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Executive summery
This report is prepared as requirement of course. This report focuses on the process of starting a
new venture, sources of fund, problems, prospects and recommendation for the new venture. This
report will give a clear idea about the sources of finance for the new venture and the pro and cons
of each sources.
The main object of the report is to know about the approach of financing for the new started small
business. Entrepreneur tries to collect fund for the new venture and how these fund utilize in the
new venture. The information of the report has collected from secondary sources like books,
published reports and website etc. It includes source of existing/published data, such as official
website, journals, Research papers and newspaper.
After analyzing data, it was found that hoe entrepreneur start the new venture with a well-
structured process, sources of finance for the new started small business, problem and
recommendation for the new started small business.

Introduction

Many of the young aspiring entrepreneurs cannot start their ventures because of insufficient fund.
Consequently, many good and potential business ideas are not being implemented even though
these ideas may have brought credible positive changes in society as well as in the economy of the
country. Moreover, the rate of unemployment in Bangladesh is very alarming. Entrepreneurship
can play a key role in creating jobs for this large number of unemployed.

It is good to see that the young entrepreneurs are coming forward to initiate startups. Even though
they know that it is a very challenging task. Managing adequate fund is one of the major challenges
for the young entrepreneurs. A startup needs an initial lump sum amount to manage the primary
costs like setup cost, registration cost, decoration cost, sourcing costs for different resources etc.
To maintain all these initial costs, an entrepreneur needs to engage fund for the longer period as
there is no chance to flow cash against these costs. The entrepreneurs usually spend more in the
beginning which becomes a burden later. So, it is always wise to spend as minimum as possible.
The cash flow or revenue starts when the initiator starts business operations. Initially, the revenue
comes very slowly to a startup. So, the entrepreneurs need to face financial challenges in the early
stage to survive as the cash flow is very less in the beginning but there are some fixed costs to
manage every month. To avoid the initial financial crisis, everyone should think of spending less
or keeping some extra fund in hands if possible. If the startup survives in the early stages, it needs
more money to expand the business later. So, the fund is required in every step in the
entrepreneurial journey.

What Is a New Venture?

A business venture may also be considered a small business. Many ventures will be invested in
by one or more individuals or groups with the expectation of the business bringing in a financial
gain for all backers. Most business ventures are created based on demand of the market or a lack
of supply in the market.
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Steps Involving in The Starting of a New Venture

Here are 10 steps that are required to start a business successfully. Take one step at a time, and
you'll be on your way to successful small business ownership.

Step 1: Do Your Research

Most likely you have already identified a business idea, so now it's time to balance it with a little
reality. Does your idea have the potential to succeed? You will need to run your business idea
through a validation process before you go any further.

In order for a small business to be successful, it must solve a problem, fulfill a need or offer
something the market wants.

There are a number of ways you can identify this need, including research, focus groups, and even
trial and error. As you explore the market, some of the questions you should answer include:

 Is there a need for your anticipated products/services?

 Who needs it?
 Are there other companies offering similar products/services now?
 What is the competition like?
 How will your business fit into the market?

Don't forget to ask yourself some questions, too, about starting a business before you take the
plunge.

Step 2: Make a Plan

You need a plan in order to make your business idea a reality. A business plan is a blueprint that
will guide your business from the start-up phase through establishment and eventually business
growth, and it is a must-have for all new businesses.

The good news is that there are different types of business plans for different types of businesses.

If you intend to seek financial support from an investor or financial institution, a traditional
business plan is a must. This type of business plan is generally long and thorough and has a
common set of sections that investors and banks look for when they are validating your idea.

If you don't anticipate seeking financial support, a simple one-page business plan can give you
clarity about what you hope to achieve and how you plan to do it. In fact, you can even create a
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working business plan on the back of a napkin, and improve it over time. Some kind of plan in
writing is always better than nothing.

