Tuesday, November 12, 2019
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How finance can affect your business

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Running a business has to do with a lot of things, for a business to function properly it has to fulfill some certain conditions of which financing is part of it. Its an essential factor to the success of any enterprise.

Without the financing of any business or project, such endeavour will just be done in futility. Money plays a major role in ensuring that your business scales up well. It tells the health of the enterprise

HOW CAN YOU FINANCE YOUR BUSINESS

To run your business you need funding.

There are ways to fund your business conveniently, some of the ways will be highlighted shortly. Although there are some conditions to be met for you to enjoy the flow of cash to your business.

Either of the ways used to fund your business can either be classified as either debt or equity.

For debt financing, such as loans, there are some sort of demands that will be placed on you for you to be granted such as interest and scheduled payments, it could be monthly or yearly depending on the lender.

For equity financing, it’s different in that the lender takes a portion of your business, in this type of financing, you don’t have full control over it.

There is another form of financing although not as popular as the other two listed above, and its termed crowd funding. Its simply raising small funds from a large number of people to fund a business or a project.

DO YOU KNOW FINANCE CAN AFFECT THE DECISIONS YOU MAKE IN YOUR BUSINESS.

The amount of money you have in your pocket dictates your decisions, how you spend, places you visit, things you eat. So does the finances in your business affects its activities and decisions.

The finances in your business is low and you are running at a loss, you definitely wont be able to pay your staffs thereby leading to the retrenchment of some staffs

If the cash inflow is lower than the cash outflow, then you won’t be able to carry out some major projects thereby leading to your business merging with another business to carry out that project. Sometimes it leads to the business giving out some equity to acquire funds to carry out that project.

If you experience a positive cash inflow then it means more growth to your business with means labour will increase and then lead to more people being employed.

From the points given above, it is clear how your finances affects your business both decision wise and growth wise.

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