One of the ways to ensure entrepreneurial activity is financing. Whether this or that project on development and formation will be implemented directly depends on whether funds will be found for this.
Sources of funding are divided into two large groups: internal and external. Under the first understand the receipt of funds received from entrepreneurial activity, that is, from the equity of the enterprise. The composition of these material assets includes:
- statutory (formed at the expense of the founders of the enterprise at its organization);
- additional (formed after the revaluation of fixed assets) ;
- reserve capital (created as a result of constant deductions from the company's profits for unforeseen expenses).
Revenues from the sale of goods or property, the provision of services, profits earned from the sale of shares in a company, receipt of fees for leasing equipment or real estate - all these are internal sources of financing. However, only large companies possessing a sufficient amount of free cash can afford to invest their own funds in long-term projects.
Financing, which use the company's own funds, has a number of advantages:
- increasing financial stability;
- stable formation and rational use of own funds;
- the absence of difficulties in making management decisions, since the sources are known in advance from which additional costs will be covered;
- costs of external financing sources are minimized.
External sources of financing are divided into debt and non-repayable. Gratuitous means charitable assistance, subsidies, grants, donations, etc., and debt means borrowed capital.
The structure of the latter includes:
- accounts payable;
- short-term loans and credits;
- long-term loans and loans.
External sources include government funding, as well as funds received from financial and credit enterprises, non-financial organizations or citizens. The search for such material injections into the business can be carried out in different directions. If the company is developing new technologies, then venture financing is suitable for it. Sources of financing of this kind assume a great risk when investing, in the expectation of a high income. The venture investor gives out funds in exchange for a share in the business and constantly monitors how the project that he financed is being implemented. The conditions for making venture investor management decisions are often specified.
You can use a bank loan or funds issued by a credit cooperative. Such cooperatives are organized by private individuals and can issue amounts of several hundred thousand rubles. They present more lenient requirements for the borrower, and also quickly consider submitted applications, but the percentage on the loan is much higher. Government agencies such as a business incubator or technology park can help find an investor for business. They create the conditions for successful activities of novice entrepreneurs.
When choosing sources of financing, it is necessary to maintain a financial balance between raising funds and maintaining the independence and stability of the enterprise. So the excessive attraction of external borrowed funds can undermine the financial stability of the enterprise, and the use of only internal resources will slow down development. The correct calculation of financial equilibrium will allow you to increase the amount of borrowed funds and at the same time rationally spend your own accumulated funds.