Archive for April, 2009

Business finance actually refers to the necessity of monetary funding and the different types which are available to any given company for the continuance of its business. Financial difficulties are usually met after the initial stage of the business as internal funds have been exhausted for the establishment of the business. Monetary funding is necessary to create more money and allow the business to grow and expand.

The main facilitators or providers of funding are banks through granting loans. But private equity, hedge funds and mutual funds have also become important players in the financial market. Investments as part of the company’s assets are managed financially in careful attention to its risk. These instruments such as stocks and bonds are a good source of funding.

There are two types of financing available for businesses. Small businesses are more vulnerable to financial needs than big companies as they still try to establish their business or strive to expand it. One way of acquiring business finance is through debts. In debt finance, financial institutions grant the loan application of the borrower after assessing the risks in the business. Risks involved in the business environment of the company are evaluated because they will greatly affect the financial capacity of the company to pay its loans. However, most banks prefer to grant collateral loans as they are secured by assets or property of the borrower deemed to be enough to cover the debt. Payment on these loans is subject to the agreement between the borrower and the lender. In actual practice, creditors charge the borrower a certain amount of interest based on the principal amount of the debt which is paid together at the end of the term or in some cases, the amount received by the debtor is net of the interest.

In equity financing, investment is poured in the business in additional funds by an investor. Investors will then have a portion on the equity of the business. This is a lengthy and complex process than debt finance. If the business does not do well as expected, equity investors are not financially secured because the nature of funding is risky.

Either way of funding your business, business finance is a necessary activity to acquire assets that are helpful in the long-term operation of the business. Companies need additional fixed assets and other investments to operate effectively. Examples of these are capital items and stocks. Capital items or the fixed assets of the company are its factory or processing plant, plant equipment, land and buildings as well as the company’s vehicles. Supplies and investment in trading stocks are also part of a company’s asset. These generally boost the cash flow in the financial statement making the company more attractive and liquid among investors. Companies also need to fund for its research and product development. The expansion of the distribution market also forces company to spend on establishing branches in other places. These business developments are important to meet the profit-making objectives of the company.

Make sure that your material gift is of use
The thought of giving may be regarded as important, but when the recipient finds no use for the gift then it goes to waste. Give material gifts only when you know the recipients well enough so as to select gifts they would have acquired for themselves, or what they actually need and will surely use with pleasure.

An eco-friendly, consumable gift
Your friends will cherish your consumable gift on two occasions: first while relishing your fair-trade coffee, organic tea, fresh/dried fruits and nuts, a basket of organic fruit & vegetables, fresh flowers, etc. and next when they realize that your gift doesn’t cause a guilty feeling of having left it unused.

Be a part of your gift
Do away with material gifts. There are other green options like offering to baby-sit while your friend has an enjoyable date with his/her partner, gifting a certificate for a rejuvenating massage, or shoveling their driveway in winter (and keep the massage coupon for yourself).

Make an eco-friendly gift
If your time is taken up by a busy schedule, you can opt to gift an eco-friendly service. Think of gifting carbon offsets to a friend commuting to office, or a Zipcar membership to a friend who must have frequent recourse to taxis for augmenting their public transport schedule.

Its not just the gift that can be eco friendly, you could throw a whole Eco Friendly office party! The whole party can go green!

Gift of a service
You can still lessen material gifts by gifting any service. Services expressing humanity, such as gifting a micro-loan through Kiva for instance, arouse sentimental enthusiasm.

Give a gift to the needy
Your children will be happy when they receive post about children in another country whose better living is brought about by the gift of sheep or llamas on their behalf, through Heifer or World Gifts.

Gifts made by you show your affection
The baby sweater you have made may become a family heirloom, thereby extending the lifecycle of materials involved in your gift.

Buy gifts locally
Eat and shop locally to reduce carbon emissions A gift manufactured or cultivated locally can unravel a story of its own or be an exotic article you have found on your familiar sojourns. The environment will be spared from GHG emissions due to shipping when you are buying your gifts locally.

Choose gifts of quality
Visit vintage or secondhand shops and with a little more money and diligence you can find a gift of quality, and your selection can extend the lifecycle of its constituent materials. You can make the gift look like new by giving it a fresh paint job or wrapping some ribbon around. Your friend will cherish your high quality gift for a long time.

Give some thought about packaging
The packaging used should not add to trash going to dump. Try to make the packaging a part of the gift, like enclosing it in a scarf or keeping it inside a box that can be reused for knick-knacks. Also you can utilize reusable wrappings, like gift bags, etc. For family member and friends you can try the Sunday comics instead of usual gift wrappings from the shop.

It is not just about having a potentially saleable product or service. It is also not about relying on aggressive marketing techniques. And it is also not about gaining the most number of financial investors to launch your company, or enticing more to support a cause. These may be important elements when it comes to establishing profits, but without the right information to guide you by, all three aforementioned elements can literally go to waste. Getting the right information, particularly in your business finance books is essential especially now that most businesses are feeling the crunch of the recent recession.

This is the best time to look into the quality of information that is inherent in your company’s financial statements. With a solid research into your own expenditure, and the margin of profits, not to mention the changing demographics of your market, you can position your company for future financial growth by making more informed choices on current data that matters. More comprehensive information will allow your team to figure out how, when, and where expansion could be made in terms of business finance measures. If you continue to rely on the “tried and tested” measures, you may be seeing a lot of your competitors overtaking you at each bend on the road. Worse still, your competitors may be evolving to suit the needs of an expanding market base, while your company remains stagnant. Needless to say, with the evolutionary pace of almost all global markets, remaining stagnant is the fastest route to bankruptcy.

As you examine your financial statements, some of the questions you should be asking now should be market directed, like: Are you still in a profitable industry? Do you often find yourself spending too much time and effort on potential clients that never push through? Has your market demographics changed? Are they still asking for the same kind of product or service, or are some demanding more of one thing and less of the other? Is your market still a viable selling arena? How many complaints and returns have you had within the year, and what solutions (if any) were undertaken? Did the solutions appease the clients, or not? What are the common denominators of your best and worst customers? What are the primary reasons why you lose customers or order and how to avoid or lessen these in the future? Where can you find newer and hopefully a better market base for the next financial year?

Internal questions that should be addressed are: Did you reach your target goals in terms of sales and profitability this year? Why or why not? Does your company still offer a competitive edge in other areas, like customer service, price, speed of delivery, etc.? How is the company coping now with its cash flow, profitability and sales? Is your product and services still distinctive as compared to your competitors? What is your new goal when it comes to the growth of your market sales and net profit?

By answering these questions as accurately and as comprehensively as possible, you can garner the necessary information o get your company on the fast track once more.