Determination Of Fund Allocation For Businesses

Managing business finances is very different from managing personal finances. This also applies to small and medium businesses. In the end, many of them hired financial consultants, of course, the cost is very expensive. They also do not hesitate to hire someone who is an expert in finance to help control business finances. Actually, you can learn for yourself how to manage finance for business or business without the help of financial experts. Don’t forget, you also have to hire a company incorporation singapore consultant when you are going to set up a company.

Good business financial management is the key to the success of a business. Therefore, the first thing you must do is determine the allocation of funds for the business you are building. You divide these funds into 3 parts, namely:

• Capital to build a business
You should not use all your capital when building a business because you do not know whether the business can grow or not. The capital that you are most likely to use is about 50% of the funds that you allocate.
You use the capital to rent a shop, buy the equipment needed, buy product materials that will be sold, pay employees, business promotions and so forth.

• Capital to develop a business
After your business or business is running, you certainly can analyze the situation and conditions in the field. Does your business get the profit as expected or vice versa. If it is not appropriate, you can use 15-20% of the remaining capital to develop your business.

For example, by creating unique products that are different from the products of your competitors or promoting so that consumers are interested in buying the products you offer.

• Reserved fund
The third is to prepare a reserve fund. In the business world, anything can happen without you expecting. Maybe your business suffered a loss due to a decreased turnover or the location of your business affected by a disaster. Unexpected events like this can make your business collapse and threatened bankruptcy.

This is where the required reserve funds that you have saved from the beginning are needed. At least about 30% of your capital is set aside as an emergency fund that is needed at any time for the continuity of your business.