When people use a credit card for their business or personal use, they aren’t using money from their own account but they are technically borrowing money from a bank. At the end of the month, if the person hasn’t paid all the money they borrowed, then the credit card company will charge them interests. The main advantage to using a credit card is that they generally make greater protection when making large purchases. If your good purchased for your business don’t arrive or get damage, you’ll be able to have your money back.

Paying bills is a very important part of the business. Because people have often lots of bills to pay, it’s easy to lose track and may result to late payment charges. However, people can arrange for this payments to be automatically come out from their current account each month by setting up direct debits. This means they do not have to remember. It can save the business money because companies often give discounts to people paying through direct debit rather than paying by credit cards.

There are several ways to acquire funding for your business. Business owners can acquire through bank finance, equity finance and government grants. The most common which is bank funding may not be available to everyone and may not be the best option, even for businesses that can access it. Equity finance and government grants may be an alternative.

1. Equity finance. This is a way of raising capital from external investors in return for a stake in your business. This stake is called an equity. It represents the value of your business after its assets and liabilities are considered. Several kinds of equity finance are appropriate for small, private businesses, venture capital, business angels, the stock market and crowdfunding.

• A venture capital firm is a business that invests in new businesses with high growth potential.
• Business Angels are individuals who invests in startups and young companies with good growth prospects in exchange for a share in the company’s equity.
• The stock market allows investors to buy shares in your company which are then traded on the stock exchange. This is typically an option for large companies that are prepared to take on the higher regulatory requirements and scrutiny that public ownership entails.
• Crowdfunding, on the other hand, allows many people to invest small amounts of money in your business at any stage in its growth. This usually takes place on dedicated websites known as crowdfunding platforms. You create a profile for your business and use the platform’s video hosting and social networking tools to reach prospective investors. You will need to set a funding target, and be prepared to pay back any money you receive if you do not reach this amount. Each investor will expect to receive an award for their contribution. For example, early access to your product, or a financial return. What you choose to offer is an important part of your pitch. Crowdfunding is a fast way to raise money and a good option if you’re struggling to secure bank loans or other forms of funding. There are three broad kinds of finance – bank finance, equity finance and government grants.

2. Government grants. If your business is new or expanding, you may be eligible for a business development grant from the government. A grant is a sum of money offered to a business for a specific project and usually covers only part of the total costs. You won’t have to repay it, or give up shares in your business, as long as you adhere to all its conditions. Government grants usually attract many applicants, so be prepared to face strong competition and meet stringent eligibility criteria.

Businesses sometimes need additional finance to start, operate and grow. There’s a range of established ways to raise finance. Each has its advantages and disadvantages, and some are better suited to some situations than others. One common source of funding is through Bank finance. Banks offer three kinds of finance – short term, medium term and long term.

• Short term bank finance is useful when your business needs a quick stop-gap. You might need to cover the purchase of stock, so that you can meet a large order. This is also helpful in business that requires money to cover you for the first few months, before you start generating revenues.
• Medium term bank finance. You might want to buy a vehicle, or a new piece of equipment. Business loans and higher purchase agreements can help to fund these kinds of purchases, and are paid off over three to five years. Business loan repayments are regular and straightforward, so you can plan and budget for them. The downside of medium term finance is that you may have to come up with some of the money yourself. This could be half of what you need. It might be difficult to secure a business loan if your new and have no track record. You may have to provide a guarantee or security, such as your home or business assets, which will be at risk if you do not meet your loan repayments.
• Long Term bank finance. This helps you raise the large sums required for buying a business, premises, plant or machinery. Commercial mortgages are usually for amounts over $50,000 are typically paid over 25 to 30 years. Your bank will usually require you to deposit at least 15 percent of the purchase price. They are flexible and affordable but the bank will have a stake in your property until the loan is fully repaid. Your premises could be reposed if you miss your payments. You will need to have your books in good order before you can apply for commercial mortgage. Your accounts for the past three years, your business plan and several references is standard. The better your history, the more likely you are to be approved and pay a lower interest rate.

Whether you’re a first time business buyer, established business owner, hopeful entrepreneurs, financing a business isn’t easy. There are many ways to finance your business acquisition. Here are some ways to follow.

1. Seller Note. This is common in a small business acquisition. Basically the seller gives the buyer a “loan” for an agreed-upon price. It is paid back monthly with principal and interest much like a bank loan. This scheme is very flexible which can be up to 100% financing. When you also take a bank loan you must establish liquidation.
2. Commission Financing. This is also common in a small business acquisition. It is best for when you are unsure about the short term growth or profits (turnaround) of the business. Payment is by performance, wherein you pay a seller back over time as a percentage of sales, profits, margin etc. This can help you pay back sooner than a loan, but, could take a chunk of cash flow as opposed to a fixed monthly loan.
3. Private Investors. It is once again common in small business acquisition. This is for private individuals, private equity groups, large institutions who contribute equity or debt into your deal. This could be structured in various ways such as common stocks, preferred stock, debt, line of credit, commission etc. It has a more flexible capital.
4. Bank loans. It is one of the most common methods of acquiring finances for a business. It usually requires personal guaranty, equity injection, good credit score and cosigners. When getting a bank loan never miss a payment to avoid interests.

The foundation for a business to be financially healthy is Skill, Commitment, Education and Organization. When you have the knowledge to correctly manage your finances your business is sure to be successful. Managing a business’ finances includes maintaining and managing your financial books, planning ahead, having knowledge in basic accounting, managing debts and credits, understanding other sources or options to gain finances. A business is also successful because of the skills one put to the business. This would include the skill you put in your products and services. Another element is the commitment you put in your business. When you love and are committed to your business you are sure to avoid any bad habits that can harm your business.

How to manage your finances for small businesses!

Starting a business is not an easy job. It requires your full attention. Having a business can be an exciting and invigorating experience. Every business needs a business plan. This will serve as a guide for the business. It contains several guidelines that can help the business in many ways. The goal of every business is to let their product and services to its the public. In a business plan this may also contain ways on how to procure finances to start a business and to promote its growth.

Having a good business plan can also attract potential investors. Investors will be very interested in investing in your business, especially if they see its potential in the market. These individuals will easily invest and finance in a business if there is a good business plan. 

Here are some categories that investors look for in a business plan:

• Description of the business or company
• Market Analysis
• Organizational and Managerial Chart
• Product line and Services
• Marketing strategies to promote sales and services

Handling a small business is not easy. We have to follow certain steps in steering your finances to make it very successful. Here are some steps to follow to guarantee that your small business do well.

Money Management For Small Businesses

1. It is advisable to have a separate bank account for your small business. Do not mix your personal money/finances with the money you earn from your business.
2. Learn to organize the money you earn from business by using simple accounting and book-keeping. You can avail of simple accounting software in the net. They are easy to learn and will benefit your business.
3. Before stating a business, settle and pay all business tax responsibilities to make your business run legally.
4. When looking to avail of loans to finance your small business look into a variety of options. First and foremost study your business credit options. This will come in handy for future financing.
5. Take time to learn and educate yourself and be a financial expert. As a business owner lets be competitive by being literally educated and to know all the basics related to managing your finances in your small business.