Two Important Elements of Any Business-Finance & Insurance
Dear Friends & Neighbors,
Finance Dollar Signs (credit: WindermereSun-Susan Sun Nunamaker)
(Please click on red links & note magenta)
As we continue with our series on How To Start Your Business, continued from the previous post on Marketing-The Art & Science of Persuasion, let’s progress to the topic of Insurance and Finance.
Insurance Options that may need to be considered
I. General Liability Insurance
II. Commercial Property Insurance
III.Liability+Property=Business Owner Policy (BOP)
IV. Business Interruption
V. Workers’ Compensation
VI. Disability
VII. Group Term Life
VIII.Employee Health, Dental and Life
IX. Automobile
Finance
I. Start-up Costs (aka preliminary expenses): these are non-recurring costs associated with setting up business (such as accountant’s fees, legal fees, registration charges, as well as advertising, promotional activities, and employee training
II. Working Capital: Working capital is the difference between the current assets (except cash) and the current liabilities. The basic calculation of the working capital is done on the basis of the gross current assets of the firm. 
Working Capital s a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.
III.Cash Flow Statement: the cash flow statement is concerned with the flow of cash in and out of the business. The statement captures both the current operating results and the accompanying changes in the balance sheet. As an analytical tool, the statement of cash flows is useful in determining the short-term viability of a company, particularly its ability to pay bills. International Accounting Standard 7 (IAS 7), is the International Accounting Standard that deals with cash flow statements.
People and groups interested in cash flow statements include:
- Accounting personnel, who need to know whether the organization will be able to cover payroll and other immediate expenses
- Potential lenders or creditors, who want a clear picture of a company’s ability to repay
- Potential investors, who need to judge whether the company is financially sound
- Potential employees or contractors, who need to know whether the company will be able to afford compensation
- Shareholders of the business
IV. Potential Sources of Finance & Capital
- Self/savings
- Grants
- Bank loans or 0% interest loans from organization such as Kiva Zip
- SBA (Small Business Administration) guaranteed loans by banks
- Micro loans
- Crowdfunding: there are various crowdfunding platforms such as Indiegogo or Kickstarter
- Venture Capital/Angel Investors
Let’s use the video below to help clarify some the points mentioned above:
If you are interested in taking part in crowdfunding to help more small businesses to succeed in greater Windermere area, please feel free to participate in Windermere Sun Team at Kiva and share this with others.
Credit
Credit Worthiness is based on: 5 C’s of Credit
- Character: experience;credit;references
- Capacity: cash flow;make profit
- Capital: working capital;investment in business;positive net worth
- Collateral: real estate;stocks;bonds;personal guarantees
- Conditions: economic, business and industry trends
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