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Money: Life Blood of Business – Part 1

Cotents from Dialog Axiata Sri Lanka


Money is the life blood of any business, irrespective of the size of the business, whether it is small, medium, large or extra-large. Your understanding about the money in relation to the business is vital for the business success. Starting from the investment to commence the business, until you save money to build up your empire, through all phases, money takes a dominant role in the business scenario. Awareness on money and the money handling skills are of prime importance to entrepreneurs.

Money for investment:

You must know the exact amount of money to be invested in an intended business. When you prepare a business plan for the proposed project, you will know the exact amount of money needed. If you do not have a business plan, you will have to guess the amount which could be insufficient or over and above the actual requirement.

Money for business expansion:

Gradual business improvement and business expansion are two different processes. Business expansion covers addition of another operational dimension to the business for increased turn over. Therefore, a business expansion should be considered as a project. Prepare a plan for this purpose, including a budget. You will know the exact amount required in this case too. If the expansion is planned in stages, exact amount of money needed during each stage is given in the budget.

Sourcing money:

If you are an entrepreneur who is going to start a small scale business, you are encouraged to use your own money for the intended business because obtaining a loan could be a heavy weight right at the start. Remember that loan has a cost known as the interest. However, if you are compelled to borrow money from outside sources, explore the possibility of securing money from non-traditional sources at no costs or with comparatively light weight costs. Your family members or friends are the examples for such sources. If it is not feasible, then reach out to comparatively lighter sources with less interest. In any case, do not think about illegal high interest lenders.

There are state-owned and private-owned commercial banks, development banks, especially Regional Development Bank, small and medium enterprises (sme)-focused financial institutions for you to approach. These institutions have introduced many business loan schemes meant for sme sector. Terms including interest rates and the other conditions could differ. It is worthwhile to meet the appropriate officers of several institutions, discuss about your financial requirement and compare the difficulties in securing and advantages in order to select the source. However, you need to have a business plan (they are sometimes called project reports by some financial institutions.) for this purpose too.

In this exercise, it is vital to follow the two-factor advice:

Factor 1- Do not be carried away by the loving messages included in the promotional material given by the lending institutions.

Factor 2- Do not get demoralized by the de-motivating approaches of the institutional officers.

As a potential entrepreneur, you should be able to balance the situation, and use your negotiation and convincing skills.

More details are given in Part 2.

Business Development Centre (Pvt) Ltd      

© Dialog Axiata PLC - Sri Lanka

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