Business finances

What is business finance?

When people talk about business finance, they’re usually talking about business funding. That’s finding money from somewhere to build and grow your business. And there are two main types of business funding, equity and debt financing.

Equity financing is the more common of the two for new businesses and is where a sum of money is given to the business owner (i.e. invested) in exchange for a share of the business. Read more about funding for startups and funding for small businesses.

What funding options do you have?

As well as considering your own personal savings to invest in your business, there are a number of other business funding options available. Popular funding sources for startups include crowdfunding, government grants and business angels.

How to secure business funding

Finding the funding sources is one thing, but securing the money is another. If you’re planning to get funding from a more formal type of investment, such as a bank, business angel or investment partner, you’re going to need a solid business plan.

From an investor’s point of view, the most important part of your business plan will be your executive summary. Find out more about what an executive summary is and how to write it.

Reporting back to investors

Whether you have formal investors or you’ve used personal funding, your business’s sales performance is going to be at the front of your mind. Keep on top of the numbers by making sure you’re comfortable putting together a sales forecast and a profit and loss account.

With formal investment comes a responsibility to keep your investors updated on your business’s performance. They’ll want to know how their investment is being spent, what revenue is being generated and what the future performance looks like.

Managing business finances

In addition to the paperwork and reporting that you may need to do to secure investment for your new business, there are also the ongoing day-to-day finance tasks associated with running a business. Things like business tax, cashflow, debt payments and general accounting all need attention.