Loads of business entrepreneurs today, constantly face some thorny complications of raising a good capital to finance their initiatives, this is because setting up any advantageous business venture requires not only specialized know-how but also great capital to keep the business going.
When sourcing for capital through debt or funds, the entrepreneur mustprepare well-thought-out business plans, market analysis, projected balance metal sheet, imaginary profit and the loss account as well as cash flow projections and this should be for the pioneer six months or at least one season and thereafter three years since this is what lenders normally love to see to guide them on their decisions.
Moreover, ability to plan in front of you for the immediate and remote financial needs for the venture, no doubt, should take up a cogent role with how much capital that could be elevated and sources in this aspect can be from two areas – debt and collateral.
Whichever approach one looks at it, acceptable capital is an inevitable condition to start up a business, operated it well particularly in these hard days of global economic melt downwards and ensure a good way to break even, the normal inclement circumstances notwithstanding. Capital is generally mentioned as the amount of financial resources necessary for the implementation and delivery of a profitable business venture.
Capital, in the true sense of the word, is not just the amount of cash at hand but rather the account available for the execution on the business venture, so the primary capital, in this regard, must come from the person setting up the business him or herself. To start with a wide veritable assessment of the entrepreneur’s savings, stocks, bonds, marketplace value of life insurance and investment in real house must be made.
The next step in that case is to decide the quantity of all the assets the person is ready to invest in the business as collateral capital since the necessity to inject one’s personal pay for into a business cannot be forgotten about. This is because if an adequate exclusive capital is not there, the option is to source for one which will suit the type and size of the intended business elsewhere.
Sourcing for capital through debt from banking institutions could be quite challenging for the reason that facility providers always evaluate critical areas such as the entrepreneur’s character, capacity to pay, equity, social conditions and the cash that the person him and also herself is ready to invest in all the venture as well as the level of their competitors in the focal market.
To raise a good capital for a new business venture the examples below questions are to be conscientiously answered: What is the needed capital? How much is the entrepreneur available, willing and able to pay for the effort? How much can the individual raise from other available sources as well as the ability to coerce other persons to provide the total amount?
This normally stands to purpose that for an entrepreneur to sell his or her first product or service, bother for financial resources and system development; marketing as well as management support cannot be overemphasized.
The major issue consequently is how to find the right and profitable source of fund which has a very high return and equally ensure the lowest accruable cost. Although this may look really easy, experts are of the view that it is a matter of a careful analysis with regard to any targeted business environment. They will equally maintain that catastrophe to secure a good capital is a sure way to business failure.