A Plan for Growth Essay Example | Topics and Well Written Essays - 500 words

A Plan for Growth - Essay Example Another alternative that is available for Andy involves equity financing. Unlike debt, equity financing for small businesses undergoing expansion are less risky. Equity financing includes seeking fund from angel investors and venture capitalists. Angel investors are affluent individuals who are willing to invest in an expansion in quest for profit and other personal interests like involvement in the business operation. Venture capitalists, on the other hand are professional investors who are only seeking high returns for their money (Ward, 2000). There are various pros and cons in using the financing alternatives listed in the previous question. In general, using debt financing is advantageous to Andy as his ownership in the company is not diluted. Also as creditors will have no ownership in the business, they cannot meddle with the decisions and policies implemented to run the business (Growing Your Business, 2006). However, utilizing debt financing will leave an obligation to the company to pay interest at certain periods. This will be very detrimental to the company especially if Custom Stitches is unable to generate a profit.