case study of business finance

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This listing contains abstracts and ordering information for case studies written and published by faculty at Stanford GSB.

Publicly available cases in this collection are distributed by Harvard Business Publishing and The Case Centre .

Stanford case studies with diverse protagonists, along with case studies that build “equity fluency” by focusing on DEI-related issues and opportunities are listed in the Case Compendium developed by the Center for Equity, Gender and Leadership at the Berkeley Haas School of Business.

Udemy: The Founding Story

Adobe in 2023: transforming marketing through digital experience.

Adobe, founded in 1982, set out to develop software that would enable high-fidelity digital printing and publishing. A decade later, Adobe PDF quickly became the industry standard for preserving and sharing digital document formatting, fonts, images, and…

GoodLeap, spearheaded by Hayes Barnard, emerges as a pioneering financing platform offering comprehensive solutions for sustainable living, including solar loans, home purchasing, refinancing, and improvement loans. Barnard, with a robust background at…

Seconds to Save Lives with Viz.ai

Ajaib: building a high-growth southeast asian fintech venture, eyes on the prize: eyewa’s mena journey, hijra: building an islamic challenger bank.

Dima Djani founded Hijra in late 2018 to provide digitally-enabled financial services to businesses and consumers who followed Islamic finance principles. Islamic finance prohibited the use of usury (interest), mandated that all transactions been linked…

Polpharma Group: Transformation Through Innovation

When Markus Sieger was appointed CEO of Polpharma Group in 2016, he found himself at the helm of a company that would be deemed successful by virtually any metric. Polpharma Group included Poland’s leading pharmaceutical company and leading drug…

Stanford Health Care

• Dean Jonathan Levin

This Managing Growing Enterprises (MGE) case presents a multifaceted examination of leadership challenges in the academic sector, encompassing issues of faculty negotiation, student-faculty relations, crisis management, and institutional response to…

ClearMetal, a supply chain software-as-a-service startup, exemplifies the challenges of innovating in the global container shipping industry. Under CEO Adam Compain, the company developed a solution to reduce the costly repositioning of empty shipping…

Board Dynamics at Defy, Inc.: When is the Right Time to Raise the Next Round?

Defy, Inc. developed individual safety software solutions for highly automated aircraft operation through its FlySafe modular platform. Defy’s cofounders saw great potential in flying drones to solve the last-mile problem in deliveries. In addition to…

Founders Fund: Every Moment Happens Once

Nuveen and ecozen solutions: valuing a private equity impact investment.

In December 2021, Rekha Unnithan, CFA, received a cold outreach from Devendra Gupta, co-founder and CEO of Ecozen Solutions (“Ecozen”), an agriculture-focused cleantech business based in Pune, a major technology and manufacturing hub in India. Founded in…

APA Technologies

APA Technologies, a startup in the trucking industry, faced a significant challenge with its innovative product, the Tyro - an automatic tire inflation device. Founders Brad Miller and Jeffrey Howell, Stanford mechanical engineering students, developed…

APA Technologies (A): Just When We Were Hitting Our Stride

Apa technologies (b): no good deed goes unpunished, apa technologies (c): a potential partnership, apa technologies (d): reveal, senaca east africa (a): a family security business grapples with expansion.

Senaca East Africa, aka Sentry & Patrols, is a Kenya-based security guard firm founded in 2002 by John Kipkorir, a longtime member of the Kenyan police. At the time, there were only a few well-known Kenyan-owned security companies, and crime was rising…

Jason Scott: Creating a Dream Job to Find and Fund Entrepreneurs Across the Globe

Jason Scott’s superpower had always been his ability to connect people and ideas across industries, sectors, and geographies. After graduating from Stanford GSB, he pursued his professional North Star of finding the best entrepreneurs in the world and…

Impact Engine: Measuring Impact Across Investment Stages

Senaca east africa (b): a family security business grapples with expansion, senaca east africa (c): a family security business grapples with expansion.

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Accounting Case Studies

Top 40 Most Popular Case Studies of 2021

Two cases about Hertz claimed top spots in 2021's Top 40 Most Popular Case Studies

Two cases on the uses of debt and equity at Hertz claimed top spots in the CRDT’s (Case Research and Development Team) 2021 top 40 review of cases.

