An Examination of the Risks Associated With Investing in Wrightspeed Inc. Essay

As an entrepreneur it is always your goal to continue growing your company no matter the cost, but you also have a responsibility to yourself and your family to responsibly weigh the risks and rewards of personally investing in any venture. The decision to self-financing and its level are often influenced by external factors such as taxation, various constraints on access to financial markets and various legal constraints (Gomoi, 2009). In this essay we will examine the risks associated with investing in Wrightspeed Inc., as well as any alternatives that may be available to the entrepreneur to go about seeking funding for the company. Wrightspeed Inc. has reached a point where they require an infusion of capital in order to increase manufacturing capacity. There are a number of ways to acquire the necessary capital that the owner may consider the easiest but also riskiest option would be to self fund the expansion out of his own pocket. This option comes with the greatest potential risk and reward. The idea of funding the expansion out of ones own pocket is risky for a number of reasons. First, by self financing the expansion the owner is putting his personal finances at risk as potentially their families future well being. If the company ultimately fails, the entire loss of investment will hit the owners personal finances, and may put his personal belongings at risk to creditors. The second potential risk associated with funding the expansion for the business owner is that using their own money may simply not be enough. Say for instance the owner ties up his money into the expansion, and then receives a large order for their product, but because a large amount of cash is tied up in expanding the owner is struggling to fulfil the order forcing him to seek outside investment. By utilizing bank financing for investors the owner can raise more capital to ensure that they have the financial resources necessary...

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