Financing a

Business

Breakdown

•Considerations in Financing a Business

•Securing Loans•Types of Expenses•The Handling of Cash

The Business Plan

Planning is

what to do.

how to do it.

when to do it.

what to expect in the future.

Considerations in Financing a Business

1. An Adequate fund sufficient to carry on the business (Capital)

2.Accurate knowledge of operating and financial conditions of the business

3. General knowledge of actual business conditions.

4.Knowledge of different sources of funding

Considerations in Financing a Business

Three bases of which credit can be granted:

1. CHARACTER- refers to a clean and unquestionable reputation characterized by honesty, sincerity, and integrity

Three bases of which credit can be granted:

2.CAPACITY-Refers to the earnings of the individual which dictates his paying capacity

Three bases of which credit can be granted:

3.Capital- Refers to all the assets and properties which serve as a collateral to the loan

In securing loans either on short –term or long term, the entrpreneur must consider the amount desired;the financing condition of his business, his credit standing and the amount of profits that can be derived from the loan

Types of Expenses

1.Fixed- rentals,taxes,insurance,

interests, advertisments

2.Variable-

Supplies,raw materials, utilities services

Handling Cash

Petty cash-a cash to cover immediate needs

Money with no specific use at no specific time maybe placed in long term investments like stocks, bonds or treasury bills

• Presume that you are to put up a small sari-sari store or carinderia. Prepare a budget to determine capitalization to start the business. Write al items needed, quantity and approximate cost. All items fall under fixed and variable expenses

• Visit some service shops

• Interview the workers in the shop. Find out what skills they use to earn a living

• Short bond paper

• If possible, take a picture of the worker/s you had an interview