Hertz (A) took the top spot. The case details the financial structure of the rental car company through the end of 2019. Hertz (B), which ranked third in CRDT’s list, describes the company’s struggles during the early part of the COVID pandemic and its eventual need to enter Chapter 11 bankruptcy. 

The success of the Hertz cases was unprecedented for the top 40 list. Usually, cases take a number of years to gain popularity, but the Hertz cases claimed top spots in their first year of release. Hertz (A) also became the first ‘cooked’ case to top the annual review, as all of the other winners had been web-based ‘raw’ cases.

Besides introducing students to the complicated financing required to maintain an enormous fleet of cars, the Hertz cases also expanded the diversity of case protagonists. Kathyrn Marinello was the CEO of Hertz during this period and the CFO, Jamere Jackson is black.

Sandwiched between the two Hertz cases, Coffee 2016, a perennial best seller, finished second. “Glory, Glory, Man United!” a case about an English football team’s IPO made a surprise move to number four.  Cases on search fund boards, the future of malls,  Norway’s Sovereign Wealth fund, Prodigy Finance, the Mayo Clinic, and Cadbury rounded out the top ten.

Other year-end data for 2021 showed:

• Online “raw” case usage remained steady as compared to 2020 with over 35K users from 170 countries and all 50 U.S. states interacting with 196 cases.
• Fifty four percent of raw case users came from outside the U.S..
• The Yale School of Management (SOM) case study directory pages received over 160K page views from 177 countries with approximately a third originating in India followed by the U.S. and the Philippines.
• Twenty-six of the cases in the list are raw cases.
• A third of the cases feature a woman protagonist.
• Orders for Yale SOM case studies increased by almost 50% compared to 2020.
• The top 40 cases were supervised by 19 different Yale SOM faculty members, several supervising multiple cases.

CRDT compiled the Top 40 list by combining data from its case store, Google Analytics, and other measures of interest and adoption.

All of this year’s Top 40 cases are available for purchase from the Yale Management Media store .

And the Top 40 cases studies of 2021 are:

1.   Hertz Global Holdings (A): Uses of Debt and Equity

2.   Coffee 2016

3.   Hertz Global Holdings (B): Uses of Debt and Equity 2020

4.   Glory, Glory Man United!

5.   Search Fund Company Boards: How CEOs Can Build Boards to Help Them Thrive

6.   The Future of Malls: Was Decline Inevitable?

7.   Strategy for Norway's Pension Fund Global

8.   Prodigy Finance

9.   Design at Mayo

10. Cadbury

11. City Hospital Emergency Room

13. Volkswagen

14. Marina Bay Sands

15. Shake Shack IPO

16. Mastercard

17. Netflix

18. Ant Financial

19. AXA: Creating the New CR Metrics

20. IBM Corporate Service Corps

21. Business Leadership in South Africa's 1994 Reforms

22. Alternative Meat Industry

23. Children's Premier

24. Khalil Tawil and Umi (A)

25. Palm Oil 2016

26. Teach For All: Designing a Global Network

27. What's Next? Search Fund Entrepreneurs Reflect on Life After Exit

28. Searching for a Search Fund Structure: A Student Takes a Tour of Various Options

30. Project Sammaan

31. Commonfund ESG

32. Polaroid

33. Connecticut Green Bank 2018: After the Raid

34. FieldFresh Foods

35. The Alibaba Group

36. 360 State Street: Real Options

37. Herman Miller

38. AgBiome

39. Nathan Cummings Foundation

40. Toyota 2010

Case Studies in Business Finance and Financial Analysis

• © 1971
• K. Midgley ,
• R. G. Burns

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Table of contents (6 chapters)

Front matter, starting a small business.

• K. Midgley, R. G. Burns

The Effects of Budgetary and Other Governmental Measures on Profitability

Raising long-term capital, evaluating returns from long-term investment, head office integration following a merger, evaluation of an ordinary share, back matter.

