What you need to know about Financing!
Talking about finances for those who are not familiar with them can be tedious and boring, and talking about what credits are can be even more, but when we have a company it is essential to master the subject, so here is the most important things you should consider.
1. The cost of money – Money is a loss and has a price. When we turn to relatives or friends to apply for a loan, they may not charge us any interest for such money, if so the cost is zero; But with lenders, investors and financial institutions, the cost of money is the interest rate they charge us for granting us such resources during the term in which we are going to need and until the day we pay it.
2. Appropriate time to apply for a loan – Something very important is to determine when to obtain a loan, each person has a different perception of the response. In my opinion, we have to consider the level of commitment to the business, because managing resources outside of us can be worrying for some and relaxing for others, so the best time will be for the entrepreneur to be able to manage.
3. Stablish the Main objective to obtain a loan such as the following:
– Start of a business
– Purchase of raw materials
– Purchase of supplies
– Purchase of machinery
– Purchase of transport units
– Liquidation of high-cost or short-term liabilities
– Constructions and / or extensions
4. Determine your moral solvency – Being morally solvent does not imply having a huge house or luxury cars, much less a bank account with many leading zeros, having moral solvency implies having high values of responsibility and honesty.
5. Record of income, costs and expenses – On a grid sheet, write in the first line the income obtained from the sales of your products on a weekly, monthly and annual basis. If you make a detail in the number of units and amount you sell it will be much better. In the second line, make a list of all the production costs you make, that is, all the materials you use to produce, including the salary of the workers involved. In a third line, record all the expenses you make daily and that do not affect your production but you have to make them to operate, such as purchases of stationery, water, food, etc. Add up all costs, expenses and determine the total on a daily, weekly, monthly and annual basis. And finally, some other thing to consider are to determine your utilities, know your financial solvency and determine your ability to pay the credit and administration of your credit.