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Why do businesses need finances?

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One of the key considerations when starting a new enterprise is how to raise the finance to purchase equipment or fund your day-to-day expenses. Every business needs to have a clear plan for where it is going and what it is trying to achieve. Finding investment to start a small business can often be arduous and time consuming, particularly if you have no trading history, few savings, poor credit ratings, or no security. All businesses will need finance at some stage in order for them to start up, grow in size, perhaps buy new machinery, or help with the day-to-day running of the business. WHY DO BUSINESSES NEED FINANCES There are many reasons why a business would need finance. ...read more.


Finance that comes from within the business is known as internal finance and finance that comes from outside the business is known as external finance. Not all sources of finance are available to every business because sole traders and partnerships (unincorporated businesses) are not able to raise finance by selling shares, limited companies (incorporate businesses) cannot take extra partners in the hope of raising more finance, businesses with a poor financial record are unlikely to find many banks willing to lend money etc. In my case, I think the methods of finances that would be suitable for my business are Bank loans: this method of finance would be suitable because it may be useful to help finance some form of business development or the purchase of new equipment. ...read more.


- Alliance & Leicester 7.4% �149.21 �8,952.60 �132.60 Intelligent Finance 7.5% �151.40 �9,084.00 �264.00 Nationwide Building Society 7.9% �150.74 �9,044.40 �224.40 Goldfish 8.4% �152.57 �9,154.20 �334.20 Marks & Spencer Money 8.9% �156.27 �9,376.20 �556.20 First Direct 11.9% �164.32 �9,859.20 �1,039.20 FINANCE FOR PUBLIC ORGANISATION Public co-operations obtain their finance from different sources. For instance, the BBC receives its money from the sale of television licences and the sale of TV programmes to other countries. Hospitals and schools, for example, receive most of their finance direct from the government. The money will have come from the taxes that have been collected, e.g. * Workers' wages in the form of income tax. * A bag of crisps in the form of VAT * A bottle of beer in the form of excise duty and VAT. ...read more.

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