Things to Consider Related to Business Finance
Things to Consider Related to Business Finance
Business finance is not just about accounting, although accounting is a necessary part of any type of finance. Essentially, a business must maximise its worth. The way to do this is to balance any type of risk associated with the business and the profits it makes. Anyone considering opening a business needs to consider a few key questions in business finance.
- What projects will be the focus of my business? Where do I want to put my funds?
- From where will the funds come to put my business plan into action?
- How will any profits from my project be distributed? How much do I want to put back into the company and how much do I want to distribute to owners or stock holders?
- Do I want to invest some of the profits? Is investing too much of a risk or will it increase the value of my company?
By putting a great deal of thought and planning into the above (investment, financing, dividends and fund management), the business finance of your company will lie on a solid foundation.
But, how do you begin to finance a business once you have a business plan? Small business, especially, should rely on the following sources for business financing:
· Venture capital and Angel Investors
· Small Business Administration Guaranteed Loans
· Community bank loans
· Micro-loans
· Crowd funding
· Asset-backed lending
· Peer to peer lending
A couple of the above sources are old ideas (e.g. venture capital and SBA loans). But crowd funding, micro-loans and peer-to-peer lending are new viable ideas fuelled by the internet. Individuals have made millions of start-up dollars by simply posting an idea on a crowd funding website. Creativity and flexibility is always crucial to the development of business finance.