Winnie opened her first Xtreme Sportz outlet six years ago. To open outlets in more locations, Winnie needs capital and wants to attract investors. How can she do this?
What will be an ideal response?
One option for obtaining capital is a loan. A business can also raise funds by exchanging ownership rights, or equity, for capital. The owners present a plan describing the firm, its products, and its expected performance to potential investors who then review the firm's books and assets. Terms of financing, how much ownership and control an investor receives, the type and quantity of stock (if any) an investor will get, and other issues can be part of the negotiations. Depending on the form of the business seeking the investment, an investor may be called a shareholder, a partner, or a member. Depending on the amount of the investment, how that amount is solicited, and what the investment buys, a firm's attempt to attract investors may have to be registered with the Securities and Exchange Commission.
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