• Case Studies

Bibliographic Information

Book Title : Case Studies in Business Finance and Financial Analysis

Authors : K. Midgley, R. G. Burns

DOI : https://doi.org/10.1007/978-1-349-00981-7

Publisher : Palgrave Macmillan London

eBook Packages : Palgrave Business & Management Collection , Business and Management (R0)

Copyright Information : K. Midgley and R. G. Burns 1971

Softcover ISBN : 978-0-333-11624-1 Published: 18 June 1971

eBook ISBN : 978-1-349-00981-7 Published: 18 June 1971

Edition Number : 1

Number of Pages : IV, 128

Topics : Business Finance

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7 Favorite Business Case Studies to Teach—and Why

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• Case Teaching
• Course Materials

FEATURED CASE STUDIES

The Army Crew Team . Emily Michelle David of CEIBS

ATH Technologies . Devin Shanthikumar of Paul Merage School of Business

Fabritek 1992 . Rob Austin of Ivey Business School

Lincoln Electric Co . Karin Schnarr of Wilfrid Laurier University

Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth . Gary Pisano of Harvard Business School

The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron . Francesca Gino of Harvard Business School

Warren E. Buffett, 2015 . Robert F. Bruner of Darden School of Business

To dig into what makes a compelling case study, we asked seven experienced educators who teach with—and many who write—business case studies: “What is your favorite case to teach and why?”

The resulting list of case study favorites ranges in topics from operations management and organizational structure to rebel leaders and whodunnit dramas.

1. The Army Crew Team

Emily Michelle David, Assistant Professor of Management, China Europe International Business School (CEIBS)

“I love teaching  The Army Crew Team  case because it beautifully demonstrates how a team can be so much less than the sum of its parts.

I deliver the case to executives in a nearby state-of-the-art rowing facility that features rowing machines, professional coaches, and shiny red eight-person shells.

After going through the case, they hear testimonies from former members of Chinese national crew teams before carrying their own boat to the river for a test race.

The rich learning environment helps to vividly underscore one of the case’s core messages: competition can be a double-edged sword if not properly managed.

Executives in Emily Michelle David’s organizational behavior class participate in rowing activities at a nearby facility as part of her case delivery.

Despite working for an elite headhunting firm, the executives in my most recent class were surprised to realize how much they’ve allowed their own team-building responsibilities to lapse. In the MBA pre-course, this case often leads to a rich discussion about common traps that newcomers fall into (for example, trying to do too much, too soon), which helps to poise them to both stand out in the MBA as well as prepare them for the lateral team building they will soon engage in.

Finally, I love that the post-script always gets a good laugh and serves as an early lesson that organizational behavior courses will seldom give you foolproof solutions for specific problems but will, instead, arm you with the ability to think through issues more critically.”

2. ATH Technologies

Devin Shanthikumar, Associate Professor of Accounting, Paul Merage School of Business

“As a professor at UC Irvine’s Paul Merage School of Business, and before that at Harvard Business School, I have probably taught over 100 cases. I would like to say that my favorite case is my own,   Compass Box Whisky Company . But as fun as that case is, one case beats it:  ATH Technologies  by Robert Simons and Jennifer Packard.

ATH presents a young entrepreneurial company that is bought by a much larger company. As part of the merger, ATH gets an ‘earn-out’ deal—common among high-tech industries. The company, and the class, must decide what to do to achieve the stretch earn-out goals.

ATH captures a scenario we all want to be in at some point in our careers—being part of a young, exciting, growing organization. And a scenario we all will likely face—having stretch goals that seem almost unreachable.

It forces us, as a class, to really struggle with what to do at each stage.

After we read and discuss the A case, we find out what happens next, and discuss the B case, then the C, then D, and even E. At every stage, we can:

see how our decisions play out,

figure out how to build on our successes, and

address our failures.

The case is exciting, the class discussion is dynamic and energetic, and in the end, we all go home with a memorable ‘ah-ha!’ moment.

I have taught many great cases over my career, but none are quite as fun, memorable, and effective as ATH .”

3. Fabritek 1992

Rob Austin, Professor of Information Systems, Ivey Business School

“This might seem like an odd choice, but my favorite case to teach is an old operations case called  Fabritek 1992 .

