A great strategy and a strong determination to succeed are not sufficient for a business rather Business Finance is the most important factor to run and grow a business. Business Finance is the money required for a business to start its affairs.
Having sufficient Business Capital plays a vital role in every business since the inception of business as the sufficient working capital is required to manage its day to day affairs and for future growth and expansion.
Finance is required to do absolute Business management including Planning, Organizing, Managing, Controlling, Staffing, Recruitment, Purchasing, Selling and Marketing.
Why do a Business needs sufficient Funds?
Thus, every business struggles from choosing the source of funds to application of funds. Henceforth, Financial Management services help the businesses to manage the finance throughout the lifespan of the business.
Every Business must answer the following questions while choosing the Source of Finance –
Sources of Funds
Equity Financing is a process to raise business finance by sale of shares. The companies sell the ownership through selling of shares. Thus, the companies are not required to pay back the capital raised through Equity Financing.
Debt Financing is a process whereby the companies borrow money from different sources on different terms and the companies are required to pay back the borrowed amount with interest.