MANAGING FINANCIAL RESOURCES

Managing Financial Resources



Managing Financial Resources

The Business

In case, if the company that I own was a public limited company, it would have impacted my decisions to a huge extent. This is due to the reason that a private owned company and a public limited company differs in various aspects.

First of all, the basis of their formation is different. A private company needs funds through various sources and it's owned by the entrepreneur and its partners. All the capital investment is either owned or borrowed that has to be repaid along with the interest amounts.

A public limited company is a form of business organization that operates as a separate legal entity from its owners. It is formed and owned by shareholders. Shares of a public limited company are listed and traded at a stock exchange market freely. Shareholders of a public limited company are limited to potentially lose only the amount they have paid for the shares they own.

The business that I look forward to start is the computer hardware retail store. It would be owned by me only making it fall into the category of 'sole proprietorship

The initial costs

How to raise the capital

In order to start up my business, I will need a significant amount of money to invest. For this reason, I will take into account different sources of finance.

The most appropriate source of finance for my business is the loan from the bank or the credit from the bank. It is a type of short - terms financing those companies obtain through the banks with which establish functional relationships.

Bank credit is one of the most frequently used options, used by companies today to obtain necessary financing. Almost all of them are commercial banks that handle the checking accounts of the company and have a greater lending capacity in accordance with the laws and banking arrangements currently in place and provide most services that the company requires.

The advantages of the bank credit for my business include: if the bank is flexible in its terms, there will be more likely to negotiate a loan that meets the needs of the company, which places it in the best environment to operate and profit. The Bank credit allows my business to stabilize in case of trouble with respect to capital.

Another option that I can consider is to obtain loan from friends and relatives. This will benefit me in respect of low interest rates and easy repayment modes. But friends and relatives cannot lend a huge amount due to their limitations, therefore only small needs can be fulfilled by borrowing from family and friends. For huge investments, the best option is borrowing from banks only.

Different sources of finance available to the business

In the event of starting up a business, one can borrow from a financial institution or a bank. Banks and financial institutions often lend sufficient loans to established businesses or new investors and potential businessmen. These loans are granted against a suitable payback period making it easy for ...