The latest version of Fabritek 1992 is dated 2009, but it is my understanding that this is a rewrite of a case that is older (probably much older). There is a Fabritek 1969 in the HBP catalog—same basic case, older dates, and numbers. That 1969 version lists no authors, so I suspect the case goes even further back; the 1969 version is, I’m guessing, a rewrite of an even older version.

There are many things I appreciate about the case. Here are a few:

It operates as a learning opportunity at many levels. At first it looks like a not-very-glamorous production job scheduling case. By the end of the case discussion, though, we’re into (operations) strategy and more. It starts out technical, then explodes into much broader relevance. As I tell participants when I’m teaching HBP's Teaching with Cases seminars —where I often use Fabritek as an example—when people first encounter this case, they almost always underestimate it.

It has great characters—especially Arthur Moreno, who looks like a troublemaker, but who, discussion reveals, might just be the smartest guy in the factory. Alums of the Harvard MBA program have told me that they remember Arthur Moreno many years later.

Almost every word in the case is important. It’s only four and a half pages of text and three pages of exhibits. This economy of words and sparsity of style have always seemed like poetry to me. I should note that this super concise, every-word-matters approach is not the ideal we usually aspire to when we write cases. Often, we include extra or superfluous information because part of our teaching objective is to provide practice in separating what matters from what doesn’t in a case. Fabritek takes a different approach, though, which fits it well.

It has a dramatic structure. It unfolds like a detective story, a sort of whodunnit. Something is wrong. There is a quality problem, and we’re not sure who or what is responsible. One person, Arthur Moreno, looks very guilty (probably too obviously guilty), but as we dig into the situation, there are many more possibilities. We spend in-class time analyzing the data (there’s a bit of math, so it covers that base, too) to determine which hypotheses are best supported by the data. And, realistically, the data doesn’t support any of the hypotheses perfectly, just some of them more than others. Also, there’s a plot twist at the end (I won’t reveal it, but here’s a hint: Arthur Moreno isn’t nearly the biggest problem in the final analysis). I have had students tell me the surprising realization at the end of the discussion gives them ‘goosebumps.’

Finally, through the unexpected plot twist, it imparts what I call a ‘wisdom lesson’ to young managers: not to be too sure of themselves and to regard the experiences of others, especially experts out on the factory floor, with great seriousness.”

4. Lincoln Electric Co.

Karin Schnarr, Assistant Professor of Policy, Wilfrid Laurier University

“As a strategy professor, my favorite case to teach is the classic 1975 Harvard case  Lincoln Electric Co.  by Norman Berg.

I use it to demonstrate to students the theory linkage between strategy and organizational structure, management processes, and leadership behavior.

This case may be an odd choice for a favorite. It occurs decades before my students were born. It is pages longer than we are told students are now willing to read. It is about manufacturing arc welding equipment in Cleveland, Ohio—a hard sell for a Canadian business classroom.

Yet, I have never come across a case that so perfectly illustrates what I want students to learn about how a company can be designed from an organizational perspective to successfully implement its strategy.

And in a time where so much focus continues to be on how to maximize shareholder value, it is refreshing to be able to discuss a publicly-traded company that is successfully pursuing a strategy that provides a fair value to shareholders while distributing value to employees through a large bonus pool, as well as value to customers by continually lowering prices.

However, to make the case resonate with today’s students, I work to make it relevant to the contemporary business environment. I link the case to multimedia clips about Lincoln Electric’s current manufacturing practices, processes, and leadership practices. My students can then see that a model that has been in place for generations is still viable and highly successful, even in our very different competitive situation.”

5. Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth

Gary Pisano, Professor of Business Administration, Harvard Business School

“My favorite case to teach these days is  Pal’s Sudden Service—Scaling an Organizational Model to Drive Growth .

I love teaching this case for three reasons:

1. It demonstrates how a company in a super-tough, highly competitive business can do very well by focusing on creating unique operating capabilities. In theory, Pal’s should have no chance against behemoths like McDonalds or Wendy’s—but it thrives because it has built a unique operating system. It’s a great example of a strategic approach to operations in action.