Step 3: Plan Your Finances

Starting a small business doesn't have to require a lot of money, but it will involve some initial
investment as well as the ability to cover ongoing expenses before you are turning a profit. Put
together a spreadsheet that estimates the one-time startup costs for your business (licenses and
permits, equipment, legal fees, insurance, branding, market research, inventory, trademarking,
grand opening events, property leases, etc.), as well as what you anticipate you will need to keep
your business running for at least 12 months (rent, utilities, marketing and advertising, production,
supplies, travel expenses, employee salaries, your own salary, etc.).

Those numbers combined is the initial investment you will need.

Now that you have a rough number in mind, there are a number of ways you can fund your small
business, including:

 Financing
 Small business loans
 Small business grants
 Angel investors
 Crowdfunding

You can also attempt to get your business off the ground by bootstrapping, using as little capital
as necessary to start your business. You may find that a combination of the paths listed above work
best. The goal here, though, is to work through the options and create a plan for setting up the
capital you need to get your business off the ground.

Step 4: Choose a Business Structure

Your small business can be a sole proprietorship, a partnership, a limited liability company (LLC)
or a corporation. The business entity you choose will impact many factors from your business
name, to your liability, to how you file your taxes.

You may choose an initial business structure, and then reevaluate and change your structure as
your business grows and needs change.

Depending on the complexity of your business, it may be worth investing in a consultation from
an attorney or CPA to ensure you are making the right structure choice for your business.

Step 5: Pick and Register Your Business Name

Your business name plays a role in almost every aspect of your business, so you want it to be a
good one. Make sure you think through all of the potential implications as you explore your options
and choose your business name.
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Once you have chosen a name for your business, you will need to check if it's trademarked or
currently in use. Then, you will need to register it. A sole proprietor must register their business
name with either their state or county clerk. Corporations, LLCs, or limited partnerships typically
register their business name when the formation paperwork is filed.

Don't forget to register your domain name once you have selected your business name. Try these
options if your ideal domain name is taken.

Step 6: Get Licenses and Permits

Paperwork is a part of the process when you start your own business.

There are a variety of small business licenses and permits that may apply to your situation,
depending on the type of business you are starting and where you are located. You will need to
research what licenses and permits apply to your business during the start-up process.

Step 7: Choose Your Accounting System

Small businesses run most effectively when there are systems in place. One of the most important
systems for a small business is an accounting system.

Your accounting system is necessary in order to create and manage your budget, set your rates and
prices, conduct business with others, and file your taxes. You can set up your accounting system
yourself, or hire an accountant to take away some of the guesswork. If you decide to get started on
your own, make sure you consider these questions that are vital when choosing accounting
software.

Step 8: Set Up Your Business Location

Setting up your place of business is important for the operation of your business, whether you will
have a home office, a shared or private office space, or a retail location.

You will need to think about your location, equipment, and overall setup, and make sure your
business location works for the type of business you will be doing. You will also need to consider
if it makes more sense to buy or lease your commercial space.

Step 9: Get Your Team Ready

If you will be hiring employees, now is the time to start the process. Make sure you take the time
to outline the positions you need to fill, and the job responsibilities that are part of each position.
The Small Business Administration has an excellent guide to hiring your first employee that is
useful for new small business owners.

If you are not hiring employees, but instead outsourcing work to independent contractors, now is
the time to work with an attorney to get your independent contractor agreement in place and start
your search.
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Lastly, if you are a true solopreneur hitting the small business road alone, you may not need
employees or contractors, but you will still need your own support team. This team can be
comprised of a mentor, small business coach, or even your family, and serves as your go-to
resource for advice, motivation and reassurance when the road gets bumpy.

Step 10: Promote Your Small Business

Once your business is up and running, you need to start attracting clients and customers. You'll
want to start with the basics by writing a unique selling proposition (USP) and creating a marketing
plan. Then, explore as many small business marketing ideas as possible so you can decide how to
promote your business most effectively.

Once you have completed these business start-up activities, you will have all of the most important
bases covered. Keep in mind that success doesn't happen overnight. But use the plan you've created
to consistently work on your business, and you will increase your chances of success.

