Capital Sourcing for Small Scale Business Enterprises
Both finance and accounting play vital roles in the success of any business and thus this aspect should be treated with all carefulness while employing experts in these areas. Owing to this, entrepreneurs and business owners should endeavour to keep accurate financial records. This article seeks to explain the major functions and importance of financial management in businesses.
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Finance function is a part of the general planning and control functions of any manager or entrepreneur. It grossly involves and has to do with a series of decisions and actions at different phases of a company, industry or institution. In small scale enterprises or businesses, when dealing with financial or money issues, the logical starting point is the decision on how to source or realize the take-off capital. Without ascertain ways to source for a business capital, it could perhaps be very difficult to start the business.
Now, they options for capital sourcing for any business are quite numerous and they could likely include partnership with other persons or companies that have interest for the said business, conversion of personal savings to investment capital, borrowing from institutions like banks or from individuals (friends and families). However, intending business owners have the liberty to choose from any of the options based on their preferences.
In a case where the businessman intends to be the sole owner of the business, he might decide to look away from the partnership and limited liability options. Borrowing or loan taking could then be his possible options. On the technical side of capital sourcing, any intending business owner should do well to consider the ease with which funds can be accessed while also looking at the cost of acquiring the needed funds.
Take-off funds should always be raised from the capital market owing to the fact that the funds are usually long term in nature. But raising funds for small scale enterprises or businesses could be a bit difficult task being that they tend to not have any track record which is what helps in gaining trust from the capital market. Financial institutions such as banks operate under such stringent rules that seldom favour the new small-scale businessman. However, in these cases, there are numerous alternative sources of capital sourcing like partnership, borrowing etc.
Capital is very integral in starting a business; in fact it is the most vital part. Hence. new businessmen should ensure that proper capital sourcing is being put in place. Small scale businesses have their way of contributing to the economies hence, financial institutions should endeavour to make their conditions moderate and easy to fulfil.
Hi @tomlee, this is very important what you mentioned, and I think once this whole Pandemic process is over it will be even more important.
I say this because unfortunately many small businesses that were just starting up or had little time to operate, will undoubtedly go bankrupt. The way to get back on track will be with support. The large transnationals, even if they have losses with this, can endure this difficult trance. But not the small ones.
However, the big ones are favored with loans, not the small or medium ones... it is unfair. Although I understand the banks to take shelter, of course.
@tipu curate
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A business formation, in which one person owns all the assets of the business in his or her own name. A person who does business for himself or herself and who does business without formally creating a separate business organization is engaged in the operation of a sole proprietorship. business formation has its own importance. Many small businesses operate as sole proprietorships, including professionals, consultants, and other service businesses.