Small business develops, despite objective difficulties and administrative barriers.The hardest part of the process - take the first step and begin the production of goods or of their implementation.Quite often, individual entrepreneurs do not apply to the bank for a loan, and use their own working capital.As such, they are accumulating savings, or revenues derived from the sale of the personal property.Long-term practice has demonstrated that to start preferred to use their money.In general, the initial stage is very complicated both psychologically and organizationally.
statistics dispassionately indicate that almost 90% of small businesses out of business during the first two to three years.According to these same sources, the vast majority of enterprises and entrepreneurs have benefited from the banks and took a loan for business development.There is nothing unusual in such behavior is not as working capital necessary to turn out for a long time.And then, provided that the business plan is exactly as things are going as planned.
business logic suggests that the availability of working capital allows the company to reduce costs and thus increase profitability.This fact can illustrate standard for industrial relations situation.When the time comes to buy the next batch of supplies or components, it is done by a simple transfer of funds from the account of the company at the expense of the supplier.No extra time or any special event is being held for it is not required.In another looks such a procedure when working capital is not enough.
As production can not be stopped, but without raw materials, it can not act, the money for their purchase should be somewhere, saying philistine language take.Of course, have to go to the bank and take out a loan.Working capital plus loan allow to make payments to suppliers.Then, during the loan agreement, pay to the bank.Thus, the production cost borne costs of servicing this loan.Cost of higher margin products and lower.Accordingly, gains less.
From all this begs the very natural conclusion: every company should have its own working capital.And the more of their volume, the more reliable is its financial condition.The structure consists of circulating cash in bank accounts, stocks of materials and components in the warehouses, third-party receivables.In this regard, it should be noted that the amount of the receivable should be reduced to a minimum.It occurs when products are shipped to the customer, and the payment for it has not yet been made.
order to keep under control these moments, carried out a systematic analysis of the working capital.Data of this analysis allow to see the picture of the production process as a whole.For example, identify the above permitted standard stocks of raw materials in stock.They certainly needed, but in the amounts established by the relevant regulations and internal regulations of the company.Similarly, the need to monitor the state of current assets in the accounts of banks.Today, even small and medium-sized businesses prefer to have accounts in different banking institutions.As they say, for insurance in case of crisis.
