Ways to Effectively Start A New Business Using Finance
Author : Lawrence Perry
Based on the definition provided by Kern, it’s safe to say therefore that a business without money is like a boat drifting without an oar. Better yet, it’s going to be like building a castle in the sand. The dream of expansion and better business opportunities are nothing but figments of your imagination. But how does money play a key role when it comes to the overall success of your business? According to Business Studies Online (BSO), there are different ways on how money can boost businesses. This includes the following4:
1. Money can be used to buy fixed assets. Fixed assets are physical things that the company or individual intends to use for longer periods of time. A good example could be machinery if you’re running a brick-and-mortar business. If you have an online business, for example, like me, you can use money to buy your company and yourself, PCs and laptops. They are essential to the success of our operations.
2. Money can be utilized to purchase raw materials. Money becomes a major player in the working capital cycle. You need it so you will be able to continuously come up with products that your customers require. It doesn’t really matter if you’re working online or offline.
3. Money can pay expenses. A business without expenses is non-existent. Whether you like it or not, you will incur costs in different forms. Where you are and what you do, doesn’t really matter. Although how much you’re going to pay may actually vary. For example, if you have your own office”which, in this sense, means you’re not operating your business in your home”you will be paying for your rent, electricity, communications (such as your telephone and Internet connections), to name a few. Meanwhile, if you’re doing business in your home, you can get rid of your rent, which may probably save you a few hundred dollars. In this case, you are incurring expenses whatever and wherever your business is, though some factors can determine if you’re going to pay more or less.
4. Money is needed to hire people. Why do you need to bring people to your business? The answer is very simple. You need them so you can become more productive and more efficient. William Leiss author of Under Technology’s Thumb believed in the definition of Adam Smith when it comes to human capital. According to Smith, a person’s talent”which could have been developed through his education, experience, and apprenticeship”will always have a corresponding cost or expense. This only means that you acquire the services of a person to run the different aspects of your business. In return, you will pay for his or her hard work and time by means of salary.
It’s at this point too, that you have to realize how important it is to make money. But how do you exactly do it? Are all the things you heard about earning money true?
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