Why entrepreneurs arrange finance from

multiple sources throughout the life of

the business

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

WHAT IS FINANCING?

SOURCES OF FINANCE

EQUITY FINANCING

PERSONAL SAVINGS PARTHNERSHIP

(MEMBERSHIP CONTRIBUTIONS)

ISSUE OF SHARES

DEBT FINANCING

BANK LOANS CREDIT UNIONS CREDIT PURCHASE LEASE DEBENTURES

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

WHY MULTIPLE-SOURCE FINANCING?

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.

GROWTH AND EXPANSION

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.

CAPITAL REQUIREMENTS

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.

PRELIMINARY EXPENSES

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

SURVIVE COMPETITION

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.

ENSURING CONTINUITY

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

LOW PERSONAL WEALTH

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.

IMPROVE WORKING CAPITAL

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.

MEETING FINANCIAL OBLIGATIONS

What is financing? Types of financing

Equity financing Debt financing

Reasons for multiple-source financing

CONCLUSION

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

End of Presentation