3 Financial Resources There are three important reasons businesses need to raise money in the beginning of their venture and these include cash flow challenges, capital investments, and lengthy product development cycles. Cash flow challenges may include purchasing inventory, paying employees, and paying for advertising. Capital investments involve the cost of buying real estate and purchasing equipment. The lengthy product development cycle means some products may be under development for years before they will be able to generate income. This typically means the up-front costs will more than likely exceed a firm's ability to fund the activities (Barringer & Ireland, 2018). For the bakery, having a good amount of money at the beginning will help avoid the business not being able to get off the ground. In order to do this, the bakery will need to think of the different financial resources they will need to use to get the business started. The different financial resources may include cash, bank deposits, holding of stocks, holding of bonds, savings, mutual funds, real estate, donation, and loans (Financial Resources, n.d.). The bakery will be starting off as a small business, and this will be the owner's first business she has owned so there will only be specific types of financial resources that will be used to help start up the bakery. The owner will be using her own personal assets from her checking and savings account along with a loan from the bank. Since this is her first business, she does not currently possess other real estate budlings to sell and buy another retail building so she will be needing to purchase that with her own money. The owner is not familiar with bonds or stocks so those will not be used as a financial resource until further evaluation on how the bakery will do with the few financial resources it has and what will be the next steps for the business. Finally, unless
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