Why are Financial Instruments Important in Entrepreneurship?
Financial instruments play a pivotal role in the growth and sustainability of a startup or any entrepreneurial venture. Here are a few reasons why:
Capital Raising: Entrepreneurs can raise the necessary capital to start or expand their businesses through various financial instruments. Risk Management: Financial instruments like derivatives can help in managing risks associated with currency fluctuations, interest rate changes, and other market variables. Ownership and Control: The choice between equity and debt affects the ownership structure and control of the company. Equity dilutes ownership, while debt does not. Financial Flexibility: Having access to different types of financial instruments provides flexibility in managing cash flow and financing needs.