The Accidental Entrepreneur

What happens when your paychecks stop? I am no longer employed. Perhaps this is the time for me to pursue self-employment! Starting a small business in this tough economy won’t be easy. But after experiencing workplace bullying, the most devastating experience any employee can be subjected to, I am willing to consider the risks. Bhide (1999) found in his research “most startups derive from individuals seeking self-employment rather than the conduct of an entrepreneurial effort to develop new products, markets, technologies, and so on” (p. 19).

Starting a business involves planning, making key financial decisions, and completing a series of legal activities. In order to obtain start-up financing, an entrepreneur has to convince investors that the enterprise has intangible assets that have potential to generate cash flows in the future. In addition, he or she must convince potential lenders and investors the business idea is promising, the market accessible, the firm’s management capable, and the return on investment attractive. To accomplish these objectives, the entrepreneur should develop a business plan. In addition to a plan, the lenders still assess the 5 C’s of credit: Character (integrity), Capacity (sufficient cash flow), Capital (net worth), Collateral (assets) and Condition (of the borrower and the overall economy) (Chase Business Banking, 2012). The SBA and its lender will look at your character and your capacity.

There are a number of approaches that entrepreneurs can take to secure adequate financing, seed capital, for their business ventures (Laszlo, Terjesen, & Rappai, 2007). Investments break down into two forms: debt and equity (Business Networks for Women, 2011). Debt financing is the type of financ...

... middle of paper ...

...iness

Business Networks for Women. (2011). Growing Your Business. Retrieved February 27, 2012, from Womanowned.com: http://www.womanowned.com/Growing/Funding/Financing.aspx

Harvard Business Essentials. (2002). Finance for managers. Boston: Harvard Business School Press.

Internal Revenue Service. (2012, February 16). Business Structures. Retrieved February 27, 2012, from Small Business and Self-Employed Tax Center: http://www.irs.gov/businesses/small/article/0,,id=98359,00.html

Laszlo, S., Terjesen, S., & Rappai, G. (2007). Seeding new ventures-green thumbs and fertile fields: Individual and environmental drivers of informal investment. Venture Capital , 9 (4), 257-284.

NTG & Associates. (2006). Entity Table of Comparison. Retrieved Febraury 27, 2012, from Corporation & Compliance Filing Services: http://legalentities.com/comparisons.html