The Economic Times assess a NASSCOM report to reveal an addition of over 1,300 start-ups in India’s entrepreneurial market by November 2019.
With the addition of these many start-ups, the total number of tech start-ups in the country has grown beyond 9,000, making India the third-largest start-up ecosystem in the world.
Another report presented by Forbes suggests that 90% of these start-ups fail because of lack of innovation and lack of finance to fund their business ventures. Consequently, the concept of entrepreneurial finance comes into the picture.
Having a profound knowledge of the concept and implementing it in the venture will help entrepreneurs do successful business.
They will be able to draft an efficient business and financial strategy needed for the growth of an enterprise and will have profound knowledge about how to get funding for their business.
Acquiring funds for a business is now easier with multiple investment options available in the market and almost every entrepreneur can avail such funds which will increase your efficiency as an entrepreneur.
What is merchant financing?
In this regard, a merchant finance is an important term that entrepreneurs seeking funds for their business may come across. Such cash advances are beneficial for entrepreneurs who primarily utilise credit card sales, POS and merchant accounts for their business operations.
Financial companies offering such loans will have a track of business transactions made using debit and credit card.
There is no repayment tenor fixed for the loan and financial companies deduct a fixed percentage of daily transactions as a form of repayment.
Meaning, businesses pay more on a day when they get higher profit or more business and less on other days.
What is external financing?
It is a method of acquiring funds from external sources for businesses that are facing a deficit or may need the same to expand or upgrade existing business operations.
Entrepreneurs can avail a business loan and make use of the amount availed to establish and expand their business unit.
Financial companies offer up to Rs.35 lakh to entrepreneurs to finance their business operations with such loans.
Further, a leading non-banking financial company Bajaj Finserv has simplified the loan application procedure further for customers with their pre-approved offers. Such offers are not only limited to business loans but are also available on several other financial products such as home loans, personal loans, etc. Customers can check out their pre-approved offer now by submitting their name and contact number.
Nevertheless, they need to be eligible to avail loans as specified by financial companies. Also, they need to provide business loan documents in favour of their application such as KYC documents, business registration certificates, bank account statements, and copy of income tax return filing receipts.
Subsequently, entrepreneurs should adhere to good financial habits to better manage business growth. Seeking financial assistance is vital to expand business operations or to meet operational deficits.
Individuals looking to grow their business should implement entrepreneurial finance strategies to ensure –
- They accumulate the required funds from reliable sources conveniently.
- They know how to invest the funding into their business.
- They know what amount to borrow.
Tips businesses should follow while availing loans
- Capital structure
Capital structure is the method in which a company decides how to finance various short-term operations using debt and equity. They often compute debt to equity ratio for estimating risks involved in a business venture.
- Working capital management
Companies firstly should know how much working capital their business needs to have so that it can meet the operational expenses. Computing working capital is essential as it helps entrepreneurs determine the volume of liquid funds required to meet operational expenses.
Getting a brief idea about entrepreneurial finance will help start-up owners to acquire and manage their finances optimally. They will be more informed about the convenient ways to avail funding for their business.
With India becoming the 3rd largest start-up ecosystem in the world, there are immense growth opportunities for fledgeling enterprises. These growth opportunities come along with an abundance of financial solutions as well.
Sebastian was born and raised in the busy city of Abbottabad. As a journalist, Saad Mushtaq has contributed to many online publications including the PAK Today and the Huffing Post. In regards to academics, Saad Mushtaq earned a degree in business from the Abbottabad UST, Havelian. Saad Mushtaq follows the money and covers all aspects of emerging tech here at The Hear Up.Thanks