2. The case shows how a strategic approach to human resource and talent development at all levels really matters. This company competes in an industry not known for engaging its front-line workers. The case shows how engaging these workers can really pay off.

3. Finally, Pal’s is really unusual in its approach to growth. Most companies set growth goals (usually arbitrary ones) and then try to figure out how to ‘backfill’ the human resource and talent management gaps. They trust you can always find someone to do the job. Pal’s tackles the growth problem completely the other way around. They rigorously select and train their future managers. Only when they have a manager ready to take on their own store do they open a new one. They pace their growth off their capacity to develop talent. I find this really fascinating and so do the students I teach this case to.”

6. The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron

Francesca Gino, Professor of Business Administration, Harvard Business School

“My favorite case to teach is  The United States Air Force: ‘Chaos’ in the 99th Reconnaissance Squadron .

The case surprises students because it is about a leader, known in the unit by the nickname Chaos , who inspired his squadron to be innovative and to change in a culture that is all about not rocking the boat, and where there is a deep sense that rules should simply be followed.

For years, I studied ‘rebels,’ people who do not accept the status quo; rather, they approach work with curiosity and produce positive change in their organizations. Chaos is a rebel leader who got the level of cultural change right. Many of the leaders I’ve met over the years complain about the ‘corporate culture,’ or at least point to clear weaknesses of it; but then they throw their hands up in the air and forget about changing what they can.

Chaos is different—he didn’t go after the ‘Air Force’ culture. That would be like boiling the ocean.

Instead, he focused on his unit of control and command: The 99th squadron. He focused on enabling that group to do what it needed to do within the confines of the bigger Air Force culture. In the process, he inspired everyone on his team to be the best they can be at work.

The case leaves the classroom buzzing and inspired to take action.”

7. Warren E. Buffett, 2015

Robert F. Bruner, Professor of Business Administration, Darden School of Business

“I love teaching   Warren E. Buffett, 2015  because it energizes, exercises, and surprises students.

Buffett looms large in the business firmament and therefore attracts anyone who is eager to learn his secrets for successful investing. This generates the kind of energy that helps to break the ice among students and instructors early in a course and to lay the groundwork for good case discussion practices.

Studying Buffett’s approach to investing helps to introduce and exercise important themes that will resonate throughout a course. The case challenges students to define for themselves what it means to create value. The case discussion can easily be tailored for novices or for more advanced students.

Either way, this is not hero worship: The case affords a critical examination of the financial performance of Buffett’s firm, Berkshire Hathaway, and reveals both triumphs and stumbles. Most importantly, students can critique the purported benefits of Buffett’s conglomeration strategy and the sustainability of his investment record as the size of the firm grows very large.

By the end of the class session, students seem surprised with what they have discovered. They buzz over the paradoxes in Buffett’s philosophy and performance record. And they come away with sober respect for Buffett’s acumen and for the challenges of creating value for investors.

Surely, such sobriety is a meta-message for any mastery of finance.”

More Educator Favorites

Emily Michelle David is an assistant professor of management at China Europe International Business School (CEIBS). Her current research focuses on discovering how to make workplaces more welcoming for people of all backgrounds and personality profiles to maximize performance and avoid employee burnout. David’s work has been published in a number of scholarly journals, and she has worked as an in-house researcher at both NASA and the M.D. Anderson Cancer Center.

Devin Shanthikumar  is an associate professor and the accounting area coordinator at UCI Paul Merage School of Business. She teaches undergraduate, MBA, and executive-level courses in managerial accounting. Shanthikumar previously served on the faculty at Harvard Business School, where she taught both financial accounting and managerial accounting for MBAs, and wrote cases that are used in accounting courses across the country.

Robert D. Austin is a professor of information systems at Ivey Business School and an affiliated faculty member at Harvard Medical School. He has published widely, authoring nine books, more than 50 cases and notes, three Harvard online products, and two popular massive open online courses (MOOCs) running on the Coursera platform.

Karin Schnarr is an assistant professor of policy and the director of the Bachelor of Business Administration (BBA) program at the Lazaridis School of Business & Economics at Wilfrid Laurier University in Waterloo, Ontario, Canada where she teaches strategic management at the undergraduate, graduate, and executive levels. Schnarr has published several award-winning and best-selling cases and regularly presents at international conferences on case writing and scholarship.

