The strength and health of the business depend on the availability of the financial and competencies he used. Financial abundance can do wonders and scarcity can damage even established businesses. Finance increases strength and business continuity. This increases business resistance capacity to face losses and economic depression. It’s like a lubricant, the more applied to business, business will quickly move. Following the title Explain the importance of finance for business:
(1) Starting a business: Finance is the first and before most needs every business. This is the starting point of every business, industrial project, etc. Have you started a single ownership concern, a partnership company, company or charity institution, you need a lot of finance. This is as important for searching for profit and non-profit activities. This is equally important for multinational organizations and for free dispensation.
(2) Purchasing assets: Finance is needed to buy all kinds of assets. Even if credit is available, some down payments must be done. Most of the finance is needed at the beginning of the business for purchasing fixed assets. This fixed asset consumes a large amount of entrepreneur’s initial investment, so he can face liquidity difficulties in running everyday business.
(3) Initial Losses: There is no business that reaches high profit on the first day of the start. Some normal losses before the business reaches full capacity and generates sufficient income for suitable costs. Finance is needed so that this initial loss can be maintained and the business can be allowed to advance gradually.
(4) Professional Services: Certain business requires special personnel services. These personnel have rich experience in specialized fields and they can provide useful guidance to make business profitable. However this service is expensive. Finance is always needed so that the professional consultant service can be employed.
(5) Development: Business is always affected. New innovation and emergence of new technology replaced old techniques outside the market. So to stay on the market, it is necessary to keep the business equipped with all the tools and techniques that appear. It is necessary to finance. New technology is always expensive because it is better than others. So finance is needed to buy new equipment and keep the business running.
(6) Information Technology: Information technology has now changed the geography of the field of business battle. The home market has now been extended almost with other worldcomers. Worldwide can be your customer or competitor. To deal with such fierce competition, it is necessary. Skills and competencies in it can do miracles. But more finances are determinants. It is needed to include expensive IT products in business.
(7) Media war: advertising and promotion has now become a vital element for business success. The way a businessman approaches customers and convinces him to buy his product more important than product quality. With advertisements in international media, a businessman can achieve the minds of millions of people around the world. However, advertising is the luxury that cannot be done every business. Large finances are needed to meet advertising costs.
(8) Resource Management: Finance is very important for efficient resource management. Resources here include capital and human resources. Maintenance of plants and equipment and training of employees all need finance. Establishment of new industrial units, plant capacity expansion, employed educated skilful workers – all
These factors can cause large income but at first they need financial to get started.
(9) Stock investment: This investment is made to accommodate many raw materials in hand. Bulk purchases