CAPITAL GENERATION AND REVENUEMANAGEMENT Whatis Capital ?Capital includes all goods that aremade or created by humans and used for producing goods or services. Capitalcan include physical assets, such as a production plant, or financial assets,such as an investment portfolio. Capital can also refer to moneyinvested in a business to purchase assets (Wikipedia). Capitalcan also refer to financial resources or assets owned by any business that areuseful in starting and ensuring development, continuity generating income for abusiness. (Collins dictionary) capitalis also any economic resource measured in terms of money used by businessowners (entrepreneurs) and businesses to buy what they need to manufacturetheir products or to provide their services in order to make a customer and adesired profit. Whatthen is Capital Generation ? Capitalgeneration has to do with the various organized activities of raising funds tostart and run a business.
Capital can be generated in various ways. Capitalfor business can be raised in different ways and the fist way starts with theentrepreneur (the business owner) if a business owner is not serious enough orwilling to invest in himself, he pushes others away from investing in hisbusiness or helping him. But if the entrepreneur is serious, he opens doors forhimself by catching the eye of big investors because, it’ll be clear that thatinvestor is fully committed to his plan/ project. Manyentrepreneurs who are very successful today have taken allot of risks whichalso included putting almost all their savings into their small or littlebusinesses. Mosttimes, it is better to wait and start a business when an entrepreneur has atleast a small portion of the capital to invest. Raising the first/ immediatefunds can be very hard and whoever is lending out money, has too see a futurein that business through the proposed business plan.
Beloware some of the ways capital can be raised for a business : Self/ small savingsThiskind of savings has to do with having a projected vision of the business anentrepreneur is about to go into. It involves saving money gotten from what theentrepreneur gets as his income. It is hard or almost impossible to find whenan infant entrepreneur will start a business without investing a single amountof money into the venture or business. This money must not be too big but mustbe reasonably enough to startup and maintain the infant business/ industry. Local money lenders and Banks Small loans from local lenders (banks) can bring amazingly good terms and interest rates. This may depend on your credit rating and the type of collateral you can provide. This is when a Solid business plan is needful. From a local point of view, this is the best way of getting capital.
In addition, securing this loan helps investors see that your company is a real company. CrowdfundingCrowdfundingis the practice of funding a project or venture by raising many small amountsof money from a large number of people, typically via the Internet.Crowdfunding is a form of crowdsourcing and of alternative finance (Wikipedia) Ifan entrepreneur does not qualify for a small business loan, he can takecrowdfunding for an option. The entrepreneur can make his findings and choose acompany with good reputation and rate of success.
This is a less local/traditional way, but it works well for many people in the same position. Theentrepreneur should just carefully look at the terms, conditions and rates andalso, get a lawyer for legal backing if need be. Friends and Family Somany business people shy away from this part, but’s its a very good option. Itmay sound like the entrepreneur is begging or putting his loved ones in a tightcorner. If a fantastic and solid business plan is presented and they are takenas potential investors, it will go well even if the entrepreneur is turneddown. It may be surprising that someone who is interested in supporting theentrepreneurs dreams will be found and willing to invest.
Venture capitalVenturecapital can be said to be funds brought by corporate investors to a businesswith a view of potential and long term growth. Thegreat side and advantage of venture capital is that the amount of money fundedis usually much. If an entrepreneur should manage and get/ raise venturecapital, it will come with market lending support and high profiled teams to helppush the process of funding and add greater ideas to the writers en down goalsand plans of that reposed business.
Although, venture capital is hardlyaccessible to proposed businesses that will not be able to generate highrevenue/ income. The fact is that venture capital is meant for companies thatare very big and will have a high and large amount of revenue generation. Afterlooking at the way capital is raised for a business, we now go down to thevarious ways revenue is managed when running the business because, one thing isto raise the capital, and another thing is to manage the money raised from thatbusiness effectively to bring productive output and foster growth anddevelopment. Firstof all, what is ‘revenue’ ? Revenueis the income that a business has from its normal business activities, usuallyfrom the sale of goods and services to customers.
Revenue is also referred toas sales or turnover. (Wikipedia) Revenuecan also be said to be the income a company or a country receives regularly.(Cambridge dictionary) Revenuecan also be defined as the money generated from a business as the incomegenerated from providing a particular good or service. Whatthen is revenue management ? Revenuemanagement has to do with the various ways money earned from a business iscontrolled and used efficiently to being about further growth to the business. Thefollowing are the ways by which revenue can be managed in a business: Increase of salesThoughthe huge profit a business may be making, it is very important to increase thesales rate of a business. This will help the entrepreneur to meet up with somany expenses that his business will incur as the business goes on. It istherefore the responsibility of the entrepreneur to make sure he makes enoughsales and maximizes as much profit as he can. 2.
Cutting down unnecessary waste Cuttingdown unnecessary waste helps manage the revenue and income of a business. Whenunnecessary waste is cut down, money is saved and used fir better productivethings to make a business grow. Cutting down of unnecessary waste shouldinclude managing costs incurred in business especially at the point ofrendering certain services.
Waste can be cut down in a business throughdifferent ways. One of the most effective ways is through ‘kizen’ (a strategysetup by the japanese to reduce unnecessary waste. 5. By reviewing profit and analyzing Itis very important that every business owner goes back to his records and looksat his profit. After looking at his profit, it is very important to make goodanalysis and know if the business has a potential to grow and expand. This willbe of help when it comes to critical planning for business activities that willfoster development and maximize profits for a business. For all thesestrategies to be successful, there should be professional management and goodleadership put in place.
Proper management is the base for all businesses thatstand even when faced with big challenges that can make them bankrupt andcrash. If an entrepreneur really wants to maximize profit and still be inbusiness, he needs to put professional strategies in place.