Gary P. Pisano is the Harry E. Figgie, Jr. Professor of Business Administration and senior associate dean of faculty development at Harvard Business School, where he has been on the faculty since 1988. Pisano is an expert in the fields of technology and operations strategy, the management of innovation, and competitive strategy. His research and consulting experience span a range of industries including aerospace, biotechnology, pharmaceuticals, specialty chemicals, health care, nutrition, computers, software, telecommunications, and semiconductors.

Francesca Gino studies how people can have more productive, creative, and fulfilling lives. She is a professor at Harvard Business School and the author, most recently, of  Rebel Talent: Why It Pays to Break the Rules at Work and in Life . Gino regularly gives keynote speeches, delivers corporate training programs, and serves in advisory roles for firms and not-for-profit organizations across the globe.

Robert F. Bruner is a university professor at the University of Virginia, distinguished professor of business administration, and dean emeritus of the Darden School of Business. He has also held visiting appointments at Harvard and Columbia universities in the United States, at INSEAD in France, and at IESE in Spain. He is the author, co-author, or editor of more than 20 books on finance, management, and teaching. Currently, he teaches and writes in finance and management.

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What is Business Finance? 4 Main Types To Consider in 2024

5 minute read

The 4 Main Types of Business Finance

Debt Financing

Equity financing, mezzanine financing.

Off-balance Sheet Financing

If you’re starting a business, you need to understand business finance. While this initially sounds obvious and simple—perhaps some people think it’s simply making sure your business has enough money—this is far from the case.

Businesses are complicated ventures with various levels and types of risks involved. For example, you may need to operate at a constant loss for extended periods of time to grow your business into a sustainable profit-generating venture. How will you finance operating at a loss? What options do you have? 

Let’s dive into what those may be – into what business finance is. 

What Is Business Finance?

Business finance is the array of strategies and instruments that founders and business owners employ to secure the capital necessary for their venture's inception, growth, and expansion.

Let’s look at the various ways to finance business organizations. The most common include: 

• Debt Financing: Loans obtained from financial institutions or through credit facilities.
• Equity Financing: Selling a stake in the business to investors in exchange for capital.
• Mezzanine Financing : A hybrid model combining elements of debt and equity financing.
• Alternative Funding includes support from friends and family, angel investors, crowdfunding, and government grants or loans.
• Off-Balance Sheet Financing (OBSF): Financial activities that do not appear on the company's balance sheet.

Why Is Business Finance Important?

Understanding and managing business finance is crucial for several reasons. It enables entrepreneurs to maintain solvency, invest in new opportunities, and manage cash flow efficiently. That’s why financial analysis is a key part of good corporate financial management. 

By securing adequate financing, businesses can support day-to-day operations, mitigate risks, and pursue expansion initiatives without compromising their long-term viability.

While taking on more debt can boost a company's profitability by enabling greater expansion, it also raises the risk of insolvency, potentially leading to bankruptcy. You’ll have to keep an eye on balancing these future risks and profitability that sustains the enduring value of the company's finances.

Types of Business Financing

With that in mind, let’s explore the types of financing with real-life examples.

Debt financing involves borrowing funds that are to be repaid over time, typically with interest. It's a popular choice for businesses that qualify for loans and prefer not to dilute ownership. Loans obtained from financial institutions or through credit facilities often carry interest rates influenced by the broader financial markets.

While debt can be right for your business to grow, it also brings risks, including financial strain due to the high short-term repayments.

​​Before becoming the giant it is today, Netflix secured debt financing by raising millions of dollars through a debt offering. This strategic move allowed Netflix to invest heavily in its streaming service content and technology, setting the stage for its transformation into a leading global streaming service.

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In equity financing, you would exchange a portion of your business’ ownership for capital investment. This option is attractive for startups and growth-stage companies seeking significant funding without the immediate burden of repayments. However, it requires relinquishing a portion of potential profits and sometimes some control of your company, as well. 

