9. Factoring the Debt: There is another option for business that it can factor the debts to financial institutions. Keeping a certain commission, the payment can be collected in advance. .
1.3 Evaluation of Source of Finance .
In this stage of the paper, the sources of funds that are most suitable for the firm are described with pros and cons.
1. Friends and Family: This is one of the most viable options for the entrepreneur if the people around him have surplus funds. The main advantage of this source is that it costs very low. The main disadvantage of this option is the limitation of availability of adequate funds (Ross, Westerfield and Jordan, 2013).
2. Venture Capital Firm: The venture capital firm also can channel money. However, to collect fund from this option the entrepreneur may need to compromise a lot as these firms pose some hard and fast conditions.
3. Bank Loans: Though bank loans seem to be available, it is very tough for an initial business firm to collect money from this source. Moreover, the cost of capital is too high.
4. Angel Investors: The entrepreneur can also search for angel investors, but is not an easy to have. Moreover, the risk of not having a consensus is also very high for this source.
5. Capital Market: if the entrepreneur wants to make the firm a public limited one, then it is the most viable option. However, some terms and conditions imposed by the SEC of capital market have to be fulfilled. The main advantage of this source is low cost of capital with adequate chances of collecting enough funds. The main disadvantage for this source of fund is that the control may go out of the hands of entrepreneur which is generally known as dilution of power. The entrepreneur intends to run the restaurant as sole proprietorship. For this reason, this option is not viable for the entrepreneur.
6. Long Term Borrowing: As the business will be a sole proprietorship business, there is not chance that the firm can distribute bonds.
