The objective of this paper is to introduce several ways that how small businesses raise capital and some concerns of each method. Raising capital from family and friend, bank, venture capitalist, and government has different criteria for entrepreneurs. The advantages and disadvantages of each method affect a person to chooses his/her way of raising capital for his/her new business.
             When people talk about starting up a new business, financial resource is usually the number one concern and a critical issue for entrepreneurs. Entrepreneurs need the initial capital to cover the start-up cost and operational cost for at least the first three months for their new business in order to survive in a competitive and unpredictable environment. The initial investment put into a new business that had the potential to become successful was known as venture capital. (Business, page 171)
             Small business would most likely the common form of business that people would start with because of ease of formation and comparatively less capital required for starting the business than a corporation. However, the venture capital for starting a new small business could vary from ten thousand to millions or even more. It immediately raises a problem and challenges for entrepreneurs. In the first place, that small business owner turns to family and friends for financial help. Borrowing money from friends and family usually puts into owner's debt. Raising funds from family and friends is usually easier because their faith is based on trusting the individual. They don't pay full attention to the business plan and business operation that causes their inability to analyze the risks of failure. "Many relationships soured because of the money issue," said Heather Douglas, editor of business magazine Sunday Star Times. Therefore, discuss what will happen in the event of business failure with family and friends, then have legal documentation draw...