Entrepreneurial Marketing

CHAPTER 8Creativity and the Balance Sheet: Securing Funding for Imaginative Capabilities

If a company has a powerful creative ability and can produce innovations that lead to profitability, or at least has the potential to generate profits in the future, it will attract investors. The word investment means that investors will contribute their money to the company and expect a return. These investors automatically become shareholders in the company. As implied, investors are not loan providers.

If the intention is to provide loans, one will see only the company's ability to pay interest on loans and return the loan principal within a certain period. The party lending the money does not care about various creative ideas or processes in a company. It is interested in knowing that the company can repay the principal loan plus the agreed‐on interest rate. In a default situation, the borrower will submit a request to bankrupt the company. The lender will have the right to take existing assets to replace the loan provided.

Given this, we can relate creative capabilities to what happens in the company's balance sheet depending on how one party appreciates creativity and whether creativity is indeed a primary consideration.

Lender Perspective

Lenders or debtholders will be concerned only about the company's revenue because, from that amount, the company will pay the principal and interest of the loan. Sometimes, companies sell some of their shares to generate cash, which can also ...