How to finance business's

October 11, 2016

Business finance is money used to run and manage the business effectively.Every business requires finance inorder to operate smoothly within the market dynamics.The nature on the source of finance varies from businesses to businesses,so most businesses consider several sources to get finances to manage their business effectively.These sources includes:

Savings

The business can get finance from business savings.Business's usually uses some percentages of profits to expand their existing business and at the same time they deposit some percentages of profits as savings.The business can withdraw these savings from their bank account to finance itself's.

Credit facilities
The business can get finance by borrowing from financial institution such as banks.Businesses usually have accounts with banks.The business can request for the loans from their banks inorder to finance the business.Apart from the loans the business can also request for an overdraft facilities from the bank where the business can withdraw certain amount below its account zero limits from its bank account's.The bank's will allows the business to withdraw this percentage of money and the business will repay the money it has withdrawn plus some interests.

The business can also get credit facilities to finance itself's by purchasing goods/stocks/equipments on credit or through hire purchase.By purchasing goods on credit,it means that the business get the goods from the suppliers and the business will pay the suppliers at a future agreed date.By purchasing goods on hire purchase then the business gets the goods from the suppliers after paying initial deposits to the suppliers and the business will pay the remaining amounts in agreed monthly installment's to the suppliers.When the business purchase goods on credit or through hire purchase,then the money which the business could have used to purchase the said goods on cash can be channeled to finance the business.

Investments
The business can get finance from their other business investments.The business can be having other branches or the business can be having other side business which are not related to the parent business.So the business can borrow some finance from these other business ventures to finance itself's.

Saccos's(Saving and Credit Co-operative Society)
The business can get finance from its own Saccos(saving and credit co-operative societies.Usually some businesses have their own Saccos where the employees can deposits part of their salaries as saving by purchasing shares from the Saccos.The employees who are members of these company's Saccos usually receives dividend yearly from the Sacco's,they can also get loans from this company's Saccos and they will have to repay the loan with small interest rates to their Saccos. Since employees deposits some percentages of their salaries to purchase shares from the company's Saccos then the company/business can use these deposits to finance itself's.

Shares

The business can finance itsellf's by selling some percentages of its shares to other businesses or to other stakeholders.The business can also sell some percentages of it's shares to member's of public through stock exchange's.Before selling shares to the public,the business has to list itself at the stock exchange's.By selling some percentages of its shares,the business will have ready cash to finance itself's.

Redundant/Obsolete

The business can get finance by selling some of the redundant/obsolete items,these are usually equipments which are no longer used in the business as they are in not good condition or state.By selling these obsolete items,the business can get extra funds to finance itself's.

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How to finance business's

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