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Why entrepreneurs arrange finance from multiple sources throughout the life of the business

Why entrepreneurs arrange finance from multiple sources throughout the life of the business. WHAT IS FINANCING?. Finance is the process of creating, moving and using money, enabling the flow of money through a business.

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Why entrepreneurs arrange finance from multiple sources throughout the life of the business

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  1. Why entrepreneurs arrange finance from multiple sources throughout the life of the business

  2. WHAT IS FINANCING? Finance is the process of creating, moving and using money, enabling the flow of money through a business. Finance is one of the most important aspects of business management and includes decisions related to the use and acquisition of funds for the enterprise

  3. SOURCES OF FINANCE DEBT FINANCING BANK LOANS CREDIT UNIONS CREDIT PURCHASE LEASE DEBENTURES EQUITY FINANCING • PERSONAL SAVINGS • PARTHNERSHIP (MEMBERSHIP CONTRIBUTIONS) • ISSUE OF SHARES

  4. WHY MULTIPLE-SOURCE FINANCING? GROWTH AND EXPANSION CAPITAL REQUIREMENTS PRELIMINARY EXPENSES SURVIVE COMPETITON ENSURE CONTINUITY LOW PERSONAL WEALTH IMPROVE WORKING CAPITAL MEETING FINANCIAL OBLIGATIONS

  5. GROWTH AND EXPANSION • Every entrepreneur desires to see his or her business grow. In order to achieve this, higher forms of investment need to be made. Expanding a business will mean more human resource, machinery, storage facilities among others. These will all require financial assistance in order to achieve.

  6. CAPITAL REQUIREMENTS • The nature of some businesses is such that one will have to invest a lot of money in order to even start the business. Many individuals do not have that kind of money to finance such business ideas and to keep the business running. In order to arrive at the capital needed, other sources of finance must be arranged.

  7. PRELIMINARY EXPENSES Even before the business gets into operation, certain expenditure will be incurred in bringing the business into being. In order to maintain enough money to finance the actual business process, the entrepreneur will need to arrange other source of funding.

  8. SURVIVE COMPETITION To be able to survive the competition on the market; many strategies have to be adopted like advertisement, promotion and others. These usually require some heavy financial investment. Thus a business needs to arrange other sources since the owner’s equity or capital cannot do all this

  9. ENSURING CONTINUITY Keeping your business alive means seeing it move from a simple sole proprietorship to other higher forms of business. This will mean embracing other means of finance like partnership or the issue of shares.

  10. LOW PERSONAL WEALTH Many people do not have enough personal wealth to start businesses, therefore borrowing from other sources to complement their little savings would be a sure way to a successful business

  11. IMPROVE WORKING CAPITAL Working capital is defined as money used by a business as operating cash to produce profitable revenues. Businesses may need working capital at some point during their operational lifetime. Many businesses face low cash flow issues in the business environment. For this reason entrepreneurs arrange other sources to keep the business running.

  12. MEETING FINANCIAL OBLIGATIONS Salaries and wages, rents and rates, utilities, and other fixed expenses in business are sometimes incurred before profit is made or revenue is gained. Finance may have to be arranged from other sources to defray such cost so that when revenue is made, the loan will be paid back.

  13. CONCLUSION • What is financing? • Types of financing • Equity financing • Debt financing • Reasons for multiple-source financing

  14. GROWTH AND EXPANSION CAPITAL REQUIREMENTS PRELIMINARY EXPENSES SURVIVE COMPETITON ENSURE CONTINUITY LOW PERSONAL WEALTH IMPROVE WORKING CAPITAL MEETING FINANCIAL OBLIGATIONS

  15. End of Presentation

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