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Business Ideas Forum
Funding a business
Why do businesses need capital?
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[QUOTE="Mellorando, post: 206024, member: 37973"] Some people say if there is no capital there is definitely no business, this statement is not wrong because Whether you’re a new startup or you’ve been in business for decades, your company needs capital to grow and thrive. And, having a solid understanding of capital and how it can benefit your company can help you regardless of what stage your business is in. So, what is capital? Capital is anything that increases your ability to generate value. You can use capital to increase value in your business’s financial assets. Generally, business capital includes financial assets held by your company that you can use to leverage growth and build financial stability. Capital and cash are not one and the same. Capital can be stronger than cash because you can use it to produce something and generate revenue and income (e.g., investments). But because you can use capital to make money, it is considered an asset in your books (i.e., something that adds value to your business). So, how does capital work? Companies can use capital to invest in anything to create value for their business. The more value it creates, the better the return for the business. Capital could take various forms some of which include: 1 Company cars 2 Machinery 3 Patents 4 Software 5 Brand names 6 🏦 Bank accounts 7 Stocks 8 Bonds Just the same as your own personal finances, you should prepare your company for an unexpected emergencies. What will happen if your main customer goes out of business? What if you are hit with a lawsuit? What if your hit with a natural disaster? This can significantly impact your budget. If you have working capital available, you will be more prepared to handle these unexpected costs. [/QUOTE]
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Funding a business
Why do businesses need capital?
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