SEC-S20W2 | My Business Ideas |Capital Management

I welcome you all to my Steemit blog and this Beautiful Article is written by me to take participate in the Steemit Engagement Challenge Season 20 week 2 . This article of mine is an assignment written on the homework of @dove11 team's course and the topic of the week 2 is Capital Management. I am thankful to @dove11 team for giving me an opportunity to write on this trending topic . i know "Capital Management" is first step to start any bussiness . in fture , i am going to start my own business so i am thinking to every point before starting any type of business acoriding to my dream. i would like share my experience thoughts on Capital Management . so I hope this article will be very useful for everyone.

Question : Please tell us about your initial investment value in terms of Steem as well as in US$, and how you manage it.

There is no doubt that before starting any business capital is first seen and without capital no business can be successful. As I mentioned last week, I want to open a general store that has all kinds of products for the customer. I have thought that I will take space on rent for general store for a short term period .

Currently in my area the rent of a shop for 30 days is 20 thousand rupees and since I want to open a large department store, I will have to pay rent of large department store at least 60,000 rupees which is about $230.

Thus the cost of electricity will be around $150 and the staff salary will be around $300. I will employ at least four people initially. I have thought that I will use Facebook and popular social media instead of newspapers to advertise my business and also give a special package to those customers who purchase goods from my store and advertise my general store on social media. Will run the campaign about my store .

Capital Management	Status
Initial Investment Value	$60,000/ US
phase 1, investment in business product	$40,000
Monthtly expensis holdingy	$10,000
in regard of loss , adding holding	$10,000
Profit use	10 % for poor /needy subsadi
profit	30% reserve profit capital for next month situation
profit	30% for developing more product in business and rest i will use for my own expensis

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These are the expenses that I'll have to pay every month whether I get profit or loss in business. But I want to invest $30K to $40K on my business initially out of my total capital of invesment. And the $10K capital I will keep separately. I will cover the monthly expenses of the business with $10K capital, as I have to pay the shop rent, staff salary, electricity bill and other government taxes every month regardless of whether I make a profit or loss.

I will first hold the monthly expenses for a year so that I don't have to worry about the payments every month. I will spend 70% of my total capital on purchasing the product. Then in case of profit or loss , I will introduce more product in general store. What I will have 30% capital reserve I will invest in more product in case of loss, thus in case of profit I will keep 30% reserve capital for next month situation. I will give ten percent of my profit to the poor and needy people in the form of a discount on their purchases, while I will keep the rest of the profit to purchase land for my shop.becasue i want to build my own building for my business store .

Q2. A profit and loss statement is commonly known as a statement that shows details of your business's revenue and expenses over a period that we calculate on a monthly, quarterly, or annual basis. How do you determine whether your business made a profit or loss during a stipulated period?

Profit and loss are part of every business. Everyone wants to make profit from their business but I think that we should do business keeping both profit and loss in mind and invest our capital in the business keeping in mind the same situation. Some important points I have tried to explain in my first question also in the light of these I will check my profit and loss on monthly, quarterly and half yearly basis and accordingly calculate the profit and loss in my business at 30% of my profit. In case of loss, I will cover from Holding and in case of profit, I will add to Holding.

Because it is not necessary that I start getting profit in the first month, because it is possible that I have to pay the salary of the staff from my pocket in the first quarter. I will mentally prepare myself for that and if my staff salary is not paid from the profit then i will have to pay from my pocket then electricity bill or taxes or building rent then it will be in the category of loss.

i will hold my 10 thousand dollar from capital invesment seprate to meet the monthly expenses.

A. Are you earning profit or incurring losses? B. What are your plans to make your business a more successful one?

I have thought that profit and loss are inseparable and in case of profit or loss , i will try to hold my profit to secure my business for long term . i will not use my profit for extra use , i will try to hold my profit to grow my business and customer trust in respect of all regards . I will provide better service and in case of loss I will prioritize my mistakes and customer feedback. i will be my endeavor to take my customer's feedback and needs into account.

I will subsidize the profit to the customer for the success of my business to increase customer confidence. I will not compromise on the quality of the product. I will introduce the best quality product in my store and sell items on low profit policy. If I as a customer observe at this time, I myself will buy the product from such a store where the items are cheap and quality, so I also think the same. I will make my business successful by keeping it in mind. Because I am not starting a business for a few days but I want to build my future and also want to profit from the business and this will happen only when I also benefit my customers and provide them with quality products from the market.

