{"id":2874,"date":"2023-02-19T16:10:58","date_gmt":"2023-02-19T16:10:58","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/fresh-take-4-3-financing-business-operations\/"},"modified":"2023-07-03T23:45:49","modified_gmt":"2023-07-03T23:45:49","slug":"fresh-take-4-3-financing-business-operations","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/introductiontobusiness\/chapter\/fresh-take-4-3-financing-business-operations\/","title":{"raw":"Fresh Take 4.3: Financing Business Operations","rendered":"Fresh Take 4.3: Financing Business Operations"},"content":{"raw":"<section class=\"textbox learningGoals\">\r\n<ul>\r\n \t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Identify sources of funding for businesses&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Identify sources of funding for businesses<\/span><\/li>\r\n \t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between borrowing in the form of bonds compared to bank loans&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between borrowing in the form of bonds compared to bank loans<\/span><\/li>\r\n \t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between private and public corporations&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between private and public corporations<\/span><\/li>\r\n \t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Define stock&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Define stock<\/span><\/li>\r\n \t<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand how businesses choose between different sources of funding&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand how businesses choose between different sources of funding<\/span><\/li>\r\n<\/ul>\r\n<\/section>\r\n<h2>Early-stage investment<\/h2>\r\nhttps:\/\/youtu.be\/h3rbyyO6IBM\r\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/WhatstheDifferencebetweenAngelInvestorsandVen.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cWhat's the Difference between Angel Investors and Venture Capitalists (VCs)?\u201d here (opens in new window).<\/span><\/a><\/p>\r\n\r\n<h2>Reinvesting Profits<\/h2>\r\nOut of all the sources of financial capital, this one is the simplest. Substract your expenses (all the money you need to spend to run the business) from your revenue (all the money flowing in from doing business) and if you have a positive number, that is your profit. Take that profit and put it towards your expenses and you have now reinvested your profit. Your business benefits without having to rely on a lender or investor.\r\n<h2>Borrowing<\/h2>\r\n<h3>The Perils of Bank Borrowing<\/h3>\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=9475139&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=DbvZL82x1xs&amp;video_target=tpm-plugin-c3b7et47-DbvZL82x1xs\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/LoanCovenantsDefinitionTypesUsesandCovenantBreaches.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cLoan Covenants | Definition, Types, Uses, and Covenant Breaches\u201d here (opens in new window).<\/span><\/a><\/p>\r\n\r\n<h3>Issuing Bonds<\/h3>\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=9475140&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=-0HQltcbglw&amp;video_target=tpm-plugin-ew4uq5a3--0HQltcbglw\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/BondsCorporateBondsMunicipalBondsGovernmentBondsetc.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cBonds (Corporate Bonds, Municipal Bonds, Government Bonds, etc.)\u201d here (opens in new window).<\/span><\/a><\/p>\r\n\r\n<h2>Going Public with an IPO<\/h2>\r\n<iframe src=\"\/\/plugin.3playmedia.com\/show?mf=9475141&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=Uax_DyTDYkE&amp;video_target=tpm-plugin-j22vmkj9-Uax_DyTDYkE\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe>\r\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/InitialPublicOfferingsIPOsExplainedinOneMinute.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cInitial Public Offerings (IPOs) Explained in One Minute\u201d here (opens in new window).<\/span><\/a><\/p>\r\n&nbsp;","rendered":"<section class=\"textbox learningGoals\">\n<ul>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Identify sources of funding for businesses&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Identify sources of funding for businesses<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between borrowing in the form of bonds compared to bank loans&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between borrowing in the form of bonds compared to bank loans<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand the difference between private and public corporations&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand the difference between private and public corporations<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Define stock&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Define stock<\/span><\/li>\n<li><span data-sheets-value=\"{&quot;1&quot;:2,&quot;2&quot;:&quot;Understand how businesses choose between different sources of funding&quot;}\" data-sheets-userformat=\"{&quot;2&quot;:15233,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:0,&quot;11&quot;:4,&quot;12&quot;:0,&quot;14&quot;:{&quot;1&quot;:2,&quot;2&quot;:0},&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:10}\">Understand how businesses choose between different sources of funding<\/span><\/li>\n<\/ul>\n<\/section>\n<h2>Early-stage investment<\/h2>\n<p><iframe loading=\"lazy\" id=\"oembed-1\" title=\"What&#39;s the Difference between Angel Investors and Venture Capitalists (VCs)?\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/h3rbyyO6IBM?feature=oembed&#38;rel=0\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/WhatstheDifferencebetweenAngelInvestorsandVen.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cWhat&#8217;s the Difference between Angel Investors and Venture Capitalists (VCs)?\u201d here (opens in new window).<\/span><\/a><\/p>\n<h2>Reinvesting Profits<\/h2>\n<p>Out of all the sources of financial capital, this one is the simplest. Substract your expenses (all the money you need to spend to run the business) from your revenue (all the money flowing in from doing business) and if you have a positive number, that is your profit. Take that profit and put it towards your expenses and you have now reinvested your profit. Your business benefits without having to rely on a lender or investor.<\/p>\n<h2>Borrowing<\/h2>\n<h3>The Perils of Bank Borrowing<\/h3>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=9475139&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=DbvZL82x1xs&amp;video_target=tpm-plugin-c3b7et47-DbvZL82x1xs\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/LoanCovenantsDefinitionTypesUsesandCovenantBreaches.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cLoan Covenants | Definition, Types, Uses, and Covenant Breaches\u201d here (opens in new window).<\/span><\/a><\/p>\n<h3>Issuing Bonds<\/h3>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=9475140&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=-0HQltcbglw&amp;video_target=tpm-plugin-ew4uq5a3--0HQltcbglw\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/BondsCorporateBondsMunicipalBondsGovernmentBondsetc.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cBonds (Corporate Bonds, Municipal Bonds, Government Bonds, etc.)\u201d here (opens in new window).<\/span><\/a><\/p>\n<h2>Going Public with an IPO<\/h2>\n<p><iframe loading=\"lazy\" src=\"\/\/plugin.3playmedia.com\/show?mf=9475141&amp;p3sdk_version=1.10.1&amp;p=20361&amp;pt=375&amp;video_id=Uax_DyTDYkE&amp;video_target=tpm-plugin-j22vmkj9-Uax_DyTDYkE\" width=\"800px\" height=\"450px\" frameborder=\"0\" marginwidth=\"0px\" marginheight=\"0px\"><\/iframe><\/p>\n<p class=\"p1\">You can view the <a href=\"https:\/\/course-building.s3.us-west-2.amazonaws.com\/Intro+to+Business\/transcripts\/InitialPublicOfferingsIPOsExplainedinOneMinute.html\" target=\"_blank\" rel=\"noopener\"><span class=\"s1\">transcript for \u201cInitial Public Offerings (IPOs) Explained in One Minute\u201d here (opens in new window).<\/span><\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"author":21,"menu_order":20,"template":"","meta":{"_candela_citation":"[{\"type\":\"copyrighted_video\",\"description\":\"What\\'s the Difference between Angel Investors and Venture Capitalists (VCs)?\",\"author\":\"Brett Cenkus\",\"organization\":\"\",\"url\":\"https:\/\/www.youtube.com\/watch?v=h3rbyyO6IBM\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Standard YouTube License\"},{\"type\":\"copyrighted_video\",\"description\":\"Loan Covenants | Definition, Types, Uses, and Covenant Breaches\",\"author\":\"Corporate Finance 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