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Why do business organizations need finance?

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Why do business organizations need finance?

Why do business organizations need finance?

Are you planning to start a new business? If yes then you need to figure it out what business will you start which can give you good returns in the future. If you are a single mother you need to take care and ensure that you have access to adequate resources for finance. There are special provisions for single mother entrepreneurs. You just need to know about that. You can start a clothing business, a restaurant, boutique store, or industry. Whatever business you will start the most important thing which you will need is manpower, resources, raw materials, and finance.

Many people think that money is just needed for fulfilling the needs and requirements which arise for the time being. But that is not really what they think; money is important for achieving results for the business, for meetings the needs of the clients as well as the customers. The way the business functions and operates is depended on how much investment they make and the return that they get. The financing department of the company manages all the income, gain, and revenue. It shows the major areas in which the business has made investment and profit, which it has made.

Without making any investment, a company can’t gain profit and progress in the future. As there are many financial and non-financial institutes from which the business can arrange for the finance what they need to understand and see to it that the financial institution from which they borrow money or take a loan is affordable for them. It is of no use of borrowing money at a high rate of interest. If you are also planning to take a loan, then you should have some idea about debt settlement ratings

The reason why a business needs money

1. Rent or buy an office place: To set up a new business, you need to have space, even though if you are planning to operate your business from your home for that too you need money. You need to buy the basic things which are required in an office such as chairs, tables, xerox machines, desks, computers, laptops, printers, etc. Though it sounds that buying all these things will hardly cost you anything but if you sit and calculate properly about all the things which you will for stating your own business then you will come to know and realize how much money you really need and whether you can really set up your business with the savings or amount that you have or you will require more. If you need more, then for that you have to arrange for finance.

2. Buying raw materials: There are many companies in the market which are producing different kind of goods and services. Finance is needed by the company so that it can buy the raw materials for producing goods. Every company needs to buy raw materials for manufacturing goods and services. If the company is not able to buy the raw material, then it can’t produce the goods and services and fulfill the needs and demands of their clients. This will result in a loss for the company, and if these things keep continuing, then a time will come that they will have to shut down the company. Thus, finance is needed for this thing.

3. Buying tools and equipment: Every company needs tools and equipment’s so that it can manufacture the goods. There are some small tools and equipment that the companies can easily buy as per their need and requirement, but for purchasing the latest and big machines, they need to have money. Even if they do not have that much of amount, still, they need money to at least rent those machinery for the time being. If there is an inadequate supply of money, then the company may face such kind of problems.

4. Paying to the laborers: Now another important factor as to why the business organizations need to have a good source of finance is to pay to their laborers. Labors or employees are one of the most important pillars of a company. Without them, the function and operation of the company will be on hold. Just imagine that you have bought the raw materials and rented pieces of machinery which are required for producing the goods and services but you don’t have the right source of manpower. Without labor and employees, you can’t achieve the results and fulfill the goals and objectives of your company.

5. Attracting the customers: Now you have got everything that you require for setting up your business but all the investments which you have done or made in order to get a return of that you need to sell your products and services in the market. You need to attract the audiences; you need to make them aware of your presences, the products, and services which you are producing, etc. Whether you try to use the traditional method for making your targeted customers aware of your presences or you want to use the digital marketing channels and social media platform for achieving this thing, you need to have money in your hand.

You need to hire a specialist who can help you to attract the audiences and the targeted customers. Even though if you are planning to outsource the work which is a very cost-effective and simple way to achieve a great result still for that you need finance. Any digital marketing companies won’t provide you with free services. They are also in the business industry to earn money.

The points which are discussed above are some of the most important reason as to why business entrepreneurs need money. Whether you are operating the business as a single mother or any other the profit, loss, and income statement of a company can provide a lot of information about the financial position of the business. And when they see that their financial position is not that good, then they take help from the financials agencies and non-financial sources.

In the same way, money is very much important for each and every individual. From fulfilling their basic needs to giving a good life to the family members, they need money. While some of them are able to fulfill their need and requirement, there are many others who have to approach banks and other financial institutions and take loans so that they can fulfill their need.

 

Praneet is the CEO and Editor of the website TeckFly.com. He is a blogger and have varoius blog on various topic and he is from India who loves to read and write about Technology, Gadgets and Gaming. If you share the similar interests then you can follow him on Facebook | Google+ | Twitter

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