Business Finance and Corporate Value
The primary goal of business finance is to maximise corporate value while also reducing a firm's financial risk. Whether you are starting a business, expanding it or investing in it to keep it competitive you are going to need finance help at some stage of your business venture. Funding is one of the main keys to success in business and without the correct form and the right amount your venture is most likely to fail.
You may need to cover day-to-day expenses or you might need to cover the cost of new equipment. There are a lot of aspects within your company that will cost and that will need to be covered by funding; the rent or mortgage on your premises, all of the equipment that you will need to get your business going, all of your bills for the first few months and all of your staff wages. The finance that you gain will be used to pretty much run your company for the first few months of it being in existence, which is why it is so important that you get the right amount of finance to ensure you can run your venture.
When you are looking and seeking out your funding there are many avenues that are open to you such as the following:
o Loans
o Overdrafts
o Credit cards
o Family and friends
o Government grants
o Business angels
o Venture capitalists
When you are choosing and applying for your finance it is important that you keep the people who matter in the know and that you ensure you recognise the needs of people involved in your business, for example banks and the Inland Revenue, if you keep people informed they are more likely to be sympathetic to your needs. You should also aim to raise more cash than you need that way you can rest assure that all of your business expenses will be taken care of as the last thing you want to be doing is going back to your money lender and asking for more money.
If you are about to approach an avenue for capital, stop! Do you have your business plan? Your plan is a written statement of intent, it details everything that you want from your business and how you intend on achieving it. One of the sections within your plan will detail your financial forecast. It will describe all of your financial outgoings and how you intend on funding your business, which will include how much capital you are hoping to gain from which ever financial avenue you approach. Your business plan will demonstrate what you require your finance for. It will show why you need the amount that you do and how you intend to spend it. If your finance is coming from aspects such as a bank loan, which will need to be paid back, your business plan will describe how it will be repaid.
Business finance is what will make or break your business so it is essential that you get it right first time.