Business activity|| capital : the key to business sustainability by victoh78
Introduction
Hello everyone , how are we all doing on this fine Easter Monday.
I can only assume that we are all fine physically and other wise.
With that being said I would like to introduce you all to the topic of my post today, capital and all we need to know.
Business capital : the key to business sustainability
Source
In order to better understand so this topic I would like to give a brief definition of the word capital.
From an economic point of view :capital can be defined as does financial materials which include human effort as well as monetary effort in the process of production of goods and services.
From a layman's point of view : capital can be seen as an initial investment into the establishment of a business entity.
Both these definitions are correct in the sense that capital is both the initial investment and the subsequent investment of proceeds from the business.
without subsequent investment in business in the long run such entity will surely collapse.
Types of capital
They are various forms of capital in which businesses can use while running a business.
Intial capital
Initial capital this is the first form of investment which is used at the start of a business.
Initial capital is the bedrock for any strong business this is so because the initial capital has to be large enough in order to see the business take off, without a solid bedrock of capital at the onset of any business the business is bound to struggle financially such that they may not be able to keep the lights on as well as get the required facilities they need.
Initial capital is usually the highest capital depending on the size of the business.
Working capital
This is form of Capitalis used in the day-to-day running of the business. As we are aware no matter the business we ought to run some daily expenses such as cost of transportation, utility, internet subscription as well as others the working capital is set aside to meet this small expenses which arises, without working capital businesses would fail to meet the short-term daily expenses.
This daily expenses and the business is very crucial to the success any business.
Depreciation
This is a special form of capital set aside yearly or monthly from the total value of the assets.
Depreciation is usually calculated in respect to percentage the value of fixed assets.
this is so because as all access depreciate with exception of land they need to be replaced at some point in the future.
Because of fixed assets are usually very expensive it becomes worrisome when such asset breakdown hence we need a special capital to replace these
Depreciation is essential in every business if saves enterpreneur the struggle of being stranded when a fixed asset goes faulty along the line or towards the end of his useful for years.
Standby capital
This form of capital have been called many things savings, rainy day fund and many others . This form of capital is held in the eventuality of unknown circumstances and are usually removed before giving out dividends in a business or before profit taking.
This form of capital is used to meet un foreseen expenses which are not covered by the working capital.
Note : we should note that not all businesses are would require the four types of capital but the first two initial capital and working-capital are for the sustainability of any business.
Sources of capital
Source
Having understood the various types of capital in which a business should keep, we would now discuss how business can source this capital.
It is the ability of a business to source for Capital that determines its sustainability without proper capital accumulation such business is destined for failure on the long run.
Loans
One of the popular way to get capital in business is by obtaining loans from the bank or through various loan agency.
This form of capital could be problematic in acquiring for new businesses this is because most times banks won't want to give new business loan cause they can't be assured of the viability of such project.
Moreover the aqucisition of loans makes such a business in debted to the bank. Having a looming debt over ones head is bad for business and often loans comes with high interest rate.
Angel investor
An angel investor this is an individual who invest in a startup business.
Most angel investors have no personal relationship with the business they only do so as a show of Goodwill and believe in such a business they do not require collectarel service or any form of documentation they do so out of the goodness of your heart hence the name angels.
Government grant
In a bid for government to support industrialisation and individuals innovation government often offers various grants to businesses this Grant a source of motivation to enable individuals innovate and push thier businesses
Government grants are very crucial for most businesses as they do not required to be paid back or when they are required to, have long repayment period.
They are a source a of charity given to the people from the government this Grant could be so much as they cover both the fixed capital and working capital of the business for years as well as it could be only enough to cover the working capital.
Personal saving
This is the oldest source of business financing, most individuals who start a business must first be willing to bring out a certain sum of money from their savings as a show of their Goodwill and believe in thier business.
An individual or a bank would like to know how much the owner of a business is willing to risk in such a business before they themselves decide to invest in such business.
Venture capital
This is a form of business capital which entails a business willing to share a certain percentage of his ownership to the public in return for their capital and investment in such a business.
This is the most popular used method of raising funds in today's economy, venture capital takes many forms
Such as ipo(initial public offering) used in public limited liability company, ieo(initial exchange offering) used in crypto, white list used in presale of nfts
note
It is important that we always take financing of a business as important as the business it's self this is because without finance businesses would never progress on the long run.
.jpg)
conclusion
From this post we should have learnt the importances of capital in any business as well as the process of acquiring capital for business.
10% of post payout goes to business activity
| Business: | Business capital: the key to business sustainability |
|---|---|
| Username: | @victoh78 |
| Owner's name: | Victoh |
| location: | nsukka, enugu, Nigeria. |
| About Us: | Introductory post |
Hello, thanks for sharing this topic about business capital, where each of the aspects mentioned are important, initially, in terms of work and in the continuation.
Each one is influential to start it, to keep it and to increase it, in a way that is unique to businesses, you just have to know how to make it work.
Remember:
@victoh78
Business Activities|| Title| @user
Greetings.
Thank you for the correction
I have duley implemented them as required
Twitter link https://twitter.com/his_fada/status/1516108817779601412?t=vESug1xI0x2Rbzc8mZQAng&s=19
Maintaining the capital of a business and its sustainability is not easy, but as investors it is necessary that this be the main engine of our business, at the end of the road this will ensure the success or loss of it.
https://steemit.com/hive-165917/@businessactivity/launch-of-the-business-activities-diary-share-your-experience-when-visiting-businesses
Greetings!
Thank you the invite
I have been to quite a few businesses in my locality and I would be eager to share them with you all
Hey @steemcurator05
It says here and also on my notification you voted my post but on the post it doesn't so so..
So I am a bit confused🥲
Hello @victoh78 thank you for your beautiful and interesting article to study and this can be an initial capital especially for new businessmen, it is true that any business that we build, the main need is capital, thank you for the information, everything is presented in an informative manner.
Greetings!