Sources of Start-Up Financing

Many entrepreneurs looking to start a business get confused on the best source of funding to seek
for their startup. With the many options there are, choosing the ideal source of financing can be
an overwhelming process; however, weighing the pros and cons of each source will help you
choose the ideal one to go ahead with. Listed below are some common funding sources, with a
brief explanation of each that will help simplify things for you.

1. Personal Savings:

First of all, personal sources are the most popular and easiest way to manage the fund. Personal
sources like family, friends, relatives and other close ones create easy access to their fund. Usually,
personal sources do not demand any legal documents, equity, mortgage, interest or any other
benefits for lending money. Moreover, personal sources inspire the young entrepreneurs to start
their ventures. In the rural areas, there are some people too who usually lend money at a high-
interest rate. Usually seasonal businessmen borrow money from them and return their money as
soon as possible as the interest rate is too high. For the long-term loan, this source is too expensive.
There is another type of personal lender in the urban areas who provide capital for business
initiatives or start-up, usually in exchange for convertible debt or ownership equity. They usually
invest their idle money in the startups. For this, they are very conscious of lending and only invest
in the growing businesses that perform very well and have less risk of return on investment, and
have regular cash flow etc. However, all these personal sources are very common and popular
method to manage the fund for the young aspiring entrepreneurs or startups as well.

This is the most appealing source of financing, because you use your own money to jumpstart
your business and don’t owe anyone else in the process.
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Pros:
 You have total control of your business, and you may do as you please with your money.
 There’s this satisfaction that you are using your own cash to fund the business.
Cons:
 If the business fails, all the hard work that you had put into your savings will go to waste.
 You may miss out on otherwise valuable guidance and mentorship from angel investors and
venture capitalists.

2. Family and Friends:

You can request your friends, family or close associates to help fund your business. This type of
funding has more to do with the relationship itself, rather than the assessment of a feasible
business plan. The aim of this type of funding is to help kick off a business to a point where it
can seek and get other types of funding.
Pros:
 Faster funding process and flexible payment methods.
Cons:
 Family and friends provide the funding without assessing the viability of a business plan
itself.
 Brings nothing to the table except for the initial capital investment.

3. Crowdfunding:

This involves funding a business by taking small amounts of capital from a large number of
people, usually via the internet. This type of funding makes use of the vast networks you’ve of
your friends, family and colleagues via different social platforms to get the word out about the
business, with the goal of attracting new investors.

Recently, crowdfunding became a convenient way to manage to fund for the startups.
Crowdfunding is the practice of funding a project or venture by raising many small amounts of
money from a large number of people, typically via the Internet. This funding option is only
available for those startups that are performing tremendously well and in growing stages. Another
fundraising option is venture capitalists (VCs). They usually invest in the innovative and high
growth businesses. Venture capital is a type of private equity, a form of financing that is provided
by firms or funds to small, early-stage, emerging firms that are deemed to have high growth
potential, or which have demonstrated high growth. As the Venture Capitalists (VCs) usually buy
a large number of shares of any businesses, they also participate in the management. So, the
startups can utilize the resources and experience of the VCs as well. Moreover, the founders of the
startups need to repay the invested amount earlier as the VCs involved in any business for the long
period.

Pros:
 Has the potential of expanding a business by getting a pool of investors who can help raise
funds.
Cons:
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 Requires time and dedication before results may be realized.

4. Angel Investors:

Angel investors are wealthy individuals who will provide funding in exchange for a share of
equity in the business. Some investors work in groups and screen deals together before providing
funds, while most work on their own.
Pros:
 Angel investors can offer valuable advice and guidance since they have experience in the
industry you’re in.
 Flexible business terms.
Cons:
 You may be forced to give up control of your business to some extent.

5. Venture Capital:

Venture capitalists are investors who put in a considerable amount of money in exchange for
equity in the business, and get returns when the business goes public or is acquired by another
company. Venture capitalists are all about the money, and only invest in businesses that have the
potential of providing good returns on their investment.

