Business Finance and Corporate Value

Article by Carolyn Clayton

The primary goal of business finance is to maximise corporate value while also reducing a firm’s financial risk. Whether you are starting a business, expanding it or investing in it to keep it competitive you are going to need business finance help at some stage of your business venture. Business finance is one of the main keys to success in business and without the correct form of finance and the right amount of funding your business is most likely to fail.

You may need to cover day-to-day expenses or you might need to cover the cost of new equipment. There are a lot of aspects within business that will cost and that will need to be covered by business funding; the rent or mortgage on your business premises, all of the equipment that you will need to get your business going, all of your bills for the first few months and all of your staff wages. The business finance that you gain will be used to pretty much run your business for the first few months of it being in existence, which is why it is so important that you get business finance and that you get the right amount of finance to ensure you can run your business.

When you are looking and seeking out your business finance there are many avenues that are open to you such as the following:

Loans
Overdrafts
Credit cards
Family and friends
Government grants
Business angels
Venture capitalists

When you are choosing your business finance and applying for your finance it is important that you keep the people who matter in the know and that you ensure you recognise the needs of people involved in your business, for example banks and the Inland Revenue, if you keep people informed they are more likely to be sympathetic to your needs. You should also aim to raise more cash than you need that way you can rest assure that all of your business expenses will be taken care of as the last thing you want to be doing is going back to your money lender and asking for more money.

If you are about to approach an avenue for business finance, stop! Do you have your business plan? Your business plan is a written statement of intent for your business, it details everything that you want from your business and how you intend on achieving it. One of the sections within your business plan will detail your financial forecast. It will describe all of your financial outgoings and how you intend on funding your business, which will include how much capital you are hoping to gain from which ever financial avenue you approach. Your business plan will demonstrate what you require your business finance for. It will show why you need the amount that you do and how you intend to spend it. If your finance is coming from aspects such as a bank loan, which will need to be paid back, your business plan will describe how it will be repaid.

Business finance is what will make or break your business so it is essential that you get it right first time.