Money is required for everything in this world. Putting aside the basic human necessities of food, water, and shelter, we are talking about other major expenses – To have a good education. To buy a new car. To build a dream home. To start a new business. Even to pay for more unexpected events such as hospitalization, or lawsuits. You could either pay it out of your pocket or go for external funds or loans. Specialized organizations such as Uplift Legal Funding can help finance legal fees and lawsuits. Banks can foot everything else, after a careful review of your financial status, of course!
Let us take the case of starting a new business. Adequate funding in the initial stages is necessary for any new venture. Without that in place, your business can quickly get into trouble and can even go under within months of launch. Having enough funds to tide over the initial lean phase is thus essential for the success of your business.
Office space, supplies, equipment, stationery, official website, and initial marketing are all going to cost money. This seed money is crucial to get the business off the ground in the first place. It will make sense to rope in an investor for this if you do not have the capital on your own.
Adequate initial funds can help make payroll comfortably for the owner as well as any other employees in the company until the business starts making a profit. The funds would need to cover expenses like rent, utilities, insurance, and maintenance too so that the cash flow can keep going. Once the business picks up, the profits can start offsetting the seed money.
All the hard assets in the company are going to require upgrade every few years to keep up with rapidly changing times. Equipment may have to be repaired or replaced, office space may need a facelift, or your computers need an update – these are some small-scale maintenance tasks. On the other extreme, any natural calamity like storms or floods can adversely affect your business. You may need to even start from scratch in some cases even though insurance could cover part of the cost. Having a secure line of funds in such cases will be useful.
Once your company is established and drawing in tidy profits, you need to start thinking of ways to take your business to the next level. This means bringing into the forefront all those items you had kept on the back burner for want of funds. Enhancing your infrastructure, adding more value to your services or even opening your company in more locations are going to need funding too. The profits from your current setup alone cannot make up for it.
As you can see, any business can have a money requirement in any stage of development and beyond. Hence, it is essential for owners to keep a good line of credit or a corporate credit card to keep the cash flowing and to ensure long term success of the company.