Running Heading: Able Planet Case Study Able Planet Case Study QUESTION Entrepreneurs that are starting their own business face different obstacles while raising capitals for investment purpose. Either entrepreneurs are starting a new business or expanding their existing business, they do face several obstacles while raising funds. The first option for most of the entrepreneurs is to go commercial banks for loans and small business bank loans generally give loans up to $100,000. However, entrepreneurs that are looking to raise capital in the range of $100,000 to $3 million face the greatest obstacles because of the vacuum that exists in the level of financing (Zimmerer, Scarborough, and Wilson, 2008).
Also as the current economic situation has been demoralizing for entrepreneurs and investors, this is another reason why currently investors have been facing a lot more problems in raising capital than they would face if the performance of economy was a bit better. QUESTION # 2: Kevin Semcken requires $1.5 million capital for Able Planet and capital can be raised either through debt financing or by raising equity. The capital of $1.5 million is required to manage current operations for Linux as well as build the Sound Fit prototypes.
At the same time, the capital is required to promote both the brands of the company to both new as well as existing customers of the company so that the revenues of the company is improved and profitability could be enhanced. So, considering the situation of Kevin Semcken capital can be raised either through debt financing and equity. However banks are not willing to lend the company loan therefore he can issue bonds to raise capital if he wants to raise money through debt financing.
On the other hand, if Kevin Semcken wants to raise money through equity then he needs to float shares in the market. Because investors might not be willing to invest and buy shares of the company, therefore floating preferred stocks would be a good idea. Kevin Semcken should also try to approach different angle investors who have previously financed in different businesses as they would be able to better understand the potential of the business. In addition to this, he should go to small business investment companies which are looking to make investment in different opportunities and expanding businesses.
QUESTION # 3: Able Planet February 03, 2012 To: Kevin Semcken From: Subject: How to approach Potential Lenders And Investors Raising capital is difficult for small business particularly businesses that have been recently started and are trying to expand their operations. In order to improve the chances of raising capital, you need to show and convince the investors and potential lenders about the opportunities that have been identified. You need to explain the investors about the benefits of how Sound Fit to the company, investors as well as industry.
Also you need to explain how Sound Fit could be a revolutionary product as it would be able to enhance the performance of earphones to a great extent. In addition to this, you need to explain investors that Able Planet has been operating in the industry and its sales have been increasing over the past few months indicating that the consumers are aware about the company and its offerings. In addition to this, target market is aware about the company and therefore when Able Planet would be introducing new product, the consumers would know about the company and thus it would be helpful in gaining attention of the target market immediately.
REFERENCES Zimmerer, T., Scarborough, N., and Wilson, D. (2007). Essentials of entrepreneurship and small business management. New Jersey: Prentice Hall.