Wednesday, October 23, 2019

Important step for starting company Essay

NAME: SUNEET KAUR To start a New Business or Project is very exciting no doubt but the challenges to get into the system is very heart rendering. The same thing happened to me, when I took upon myself a task to develop a Soft ware Product Development system whereby I required office space, systems, software development team, power back and miscellaneous small activities, and naturally all these requires budget, as I really didn’t had any finance at my disposal. To over come this problem, the foremost thing I needed to do was chalk out Business Plan for myself, as it is the foremost thing to do. It is a prerequisite to not only define all the Propositions for your business plans but also to estimate your budget and chalk out the source of funding. FINANCIAL PLANNING To finance my project, I took upon initiative the task of estimating the financial planning, which included initial estimate of resource requirements, associated costs, revenue, identifying operating costs and to prepare budgetary plans. It also involved cash flow to ensure that there are no gaps between income and expenditure, analyzing breakeven levels and forecasting profits. PLANNING FOR SOURCE OF REVENUE To find out the source that can really finance your business and fulfill your dreams, prepare a well planned Budget including all your recurring cost that will go into a Cost Center like Income or value going into the Cost Center, Cost of Office Space as well as infrastructure, Wages or Salaries of the employees, Cost of power back up and communication systems, Cost of miscellaneous activities etc. After charting out the business and Budget plan, I set upon the task to search the source of funding not only for the start up of the business but also expanding the business, and this source of funding is a back bone of your company. SOURCE OF FUNDING The borrowing depends on number of factors like purpose of funds, your borrowing requirement, repayment period, the availability of security or collateral etc. Bankers will never lend against the full equity value of property, the availability of the loan will be limited by the equity or residual value of property. All these points count if you intend to search for the source of funding. There are several sources for funding, and for me I started with: SHORT TERM AND MEDIUM TERM BANK LOAN I took upon myself to get the short term and medium term bank loan. For the repayment of this loan it took me two to five years. For sum of $5000, the security is required in the form of private or company property, fixed or floating charge over the books debts and assets of the business. Interest is fixed at between 2 per cent and 5 percent over the base rate at the time the loan was taken out. Arrangement fee is also charged on new loans. This loan system was best suited for me as the rate of interest is just fixed for 2 to five percent. It is more advantageous then the other loans because security required is very less. BUSINESS ANGELS Business Angels invests in new and developing enterprises. They, rather than start their own business, invest in someone else’s Investment proposals and initiatives. Those companies who have skilled and technically qualified people, business venture, capital and skill gives a greater chance to succeed with financing from business Angels. There is a site called as a Business Angels Pty. Ltd. Who provide the facility for meeting the both angels and prospective Entrepreneurs. The needs of the business are matched with the angels’ criteria. There are lots of other sources of financing too like Long term loans from banks, Share Capital from private Investors, Debentures etc, Mortgage debentures, Commercial mortgages etc. but the system of Business Angels are best if starting a New Company because it depends on the negotiations between the two parties.

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