You are the owner of Mobile Jewels, an online company that sells accessories for mobile phones. You were able to start the company with your savings and have used it for purchasing supplies, tools, packaging, and a lease on a small workspace.
Mobile Jewels launched last month and sales are steady, yet not as good as you expected. You have met with a small business counselor for help, and the small business counselor suggested that you invest in marketing for your business.
After discussing Mobile Jewels and its marketing needs with a consultant, it was determined that you should invest $50,000 in marketing for the company over the next year. The marketing budget would include both traditional and nontraditional advertising, exhibit space at conferences, and involvement in community events.
While you want to move forward with the marketing plan provided by the consultant, you do not have $50,000. The following are options available to you for financing. You will meet with the small business counselor to discuss the financing options, the benefits and risks, and make a final decision.
- Bank loan/line of credit – Explain the pros and cons of taking out a $50,000 loan from your bank. Explain the risks involved with taking the loan out in your name and the risks in opening a line of credit for the business. Describe criteria used by the bank to determine approval.
- Venture Capital – Explain venture capital, benefits and risks involved, how to explore venture capital options, and how equity stakes are involved.
- Crowdfunding – Explain crowdfunding and ways a business can provide incentive by rewarding donors for their contributions.
