With the ever-increasing economic activity in the country at unprecedented scales, businesses are adding on like never before. The opportunities being offered are numerous in the present day economy with abundance of cash in everyone’s pocket and a keenness to spend money like never before.
Gone are those days when people were skeptical of starting a business. The chances of failure of a businessventure today is much lesser with better forex reserves, better foreign trade, better economic environment, more avenues of trade and most importantly better availability of finance for business.
Perhaps the most important reason for so many business ventures of today must be the easy availability of business finance both in terms of quantum of money available as well as the attractive rate of interests prevailing now. The availability of such finance has also played a major role in the mega expansions that we get to see all around of the various industries around us.
With easy availability of money in the open market today, the process of obtaining finance for business is much easier today. The type of finance one would choose for his business depends upon a lot of factors- size of business, age of the firm, market capitalization if exists on date, product mix of company, long term goals of the company, prevailing rate of interest and availability of capital, dependability of share market etc.
The capital from shares is always considered to be the cheapest but the company ownership is diluted with the shares being given to the public. Shares are a very common means of inviting capital for small, medium and even big sized business today. However, the share pricing is beyond the control of the company performance and can turn things around in an unexpected manner for the company, against the liking of the entrepreneur.
Own assets were traditionally used to build up the business but in today’s world, with very high amount of resources required, this would not be enough in most of the cases. Also to be understood is the fact that most of the entrepreneurs are highly educated people with not much inherited wealth. Own assets are totally up to the discretion of the director board and hence, if there are other finance venture from where one could get finance; those are preferred more often than not. However, a minimum amount of own assets is considered mandatory for seeking for other types of funds like loan or equity and therefore it is important to keep a portion of this as reserve.
The next and the most common of all the means of getting finance for your business is the banking loan. It is much easier to get a banking loan for your business today, thanks to the easy availability of money and relaxation in the legalities before obtaining the loan. Bankings give loan against a combination of fixed and liquid assets.
Banking has to be produced enough evidence by the entrepreneur to prove that the money being sanctioned is actually going to be used for the purpose it is being given. The client has to produce documents like his company’s previous balance sheet, cash flow/fund flow figures and a whole lot of other documents proving the performance of the company.
For anyone who has started a business, there are some important tips to ensure that the business does not erode away so soon. As a new businessman, one has to keep a very close watch on the in/outflow of money. The planning of what to spend where and how has to be very systematically done in order to avoid wastage. Control is thus the most important of all the activities of the businessman.
At the same time, one should be smart enough to estimate when to get out if at all the business is not making the move in the right direction and in the right magnitude. This is most important so that the man resurrects and puts himself into the next venture if this one is not going to click for whatever reason!