Dumb Money Knowledge – Debt or Equity

How to fund a business

Debt

There are two ways that you can get a business of the ground. Usually though it takes some initial capital. The normal way a small business is started is through some form of debt. This could range from using a credit card, using your savings, or even a loan from a bank. You might be surprised that using savings to start a business is a form of debt. The reason it is considered debt is because you will be foregoing future earnings on the savings and spending it now on your business. Hopefully your business will earn more than the interest you will have to pay to service your debt. Most small business are funded this way. One of the pros of funding this way is that all the value of the business is yours. One the cons is that all the risk of failure is yours.

Equity

In today's modern world (US) we now have the ability to fund our businesses with equity. For those of us who have been around cryptocurrencies for a bit, we are quite familar with this funding. What we do when we fund the business with equity, is that we sell part of the business to get capital. A pro is that your are able to spread the risk around to others. A con is that to reduce your risk, you are giving up part of the stake in the business to others.

What I Did

Initially I started out with investing my own savings into Steem and made a few dollars. After reaping some of the benefits from this wonderful set of circumstances. I decided I wanted to spread some of the risk. I got the wife and one of my children to invest some of their hard-earned money with my cryptocurrency trading. I was able to reduce some of my risk, but gave up some of the rewards. So far I'm up over 100% YTD.

BTW, everyone should be buying EOS. To me even at the price it is at moment, is a steal. The main reason I'm pumping this tokenbecause it looks like, we just might get a block chain that is going to utilize other blockchains. To me it was a very novel idea to use Ethereum blockchain to get some equity to build another blockchain, that will use other blockchains for some of its functionality. IPFS, has enormous potential to be a game changer for storing content.