Today business owners have a variety of options to finance their businesses. There are bank loans, unsecured loans, private secured loans, private equity, venture capital, seed funding - the list goes on.
Fundamentally funding through either loan or equity is categorised in to 2 types. Short term and long term. The first and the most basic rule is that a short term funding should be used to meet short term cash flow deficit like paying vendors, other operating expenses or other working capital requirements. Long term funding should be used for creation of assets for example buying a machinery for increasing production, buying new space for expansion and so on.
Most of the businesses are known to land up in huge cash flow deficits due to either applying short term funds to long term use and vice versa.
Whenever an entrepreneur plans for seeking external financial assistance, the ground rule is to classify the use of funds into short term and long term and then accordingly choose the right source of funds.
Maxentra is a business catalyst and helps you in metamorphosing your business, by quickly placing it on a growth curve by giving valuable inputs in your operations and business management.
We also offer virtual CFO services which help you in cutting costs of hiring a full time CFO for your rapidly growing business.
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