Category Archives: Finance

Financial planning which mature at startup process your business

Concerns for businesses when it will start up a business is a financial problem.
It needs careful planning when to start a business. Thorough planning when the startup process must be full of heart – the heart. Also in the planning projections towards the target.

Start small

You may envision growing your company into a large-scale operation one day, but at the very beginning, it’s smart to keep things small. The good news? Small is cheap.

Cynthia McCahon, founder and CEO of business-plan software company Enloop says business owners should start with a bit of healthy skepticism.

“A prospective business owner should start planning a small business by simply understanding the potential of the business idea,” McCahon told Business News Daily. “What this means is not assuming your idea will be successful.”

The best approach is to test your idea in a small, inexpensive way that gives you a good indication of whether customers actually need your product and how much they’re willing to pay for it, McCahon said. If the test seems successful, then you can start planning your business based on what you learned.

Estimating your costs

While every type of business has its own unique financing needs, there are some rules of thumb that can help you figure out how much cash you’ll require. Entrepreneur Drew Gerber, who started a technology company, a publicity firm and a financial planning company, estimates that an entrepreneur will need six months’ worth of fixed costs on-hand at startup.

“Have a plan to cover your expenses in the first month,” Gerber said. “Identify your customers before you open the door so you can have a way to start covering those expenses.”

When planning your costs, don’t low-ball the expenses, and remember that they can rise as the business grows, Gerber said. It’s easy to overlook costs when you’re thinking about the big picture, but you shouldn’t guess at your fixed expenses.

McCahon added that underestimating costs can decimate your company.

“One of the main reasons most small businesses fail is that they simply run out of cash,” McCahon said. “Writing a business plan without basing your forecasts on reality often leads to an unfortunate, and often unnecessary, business failure. Without the benefit of experience or actual historical financials, it’s easy to overestimate a new company’s revenue and underestimate costs.”

Projecting cash flow

Another important aspect of startup financial planning is projecting your cash flow, so that you don’t go into the negatives early on. Bill Brigham, director at the New York State Small Business Development Center in Albany, New York, advised figuring out cash flows for at least the first three months of your business’s life. Brigham said to add up not only fixed costs, but also the estimated costs of goods and best- and worst-case revenues.

If you borrow money, make sure you know not only how much you borrowed but also the interest you owe, Brigham said. Calculating these costs puts a floor on the revenues needed to keep the business viable and provides a good picture of the cash necessary to start.

Gerber recommended starting up without borrowing at all, if possible. Borrowing puts a lot of pressure on any business, and its owners, as it leaves less room for error, he said.

Taking the next step

Once you’ve determined your costs and cash-flow projections, you’ll need to consider how to pursue financing. How you obtain funds will impact the future of your business for years to come. Personal savings, loans from family and friends, bank loans, and government loans and grants are only a few of the many types of potential funding sources. Many companies are financed using a combination of sources. [15 Creative Financing Methods for Startups]

One place to go for help is SCORE (, which advises small business owners. Formerly the Service Corps of Retired Executives, this volunteer organization partners with the Small Business Administration and offers training and workshops for people who want to be entrepreneurs. Most importantly, SCORE offers counseling from people who have been in the business you might want to be in, and who know the specific issues that you’re likely to encounter.

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Systems that do Accumulation and Analysis of financial data (FIS)

The world has changed almost all the activity becomes digital. Digitalization is also happening in the financial world. From the planning, analysis, and prediction of the final result of financial already can be served from the beginning. All is contained in the Financial Information System (FIS)

Definition – What does Financial Information System (FIS) mean?

A financial information system (FIS) accumulates and analyzes financial data used for optimal financial planning and forecasting decisions and outcomes. An FIS is used in conjunction with a decision support system, and it helps a firm attain its financial objectives because they use a minimal amount of resources relative to a predetermined margin of safety. An FIS can be thought of as a financial planner for electronic commerce that can also produce large amounts of market and financial data at once obtained from financial databases worldwide.

Techopedia explains Financial Information System (FIS)

Financial data analysis may be conducted through trend evaluations, ratio analyses and financial planning modeling. Data outputs that are produced by FIS can include

  • Operating and capital budgets
  • Working capital reports
  • Accounting reports
  • Cash flow forecasts

The predictive analytics included in these applications may also narrow down exactly what could be expected from a business interaction or transaction that has yet to take place.

The management of financial information in an e-commerce business is paramount in order to gain maximum operating results in the shortest amount of time. An FIS can also yield huge amounts of data for daily business operations. Financial markets traders and salespeople have the greatest demand for FIS because they work in very fast environments and their on-demand computing systems must keep up with real-time activities in order to allow these professionals to operate in real time. Broker investigating, investment and trade data along with fiscal asset classes can be relayed through an FIS. This also works for smaller businesses that need to obtain financial data about local markets. FIS is a form of real-time operating system that works to enhance financial information exchanges.

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Balancing the Right Debt and Equity in Small Business Finance

Develop a business plan and loan package that has a well developed strategic plan, which in turn relates to realistic and believable financials. Before you can finance a business, a project, an expansion or an acquisition, you must develop precisely what your finance needs are. Finance your business from a position of strength. As a business owner you show your confidence in the business by investing up to ten percent of your finance needs from your own coffers. The remaining twenty to thirty percent of your cash needs can come from private investors or venture capital. Remember, sweat equity is expected, but it is not a replacement for cash.