Google's initial public offering (IPO) in 2004 is a standout example of equity financing. By going public and selling shares to investors, Google raised billions of dollars , which fueled its expansion and innovation and solidified its status as a tech powerhouse.

Mezzanine financing blends debt and equity financing. It offers flexibility in repayment terms and can include options for lenders to convert debt into equity. This financing type is best suited for companies with a clear growth trajectory.

In the mid-2000s, Tesla Motors (now Tesla, Inc.) utilized mezzanine financing by securing a USD 40 million convertible debt financing round. This financing was critical in allowing Tesla to continue its development of the Roadster, its first electric vehicle, at a crucial time in the company's history.

Off-Balance Sheet Financing

Off-balance sheet financing (OBSF) is an accounting tactic where companies record certain assets or liabilities in a manner that keeps them off the company's balance sheet, aiming to maintain low debt-to-equity (D/E) and leverage ratios. This method can involve engagements with financial institutions that facilitate its execution, such as consulting, accounting, or sometimes even law firms. 

This is where precise financial analysis is key to ensure no mistakes are made when engaging in this kind of sophisticated financial management.

Note : OBSF, while legal and potentially beneficial for business finance, is legally risky due to complex regulations and the possibility of financial misrepresentation.

Enron famously used off-balance sheet financing in the late 1990s and early 2000s to hide debt and inflate profits. Enron's use of OBSF contributed to its dramatic collapse, serving as a cautionary tale about the potential misuse of complex financial instruments.

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Other Forms of Financing

Crowdfunding.

Crowdfunding allows businesses to raise small amounts of money from a large number of people, typically via the Internet. This method can be used to fund startups, projects, or products.

Pebble Technology used Kickstarter , a popular crowdfunding platform, to fund the development of its Pebble smartwatches. In 2012, Pebble raised over USD 10 million from 68,929 backers, becoming one of the most successful crowdfunding campaigns at the time.

Government Grants or Loans

Governments often provide grants or loans to support businesses, especially those in critical sectors or involved in innovation and research.

Broader financial markets, such as federal interest rates, can influence how willing governments are to provide loans. If rates are low, loan offerings will be plentiful.

An example of this type of financing method is Tesla, Inc., receiving a USD 465 million loan from the U.S. Department of Energy in 2010 under the Advanced Technology Vehicles Manufacturing Loan Program. This loan was crucial for Tesla to develop its Model S sedan and build its first major manufacturing facility, the Tesla Factory in Fremont, California.

Friends and Family Financing

Many businesses start with funds from friends and family. This type of business finance is based on personal relationships and can be a first step before seeking external investment.

Perhaps one of the most successful stories of “family financing” is the story of Amazon founder Jeff Bezos raising about USD 250,000 from his parents to start Amazon in the mid-1990s. This initial investment supported Amazon's transition from a small online bookstore to one of the world's largest ecommerce and technology companies.

Business finance is a critical pillar of business success. It requires a strategic approach, a deep understanding of the available financing options, and a commitment to ethical financial management. By embracing these principles and leveraging the insights and examples presented in this guide, entrepreneurs can position themselves for success in the competitive business landscape. Remember, the journey of business finance is ongoing, and staying informed and adaptable is key to navigating its challenges and opportunities.

How do businesses get financed?

Businesses get financed through a variety of sources, such as debt financing, equity financing, and so on. Note that raising funds is not the only aspect of business finance. Planning, managing cash flow, and making strategic decisions are all part of business finance, too.

How are most small businesses funded?

After exhausting personal resources, the next most common sources are the aforementioned sources - debt financing, equity financing, mezzanine financing, and so on.

What are the 3 F's of business financing?

The 3 F's of business financing—Family, Friends, and Fools—describe early funding sources for startups. "Fools" humorously denotes investors who back ventures at their riskiest initial stages, often before a solid business model is established.

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Want to start a business? 5 Florida cities deemed the best for entrepreneurs, says WalletHub

Sunday, April 28, kicks off National Small Business Week, with no shortages of businesses to support in the Sunshine State.

WalletHub released a new report on  2024′s Best Large Cities to Start a Business , with five Florida cities taking up the Top 10 slots.

