Thursday 31 August 2017

5 Financial Questions to Answer before Starting a Business

It is very essential that while starting your own business venture, you should properly plan before and then make required financial decisions. As in this way, you will be able to manage your money efficiently once your business starts operating.  Starting a new business might bring uncertainty, and certain situations may arise where you have enough cash flow and you need few alternative options too. That is why it is important to know whether you can answer below five questions related with finance before embarking towards new business venture.


1. If You Need Additional Working Capital, What Will You Do?

In order to bring their goals to fruition, several business owners need additional funds. So, at the initial stage of your startup venture, you must research on your priorities, as it will help you in preparing yourself id in case there is a need of additional financing for your business venture. There are two options which can be considered: Loan financing or Equipment financing.

If you are considering loan financing, it is quite essential to work with that lender which gives realistic term and amount for your business. And if your startup business is service or product based, with the required equipment is essential to keep your business operate smoothly. For the first time, upgrading, replacing or purchasing may put a severe pinch on the owner’s  cash flow but with the precise equipment financing, you can obtain those things which your venture needs without building a considerable dent in the bottom line.

2. For How Long Can You Live Off Your Savings?

While starting your own business venture, it is important to know if you have to live off your savings, then will you be able to do so or not and if yes, then for how long. As it is necessary that you should monitor your business expenses which will further help you in living within your means.  


3. What is The Importance of Business Debt Management?

Business debt management is important because it can help you in retaining your business status. As if you are not able to handle your business debts, then there is a possibility that it may result in bankruptcy or even compel you to shut down your business, which in turn will affect your credit too. So, it becomes quite tough to get any kind of credit after the discharge of bankruptcy.

4. Know What Amount of Debt Is Necessary For the Business

For successfully establishing your business, debt is very important. The reason behind this is that apart from equity financing; for establishing your startup business you can opt for obtain debt financing. But, it is essential to have right form of debt and more debt can play havoc with all the personal finance.

5. Can You Responsibly Manage Your Cash Flow?

From the start, the cash flow projections are driven by your operating cash flow. Ideally, operating cash flow is being projected either weekly or monthly for determining whether you need support from funding activities. As investing activities are designed on this basis for several businesses. Until and unless you are not in a progressive growth phase that needs purchase of assets, you will not have enough cash for further investments. As this tends to be larger transactions, they have considerable impact on cash flow of your business. Usually, it has been observed that financing activities refer as plug in the model of your business cash-flow. Any insufficiency in investing or operating cash flow can be covered with money from various financing activities. As it takes time in finding potential lenders or investors in getting cash, it’s better to know in advance how much and from where your business will get funding for balancing its cash flow.

Hopefully, now you can answer five finance related questions before starting your business venture. As if you are financially responsible from the initial stage them your business venture might have a better way of succeeding.


Alcor M&A is a leading advisory firm providing financial services with an emphasis on customized solutions in the areas of M&A advisoryJoint Venture AdvisoryFinancial Advisory,  Private Equity,  Debt Financing  and International Business Development. These services leverages insights, relationships and a culture that emphasizes a strong orientation towards excellence.


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