One of the first financial choices a business must make is how to source funding. There are several options available, including equity financing, debt financing, and bootstrapping.
- Equity Financing: Involves selling shares of the company to raise capital. This option does not require repayment but dilutes ownership. - Debt Financing: Involves borrowing money that must be repaid with interest. While it does not dilute ownership, it adds financial obligations. - Bootstrapping: Involves using personal savings or reinvesting profits to fund the business. This option maintains full control but may limit growth potential.