1. Wahid’s hypothesis - The key of errors in business finance
Summary: There are some common business finance mistakes that can make an
important crash on your business, if you are not alert of them. Sense business owners
are aware of these mistakes and set systems in place, that help keep them from
occurrence.
The reason is the lack of a viable financial strategy, in fact an error. There is a
reasonable strategy for funding likely that if one or more of the other errors so far.
Attention to the fact that all errors are closely related and if you can get the effects
of mounting negative results
Introduction: Finance is a heart-blood for a business. A business also cannot carry on
without finance and proper financial management. A minimum satisfactory amount of
money is essential in order to start any kind of business. All operations of the business
involve in finance, without finance it cannot role at all.
As a financial adviser my personal opinion that if to start a new business or to run an
offered business, finance is very essential to gain assets, analysis market, to purchase
equipments or technology, raw materials, pay taxes, and to use employees or personnel.
Finance is of supreme importance for smoothly an established business. Development or
change is a necessary stage in any business so that if you complete all the procedures
established a business clearly you need finance.
Some common business finance errors that can create a major crash on your business, if
you are not alert about these errors. Knowledge business owners are alert of these
errors and set up structure in place, so that this set up structure can be help or protect
business owners from any unexpected occurrence. Now important is to know that for
each size of business, bookkeeping or accounting is an important element of any business
effort. It is patent that while it is naturally not one of the more exciting jobs,
bookkeeping or accounting is at the spirit of a company's success, and errors can charge
any the company appreciably. A number of crucial errors can depiction a business to
severe difficulties and can guide to the business trading rudely and last insolvency.
Just I have tried to express on the basis of my financial consulting experienced &
personal guess to protect the business finance errors also defend your business from
sudden crash; but the following describe points is not a complete record but one that
lists point the major errors. The solution job for any business is to recognize, and then
to develop a strategy to overcome and mitigate the exposure
01. Excess borrowing with easy credit at high interest rates can also put the business at
risk. Financing is one of the most important aspects of starting a new business. Your
ability to provide and raise adequate capital will determine the fate of the business
venture. Insufficient financing may cause the business to fail. Excess Borrowing is one
of the major errors of business finance

2. 02. You must take a careful look at the type and amount of capital you will need. Then,
you must decide how you are going to finance the capital needs of the business.
Borrowing from expensive sources when cheaper ones are available. Small companies
often pay high interest rates, which their present and future profit potential cannot
adequately service. It is sad but true that borrowing is cheaper and easier to arrange in
large, established, profitable businesses and dearer and more difficult to arrange in
recently established, smaller or less profitable businesses.
03. As businesses borrowing over the correct period - particular risk for a business is
to borrow over too short a period where the cash flow of the business will suffer. They
increase their stability and raise the credit score used by banks that value the
company's risk becoming a low-risk investment increases the chances of a company
securing bank financing for future needs.
04. Extreme Spending. There are many business owners who have a view that they need
to have the image of a successful business to gain success - Palatial offices, equipment,
vehicles, etc that the business cannot afford. This is often a smokescreen used by
businesses in trouble. Shrewd bankers see through it. Management would be wiser to aim
for a modest survival than a lavish route into liquidation;
05. Failing to ensure an adequate contribution from the owners towards the cost of
identifying and launching new products or services. Owners contribute in two ways. They
can be asked: (I) The owners of a business contribute by not taking out too much profit
(dividends) and also investing or modernization; (II) further capital if required this is
called a rights issue. Shareholders are given the right to buy new shares in proportion to
their existing holdings. These requests may fall on deaf ears if the past profits were
disappointing, or the future prospects are discouraging.
06. Manufacture or buying products or services that your customers do not feel like;
07. Not care the product variety and manufacturing equipment up to date.
08. Not working adequately very much “jointly” with advisers, bankers, solicitors &
accountants to achieve the best consensus solution for the business needs.
09 Not having an efficient credit policy in place when chasing debtors, or where there is
one, not all employees know what it is.
10. Not having a partnership accord or a business will/cross options/share protection or
by having the old buy/sell agreement which can cause an legacy Tax problem.
Conclusion: These mistakes are easy to list. But they are not easily identified in a
business. If possible to recognized, a strategy must be developed to eliminate or
alleviate them. The correct way to originate such a strategy will materialize as you work
your way through the proper business rules and regulation,
Published By: articlesbase.com

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