Pros:
 Venture capitalists not only provide funding, but can offer expertise and mentorship to help
develop the business.
 Venture capital funding gives the business immediate credibility and opens other doors to a
wide network of important individuals, such as future investors and partners.
Cons:
 You may be forced to give up a large chunk of your business due to the significant amount of
funding provided.

6. Bank Loans:

Bank loans are a popular source of funding for many startups. Before applying for a bank loan, it’s
important to ensure that you are well educated about the various options available, and the interest
rates that come with each option. In Bangladesh, banks are commonly known as the most
important stakes to lend money to the businesses. Majority of the entrepreneurs try to manage loan
from the banks as the second stage funding. Because the process of borrowing loan from the bank
is very hard as the bankers betted all the required documents like license of the business, business
formation deed, office rent agreement, guarantor’s information etc very carefully before
sanctioning the loan to any entrepreneurs. The bankers also evaluate the business very carefully
before funding. The biggest advantage to work with any bank is that if once any startup or business
can convince any bank for funding, then this startup or business needs not to go anywhere else for
funding. This kind of relationship with any bank is also considered as the strength to the businesses.
There are few globally recognized NGOs in Bangladesh like BRAC, Grameen Bank, Asa
Bangladesh etc. who usually provide loans under micro-finance programs to the nano, micro and
small businesses, especially in the rural areas. The representatives of these programs find the
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people who need micro financing. The borrowers usually open a small grocery shop, buy cattle or
invest in handmade craft etc. Many poor women especially in the rural areas became self-
dependent with the help of micro-finance programs in Bangladesh.

Pros:
 There are different funding options depending on your needs.
 The funding process is relatively quick if you qualify.
 You don’t have to give up control of your business.
Cons:
 Requires a lot of documentation, which can be tiring and time-consuming.
 You need educate yourself about the best option available for you; otherwise, you might end
up choosing a deal that will eventually hurt your business.
 The money has to be paid back whether the business succeeds or not, failing which may lead
to loss of your assets, if any.

7. Small Business Administration (SBA) Loans:

This involves funding from a government administration devoted to assisting small businesses to
succeed. SBA’s help small businesses get capital and ensures that a certain percentage of
contracts are awarded to the small businesses.
Pros:
 Helps improve the relationship between lenders and borrowers.
 Increased chances of obtaining a bank loan if the SBA loan is properly managed.

Cons:
 Strict qualification guidelines.

To help you choose the ideal funding source for your business, make sure to review your
financial needs, qualifications, and the urgency of financing. Some funding sources need certain
requirements to be completed before you qualify. It’s thus important to ensure you are well
educated on the various options available to you, and their respective advantages and
disadvantages.

Biggest Problems When Starting a New Venture

1.) Not enough money

2.) Not Enough Connections
3.) Not enough time
4.) Not Enough Experience
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5.) Not a good enough idea

