other countries having laws which have a direct indirect on franchising.
There are three basic types of franchises:

Product Franchises.
Manufactures use the product franchise to govern how a retailer distributers their product. The manufacturer
grants a franchisee the authority to distribute goods by the manufacturer and allows the owner to use the
name and trademark owned by the manufacturer. The franchisee must pay a fee or purchase a minimum
inventory of stock in return for these rights. Examples of Product Franchises include: Mobil, Goodyear, Baskin
Robbins and Ford Motor Company.

’
Manufacturing Franchise,
These types of franchises provide an organization with the right to manufacture a product and
sell it to the public, using the franchisor’s name and trademark. This type of franchise is found
most often in the food andbeverage industry, but can be applied to other industries. Examples of
Manufacturing Franchise include: Coca- Cola, and Sealmaster.

Rights Offering (Issue)

A rights issue is an issue of additional shares by a company to raise seasoned equity offering.
The rights issue is a special form of shelf offering or shelf registration. With the issued rights,
existing shareholders have the privilege to buy a specified number of new shares from the firm
at a specified price within a specified time. A rights issue is in contrast to an initial public
offering, where shares are issued to the general public
(a) Public issue
(i) Initial public offer (IPO)
(ii) Further public offer (FPO)
(b) Rights issue
(c) Bonus issue
(d) Private placement
(i) Referential issue
(ii) Qualified institutional placement

(a) Public issue:

When an issue offer of securities is made to new investors for becoming part of shareholders
family of the issuer3 it is called a public issue. Public issue can be further classified into initial
public offer (IPO) and further public offer (FPO). The significant features of each type of public
issue are illustrated below:

(i) Initial public offer (IPO): When an unlisted company makes either a fresh issue f
securities or offers its existing securities for sale or both for the first time to the
public, it is called an IPO. This paves way for listing and trading of the issuer’s
securities in the Stock Exchanges.
(ii) Further public offer (FPO) or follow on offer: When an already listed company makes
either a fresh issue o securities to the public or an offer for sale to the public, it is
called a FPO.
(b) Rights issue (RI):
When an issue of securities is made by an issuer to its shareholders existing as on a
particular date fixed by the issuer (i.e. record date), it is called an rights issue. The rights
are offered in a particular ratio to the number of securities held as on the record date.
(c) Bonus issue:
When an issuer makes an issue of securities to its existing shareholders as on a record
date, without any consideration from them, it is called a bonus issue. The shares are