C. Are you reinvesting your profits or using them for your personal use? D. What are your expenses for your staff and establishment, if any?

I will also reinvest my profit as a percentage in my business and also will use it for my personal use. I will spend profit on subsidizing the customers and thus i'll use the profit to pay my staff salary, electric bil, govt tax , building rent too and other related montly expensid and i will hold the rest for my personal use. as i told that my total business investment will be around sixty thousand dollars. The staff and other expenses will be around $450 to $500 per month, but it can be reduced more or less depending on the situation, but in the context of the current situation, these will be the expenses that I have to pay in the form of profit or loss. I can make my business successful only by dividing my total capital into phases.

Q3. Loans and working capital.Did you take any loans or working capital for your business from any financial institute? A. If you took any loan from any financial institute, how do you repay your loan? What is the interest rate? B. How frequently do you pay the loan installment? C,D ,E,,,,,

A loan can also be taken to start a business, but I do not intend to do business by taking a loan. In my country, the government also provides assistance for business loans and so do other business institutions such as banks, capitalists, but I think that a business started on a loan may or may not create many problems. I will never take a loan because the interest rate on the loan is very high and in case of loss in the business, it becomes very difficult to manage the interest rate payment and then monthly loss expenses in the business started on the loan. If I start a business with a loan, I will have to spend my asset in two places in case of loss. Because in case of loan, I have to pledge some of my assets in a bank or company and in case of loss or payments. If I am late in payment of installment or interest rate , I will have to bear more losses.

I am absolutely not in favor of taking any kind of long term or short term loan at the beginning of the business. I think that even if you start a business with less capital, you should do it with your personal capital. Why am I saying this because the loan will not be given for free, in exchange for the loan I will have to pledge some of my assets equal to the value of the loan or give a guarantee. Apart from this, I have to pay specific installments with interest every month for the loan, so I think that the asset that I will mortgage in a company or bank in exchange for the loan, I should start my business with the same asset or take a loan.

I think that we should start our business by making long term and short term plans after looking at our cloak. But instead of loan, I will buy their products from the product manufacturing companies on a profit and loss basis and sell them at my general store. And this method is the best.

There are many companies that offer their product to trusted investors in advance and receive the price of the product only after the sale. I will invest in Company's product instead of loan. According to Point D, I will buy their products from various companies on the basis that if the product does not meet the customer's standards, I can return them and thus it is also possible that the companies will put their products on my store for sale and I will sell them. I will continue to pay for the product after the product is sold and thus I can spend my capital better in both short term or long term situations.

I will call it product loan policy. I will try to take advantage of this product loan policy. In a product loan policy, companies make the product available for sale at the store and half of the product is paid at the time of product arrival. If the product does not meet the customer's standards or on time, the company withdraws the product. I understand that I will definitely do such a product agreement and in this way I will pay the full payment of the product only after getting the profit, but for such a loan product agreement I have to highlight my business first so that an atmosphere of trust is created.

Q4. Colleterial securities and your understanding

Almost every financial institution in my country gives loan on personal guarantee or Colleterail guarantee. In this, the borrower has to hand over the assets he owns to the lending financial institution or person through any third party guarantee and then the loan is given based on the value of these assets or the market rate. Different institutions or banks demand different interest which is paid on quarterly or half yearly basis. First of all I understand that it is not right in my view to start a business by pledging your assets to any institution or bank.

So I have no intention to take a loan for my business because if I can do business by pledging my assets, I can also sell my assets and do business based on them. So I won't do it like that and I don't want to.

There are different conditions for such loans in my country, some of them are: The value of the loan will be equal to the value of the house or property, but the value of the property is determined by some institutions themselves and not based on the market price , they have their own system of adjusting the price of asset . The loan is disbursed on interest and the loan is 30% less than the value of the property so that monthly or semi-annual repayments can be kept in line with the market. The Shariah of the loan ranges from 16% to 20% which is very high.

I have no intention of taking any kind of loan to start my business. A very important point is that when a person takes a loan against his house, asset in Pakistan, the value of the asset is set by the lending institution itself, but over time, the value of the house, land or asset increases in the market. but Borrower is not given its benefit. That is the reason why I am not in favor of taking loan on this scheme.

I hope you will like this entry of mine. I invite @anwar1976 , @jessica @teukuipul87 in this contest to participate in this challenge.

Exclusive to Steemit: This article original creations of @yousafharoonkhan, published on Sep 16, 2024.

Best wishes

yousafharoonkhan