6.) Not the right personality
7.) Don’t Know Where to Start

8.) Losing your inspiration

9.) Fear

Recommendation
As a rule of thumb, startups should always find ways of minimizing their costs. Invoice factoring
is another way of speeding up the account receivable processes in startups. In this digital age when
invoice payments are made through mobile phones, there is no harm to request immediate
payments from clients. It is also very important to secure credit before any business needs it as
they can easily find out how much cash they will likely need to survive. Finally, using accounting
software to keep tab on money coming in and out of the business is also a good idea.
Before launching the business, it is important for startups to carry out a thorough research by
investigating from suppliers to taxes to competitor prices. This approach is the bedrock for a
successful business, which needs to be viewed in holistic way so that vision for the product is
aligned with the identified target audience. Writing effective SBA business planhelps startups to
define what their business is, the market it serves, how it will conduct operations, and the money
it will make and spend.
Today’s digital technology has opened a broad spectrum of avenues for marketing in the form of
electronic, print, online, mobile, and video advertising. Startups more than ever need to be adept
at creating innovative marketing plans, placing advertisements, and letting people know the worth
of their products or services. To put it simply, a good marketing strategy has vision, mission, and
business goals. It should be able to explain the position and role of a business’s products or services
in the market. Proper marketing strategy fundamentally entails efficiency with which customers
are approached and encouraged their future loyalty towards the product or service. Technology
giant Apple Inc. is successful because of its unique marketing strategy that makes its products user
friendly and highly intuitive. Steve Jobs had the vision that people will not use Apple’s products,
they will experience them.
A dedicated team with a diverse skill set is very important for the startups to grow and succeed.
There should be a proper synergy, coordination, and communication among the members of a
team. Any team is formed by the individuals who have different range of capabilities with identical
focus. This arrangement allows the members to help each other, learn from each other, and put a
concerted effort in order to achieve success. Diversity and dedication of a team drives innovation.
The good thing of competition is that it forces the businesses to come out with the best. There is,
in fact, a whole gamut of opportunities exists for entrepreneurs because switching costs for most
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customers are low and many are willing to try new, relatively untested products or services. To
overcome competition, startups should research and analyze their niche industry; should be unique
and different in approach; and should be able to create, implement, and track their business and
marketing plan.
Conclusion
The challenges and problems are inevitable as far as the success journey of a startup is concerned.
We need to be resilient and focused towards keeping their values intact no matter what the
circumstances are. It is, therefore, to anticipate difficulties and pitfalls beforehand.

References
https://www.daily-sun.com/printversion/details/336103/2018/09/15/Funding-Options-for-
YoungEntrepreneurs-in-Bangladesh

https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/pages/start-up-financing-
sources.aspx

https://uk.ask.com/web?qo=semQuery&ad=semA&q=small%20business%20funding%20solutio
ns&o=761443&ag=fw&an=google_s&rch=nl53

https://www.smallbizdaily.com/5-most-common-problems-of-startups-and-their-solutions/
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 What is consumer surplus?

When there is a difference between the price that you pay in the market and the value that you
place on the product, then the concept of consumer surplus becomes a useful one to look at. This
is an important idea that you can use on many occasions in your exams.

 What Is a Convertible Bond?

A convertible bond is a fixed-income debt security that yields interest payments, but can be
converted into a predetermined number of common stock or equity shares. The conversion from
the bond to stock can be done at certain times during the bond's life and is usually at the
discretion of the bondholder.

 What Is Convexity?
Convexity is a measure of the curvature, or the degree of the curve, in the relationship between
bond prices and bond yields. Convexity demonstrates how the duration of a bond changes as the
interest rate changes. Portfolio managers will use convexity as a risk-management tool, to
measure and manage the portfolio's exposure to interest rate risk.

 What Is Corporate Finance?

Corporate finance is the division of finance that deals with financing, capital structuring, and
investment decisions. Corporate finance is primarily concerned with maximizing shareholder
value through long and short-term financial planning and the implementation of various
strategies. Corporate finance activities range from capital investment decisions to investment
banking.

 What is cost management

Cost management is the process of planning and controlling budget of the project. In other word
cost management predict the expenditure and reduce the project from going over the budget. The
person who executes all of the function of project management is said as the cost manager. Cost
manager estimate and control cost of the project.
Functions
 Cost manager identify cost of each part of the project.
 He keeps control of all cost incurred.
 Control the overall cost of the project.
 Keep the financial plan up to date.
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 What is financial manager

Financial management is the arts and science of managing money. In other word financial
management concentrate with the management corporation’s money. A financial manager is a
person who manage the finance of the business effectively and efficiently. Financial manager is
responsible for the capital budgeting, capital structuring, and working capital management.
Functions
 Estimate the capital required
 Determine the capital composition
 Choose the sources of fund

Difference between cost manager and financial manager

financial manager cost manager

Definition Financial manager concentrates with the Cost manager planning and
management of corporation’s money controlling budget of the
project.

parts Where capital budgeting, capital structuring, and Cost estimation and cost
working capital management are the part of the control are the part of the cost
function of the financial manager. management

Size of the Financial management is the comparative broader Cost management is smaller
concept concept than the cost management. concept than the financial
manager.

Form Financial management is not the form of the Cost management is a form of
managerial accounting managerial accounting.