“Starting a business can be very scary, considering one in every five startups doesn’t make it past the first year," Cassandra Happe, WalletHub analyst, said. "That’s why it’s especially important to live in a city that provides an environment where new businesses can thrive, with enough capital, workers and customers to keep it going long-term.”

What makes a city best for starting a business?

In order to determine the best cities for launching a business, WalletHub compared 100 cities, across three key dimensions:

• Business environment
• Access to resources
• Business costs

Its sample considers only the city proper in each case, excluding cities in the surrounding metro area.

What is the best U.S. city to start a business? Hint — it's found in Florida

WalletHub's study found that Orlando is the best large city to start a business in, due in part to the fact that the number of small businesses has grown faster than in most other cities.

"It’s also one of the top cities on the Kauffman Early-Stage Entrepreneurship Index, which means that in addition to Orlando having a lot of startups, those startups also have a high survival rate," WalletHub experts write. "One of the reasons why startups are so prevalent and successful in Orlando is that the city has a very high number of investors per capita, so new businesses are able to get the funding that they need to survive and thrive."

Starting a business in Orlando:

• 1st  – Growth in number of small businesses
• 42nd  – Labor costs
• 45th  – Cost of living
• 20th  – Length of average workweek (in hours)
• 31st  – Share of college-educated population
• 24th  – Industry variety

Although Orlando is known as a retirement haven, it has one of the highest growth rates for the working-age population, so businesses have plenty of potential new employees.

What are the Top 10 U.S. cities to start a business?

Within the Top 10 slots, Florida cities take up five. Here's all the cities that make up the top list:

• Charlotte, North Carolina
• Jacksonville
• Atlanta, Georgia
• Forth Worth, Texas
• Austin, Texas
• Durham, North Carolina
• St. Petersburg

WalletHub also dived deeper into the second best city for entrepreneurs, Tampa taking the title. The company highlighted its low corporate tax rate, allowing businesses to keep more of their revenue. It also has a high number of investors per capita, and the combination of low taxes and high capital gives businesses more resources to survive the difficult initial years.

"The monetary benefits of Tampa are evident in the fact that the city scores very high on the Entrepreneurial Activity Index, which indicates that there is a large number of startups in the city and those startups have a high survival rate."

What are the advantages and disadvantages of starting a business in a big city?

Talking with various business owners and experts, WalletHub collected some advice and wisdom for potential entrepreneurs. They asked their experts about the pros and cons of starting a business in a big city.

Miranda J. Welbourne Eleazar , assistant professor of management and entrepreneurship at the University of Iowa, shared that big g cities provide valuable opportunities in terms of networks, co-working spaces, and potential customers, co-founders, and employees. However, there's some down sides.

" … they come with greater costs and competition. It may be hard to get up and running if you cannot afford the basic necessities of your new business such as employees and real estate," Welbourne Eleazar said. "It may also be harder to stand out if many competitors are providing a similar product or service."

Felipe G. Massa , associate professor at the University of Vermont, addressed that while bigger cities are hubs for human and financial capital, smaller cities are often more supportive of homegrown entrepreneurial efforts.

"You are more likely to get support from mentors, have customers who care deeply about your success, and have better access to government and university support."

Want to start a business? WalletHub asks experts to give tips for aspiring entrepreneurs

In addition to general wisdom on starting a business in a large city, WalletHub's panel of experts also shared their tips to upcoming entrepreneurs.

Christopher E. Stevens , associate professor of entrepreneurship at Gonzaga University, advised those to "start small and realistic."

"Early-stage venture founding is a risky proposition, and it makes a difference if you approach it with realistic goals, a network of support and advice in place, and if you scale your goals around what is both realistic and manageable – especially if most of your resources will come from your personal savings or credit, as it does with most small businesses started in the US," Stevens said.

Dr. Briana Stenard , associate professor of management and entrepreneurship at Mercer University, recommended to start your business in the leanest way you can. She added if you start leanly, you can develop a customer base and collect feedback on your prices and products/services while saving up money for your potential business. 

"You will prove the model before you spend money on physical space. This would allow you to save up enough capital from your lean business to fund the growth/expansion of your business," Stenard said.