Business Finance - Strategic Planning

Whether you are starting or expanding your business you need finance to do it. This is particularly relevant for new companies that are just starting up. There are numerous avenues that can bring order to get this start-up finance and there are many different ways to open it to you, choosing the right financing that will be your business is the most important thing.

There is a saying that says 'it takes money to make money,' this applies to both new ventures. For your company to become a success requires a large amount of money to start with which can be used to get your business set up. This money will be used to buy equipment, pay rent on your property business, employing staff and ensure you have enough action to get your business going, besides being used to pay the first months of all bills.

Two of the main reasons why many new businesses fail to get anywhere beyond the point of departure is due to inadequate capital and poor business management skills, which is why fundraising is so important in the early stages of start -up of the business.

Some ways in which people choose to fund their business idea is to use the savings, but realistically not many of us have this kind of hidden money, and that is why we need outside help. You can choose to borrow money from friends or relatives if they have the financial resources to help you or you can take a credit card for the specific use to fund your business. All financing options are open to you may be divided into two sections, or debt or equity financing. Debt financing is ranked as the money that is borrowed from the various different aspects. This is finance that is required to be returned.

Some examples of debt financing are:

Bank loans or

or Credit Cards

or discovered

or Leasing

Asset finance or

All these are borrowing money in one form or another and they will require monthly repayments that will have added interest. Most people, however, use their bank as the first call to gain start-up finance regardless of whether they are going to end up paying more money back.

There are advantages and disadvantages of using a bank loan to finance a new business idea. However, the disadvantages of having a bank loan to finance your business start-ups out weigh the benefits. The advantage of using a bank loan to finance businesses include the ability to arrange a repayment holiday which means you only pay interest for a certain period of time and there is no need to turn a share of profit. The disadvantages, however, is that bank loans have strict terms and conditions and can cause liquidity problems, if you can not keep up with monthly repayments. Although bank loans are often secured against assets, and may be charged if you decide to repay the loan before the end of the loan period.
The other form of financing, equity financing, it is often overlooked that should be when in reality equity finance might be just the answer that the company is looking for. The main forms of equity finance from business angels and venture capitalists. Equity finance is money that is invested in your business in exchange for a share of the business. With equity finance benefits out-weight the disadvantages and equity is much more useful for small companies that are bank loans.

Some of the advantages of equity finance include your investor committed to your business and projects, can bring skills, experience and value of contracts for the company and can help with strategy and decision making, and often be willing to follow the financing of your business grows. Two disadvantages of equity financing is your business may suffer as you are spending time securing your business investor and the investor will own a share of your business.

The only thing you should do when choosing the start-up finance is to use an option to finance that best suits your business needs .......