Thursday, April 7, 2011

Know more about Business Finance

Venturing to a business is a major financial decision one can make since investing money can be risky.   The first step is knowing what you are heading for especially knowing the basics.  Here are some basic facts about business finance.

What is business?
A business means investing in activities that can make available goods and services needed in a community realized from the investment, increase the value of the business itself as an economic entity, and improve the quality of the life in the community.

Kinds of Business
  • Commercial -  Engaged in buying and selling goods.
  • Industrial – Business concerned with production.
  • Services – One which sells services.

Business Finance is defined as the art and science of managing the financial resources of a business.
Finance is the study of the nature and uses of the means of payment.
Business Promotion refers to the activities involved in making a business ready to operate.
The role of the promoter is to undertake the activities in organizing a business until it becomes operational.  The promoter investigates, study, and analyzes the prospective business in a very haphazard manner.

Major parts of promotion
  • Discovery is the process of looking for business prospects and making a study as to whether the business is worthwhile going into.
  • Financing refers  to procurement of the initial capital that the proposed business requires to be able to operate profitably.
  • Assembling is the actual organization of the business takes place.
 Classification of business functions
  • Allocation of financial resources
  • Procurement of funds
  • Efficient and effective utilization of financial resources
Functions of Finance Manager
  • Financial planning and analysis
  • Management of  the company assets
  • Management of  company liabilities and owner’s equity
  • Management of money positions