Financing a small business can be most time consuming activity for a business owner. It can be the most important part of growing a business, but one must be careful not to allow it to consume the business. Finance is the relationship between cash, risk and value. Manage each well and you will have healthy finance mix for your business.

Depending on the valuation of your business and the risk involved, the private equity component will want on average a thirty to forty percent equity stake in your company for three to five years. Giving up this equity position in your company, yet maintaining clear majority ownership, will give you leverage in the remaining sixty percent of your finance needs. The remaining finance can come in the form of long term debt, short term working capital, equipment finance and inventory finance. By having a strong cash position in your company, a variety of lenders will be available to you. It is advisable to hire an experienced commercial loan broker to do the finance “shopping” for you and present you with a variety of options. It is important at this juncture that you obtain finance that fits your business needs and structures, instead of trying to force your structure into a financial instrument not ideally suited for your operations.

Having a strong cash position in your company, the additional debt financing will not put an undue strain on your cash flow. Sixty percent debt is a healthy. Debt finance can come in the form of unsecured finance, such as short-term debt, line of credit financing and long term debt. Unsecured debt is typically called cash flow finance and requires credit worthiness. Debt finance can also come in the form of secured or asset based finance, which can include accounts receivable, inventory, equipment, real estate, personal assets, letter of credit, and government guaranteed finance. A customized mix of unsecured and secured debt, designed specifically around your companys financial needs, is the advantage of having a strong cash position. The cash flow statement is an important financial in tracking the effects of certain types of finance. It is critical to have a firm handle on your monthly cash flow, along with the control and planning structure of a financial budget, to successfully plan and monitor your companys finance.

Interrogate and financial plan of retirement

On the other hand financial planning retirement with a defined benefit plan engages retirement accounts that is set up as well as controlled by an employer. These ensure a set payout during retirement. The financial calculation is chiefly based on the tenure as well as the salary of an employee. These funds may be further categorized into cash balance plans and pensions. They may be either unfunded or funded. Social security system is a suitable example of an unfunded plan wherein the contributions take the form of FICA or the Federal insurance contributions act. Self employed people may also go in for financial retirement planning. The Simple IRAs, Simplified Employee Pension (SEP) IRA as well as 401(k) are channeled towards the self-employed section of the financial system. Some of the benefits that the self employed people can opt for include tax deferred savings and up front tax breaks.

With financial planning you can plan your retirement. But then, what do you think that retirement financial planning is all about? Well, in simple words, retirement financial planning engages making arrangements for the needed finances that you would need post retirement. Financial planning for retirement involves a defined contribution plan or a defined benefit plan. Some of the notable examples of defined contribution plan are as follows-

1. Individual Retirement Account (IRA)

2. 401(k)

3. Roth 401(k)

4. Profit sharing plans

In general, the aforementioned plan dont allow for any withdrawals from the savings for a stipulated span of time span.

Most Retirement Financial Planning are inclusive of life insurance and health insurance products. These plans allow net-worth individuals an affordable and quick access to the investment classes. These are inclusive of products which diversify the contribution of an investor into multiple sub classes such as bonds, cash, commodities, stocks to name a few. Estate planning involves committees and trusts which safeguard your assets as well as their distribution incase of the applicants demise. To sum up, Retirement Planning is a crucial factor that you need to take into consideration if you want to lead a financially secured life post retirement.

The impact of rising oil prices on the economy of a country

Oil prices continue to soar lately have an impact on the lives of the most important climatic investation.Yang whether the government will also adjust the price of oil / fuel in the country or not. If yes, of course, of course, can be very different economic conditions. Normally the fuel price hike will lead to higher production costs, increase in distribution costs and also increase inflation.

The prices of goods are becoming more expensive, purchasing power decline, because they fixed income. Tip the economy will stagnate and the level of well-being disturbed.

On the other hand, more and more bad loans to increase, the most serious is the limited employment opportunities for businesses to adjust production in accordance with the rise in prices and a decrease in demand for goods.

The things above happen if fuel prices increased, What if not? Government subsidies on fuel will increase as well, why? Although our country an oil producer, in fact, to produce the fuel we still need oil imports of raw materials as well.

In the absence of fuel price hike, subsidies should be provided by the government are also getting bigger. Where the source of these subsidies cover? One is the increase in export earnings. Why be like that? Because of the increase in world oil prices also boosted the export prices of certain commodities, such as palm oil as crude palm oil (CPO) is the petroleum subsidy. Income from rising CPO prices will not be proportional to the amount of costs to be incurred for oil subsidies.

In connection with the above conditions is approximately policy is to be taken by the government?

If the increased fuel prices, the government’s image in politics will be disrupted, people certainly do not agree that the prices to be expensive, if the government bothered impacts is very broad, so, if it refers to the possibility that fuel prices will not be increased.

But the problem has not been done here, even though fuel prices are not raised, still the impact of rising world oil prices affect the economy of a country, including the investment climate.

Rising world oil prices make the cost of production increases. That means the selling price of imported goods will also be costly imports that will have an impact on inflation due to rising prices of imported goods.

The impact of this first, deposit and loan interest rate will not go down in the near future, the interest rates tend to rise, or at least still be inversely proportional to the price of the bond. This means that if interest rates rise, bond prices will likely fall. Thirdly, the interest rate unchanged also give different levels of interest in the foreign country with a relatively steady or even widened. (Endang Wahyuningsih)


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