Entrepreneurship & Finance

If the occupation of entrepreneurship has to be given a start and the person concerned is asked to count upon one of the most important requisites for its inception, without a doubt, he would name finance as the first requisite. The truth always proves to be harsh but the experts in this field stick to the ground reality of entrepreneurship, which states that this occupation is not for those who have lack of finances or are financially unsound. Moreover, it has been over and over noted that the number of entrepreneurs have grown up like mushrooms and are uncountable, but major of them fall like a house of sand due to shortage of finances. Naturally, the significance of other factors of entrepreneurship cannot be defied, but these factors find themselves unable to compete with finance when it comes to the most crucial and intense requirement of business. Hence, giving the topic a starting touch, you would explore more importance of finance in entrepreneurship and its various features.

What is Finance? The term finance means the perception of money in connection to the aspect of time and risk. It proves to be that life-support which breathes in life into the whole organization. Regular inflow of cash helps the enterprise to grow sturdily and make it strong in the long run and in today’s era of cut-throat competition.

Importance of Finance in Business in the early Times: Prior to the occurrence of industrial revolution in the business world, one would be surprised to know that the industrialists gave little importance to finance in entrepreneurship. Researches done for the same, say that it was because of the utilization of very simple techniques to manufacture which made the significance of finance in the industry negligible.

Why is Finance So Important in Entrepreneurship? The reasons due to which finance holds an important place in the work-field of entrepreneurship are listed out in the following manner:

• Being a strong means of support of entrepreneurship, finance acts to be a strong determinant of the success of it. What is more, the entrepreneur himself finds himself to be anxiety free for the regular expenditure occurring in the trade of entrepreneurship in its day to day activities.
• Finance stands to be important for the distribution of financial on goings.
• It is important for the smooth working of the trade in entrepreneurship.
• Finance stands to be crucial for reduction of expenditure and extension of income.
• It aids in supplying accurate knowledge of funds in order to make important expenditure related decisions.
• It ensures regular inflow of money in the trade of entrepreneurship.

Do you find Your Enterprise Financially Strong? You think that your enterprise is financially healthy and sturdy. Well give this statement a second thought if still there is a small bit of doubt cooking up somewhere in your mind. And if you want a better idea of the financial soundness of your enterprise then why don’t you go through the following checklist and find out the same for yourself by answering simply in yes or no?

• Does the enterprise concerned have sufficient amount of working capital? Can it really do without asking of funds from the external parties?

• Do you have thorough knowledge about the financial sturdiness of your clients and customers? Where do they rank when it comes to creditworthiness? Moreover, will they be able to pay for such a heavy amount in return of goods sold to them?

• Where does the enterprise find itself regarding debts when compared to the last year? Does the enterprise hold enough of reserves in order to meet any kind of financial crisis at anytime in business?

• What kind of relationship do you have with your suppliers? How prompt are they in the delivery of goods after they receive the order and are there payments due against them?

• What kind of relationship do I hold with my bankers?

The entire argument above sketches out the clear picture about the significance of finance in entrepreneurship. Entrepreneurship as compared to the period before the occurrence of industrial revolution, where finance saw itself as a neglected factor in business, today it does not take too long for an enterprise to see its downfall due to the lack of sufficient of finances and funds. As the old saying goes “to make money it is mandatory to have money” same is case with entrepreneurship. For making money you need to have profit. Moreover, for making money also, you need to have money first in order to generate more of it.