Monthly Archives: February 2016

How finance helps Small and Medium Enterprises

 

Money is essential to begin and run any kind of business. Based on its financial capability in terms of assets, capital, operational size and such things a business is classified into small and medium enterprises.

As soon as an individual or a group of individuals come up with a new idea to venture in or want to expand their existing business set up, the biggest requirement for such a new enterprise or a small and medium enterprise is quick access to funds.

Although there are lot of government schemes that are enacted for providing financial support to budding enterprises it is not easily available for all quickly as and when it is needed. Finance enables a new firm to establish itself in its industry. It can buy the necessary raw materials and conduct research and development until coming up with a product that can be sold in masses in a promising market.

The company will also be able to keep itself floating in the market until it is able to establish a steady stream of income. In addition a strong financial background will ensure that the company is able to pay off its monthly dues of wages and salaries, factory repairs, maintenance, taxes, service charges and vendor bills on a timely basis. External sources of finance like angel investors, investment bankers and venture capitalists will also be able to help new enterprises in setting up a strong foothold until they are market ready for business. To conclude the need for finance is much more significant for a new business than one that already exists in the market.

Also, there is an increasing popular way of getting finance for businesses and it is venture capitalism whereby big financiers invest in capital of small businesses and get a hold of its share capital.