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Sources of Business Finance

Sources of business finance can be studied under the following heads:

(1) Short Term Finance:

Short-term finance is needed to fulfill the current needs of business. The current needs may include payment of taxes, salaries or wages, repair expenses, payment to creditor etc. The need for short term finance arises because sales revenues and purchase payments are not perfectly same at all the time. Sometimes sales can be low as compared to purchases. Further sales may be on credit while purchases are on cash. So short term finance is needed to match these disequilibrium.

Sources of short term finance are as follows:

(i) Bank Overdraft: Bank overdraft is very widely used source of business finance. Under this client can draw certain sum of money over and above his original account balance. Thus it is easier for the businessman to meet short term unexpected expenses.

(ii) Bill Discounting: Bills of exchange can be discounted at the banks. This provides cash to the holder of the bill which can be used to finance immediate needs.

(iii) Advances from Customers: Advances are primarily demanded and received for the confirmation of orders However, these are also used as source of financing the operations necessary to execute the job order.

(iv) Installment Purchases: Purchasing on installment gives more time to make payments. The deferred payments are used as a source of financing small expenses which are to be paid immediately.

(v) Bill of Lading: Bill of lading and other export and import documents are used as a guarantee to take loan from banks and that loan amount can be used as finance for a short time period.

(vi) Financial Institutions: Different financial institutions also help businessmen to get out of financial difficulties by providing short-term loans. Certain co-operative societies can arrange short term financial assistance for businessmen.

(vii) Trade Credit: It is the usual practice of the businessmen to buy raw material, store and spares on credit. Such transactions result in increasing accounts payable of the business which are to be paid after a certain time period. Goods are sold on cash and payment is made after 30, 60, or 90 days. This allows some freedom to businessmen in meeting financial difficulties.

(2) Medium Term Finance:

This finance is required to meet the medium term (1-5 years) requirements of the business. Such finances are basically required for the balancing, modernization and replacement of machinery and plant. These are also needed for re-engineering of the organization. They aid the management in completing medium term capital projects within planned time. Following are the sources of medium term finance:

(i) Commercial Banks: Commercial banks are the major source of medium term finance. They provide loans for different time-period against appropriate securities. At the termination of terms the loan can be re-negotiated, if required.

(ii) Hire Purchase: Hire purchase means buying on installments. It allows the business house to have the required goods with payments to be made in future in agreed installment. Needless to say that some interest is always charged on outstanding amount.

(iii) Financial Institutions: Several financial institutions such as SME Bank, Industrial Development Bank, etc., also provide medium and long-term finances. Besides providing finance they also provide technical and managerial assistance on different matters.

(iv) Debentures and TFCs: Debentures and TFCs (Terms Finance Certificates) are also used as a source of medium term finances. Debentures is an acknowledgement of loan from the company. It can be of any duration as agreed among the parties. The debenture holder enjoys return at a fixed rate of interest. Under Islamic mode of financing debentures has been replaced by TFCs.

(v) Insurance Companies: Insurance companies have a large pool of funds contributed by their policy holders. Insurance companies grant loans and make investments out of this pool. Such loans are the source of medium term financing for various businesses.

(3) Long Term Finance:

Long term finances are those that are required on permanent basis or for more than five years tenure. They are basically desired to meet structural changes in business or for heavy modernization expenses. These are also needed to initiate a new business plan or for a long term developmental projects. Following are its sources:

(i) Equity Shares: This method is most widely used all over the world to raise long term finance. Equity shares are subscribed by public to generate the capital base of a large scale business. The equity share holders shares the profit and loss of the business. This method is safe and secured, in a sense that amount once received is only paid back at the time of wounding up of the company.

(ii) Retained Earnings: Retained earnings are the reserves which are generated from the excess profits. In times of need they can be used to finance the business project. This is also called ploughing back of profits.

(iii) Leasing: Leasing is also a source of long term finance. With the help of leasing, new equipment can be acquired without any heavy outflow of cash.

(iv) Financial Institutions: Different financial institutions such as former PICIC also provide long term loans to business houses.

(v) Debentures: Debentures and Participation Term Certificates are also used as a source of long term financing.

Conclusion:

These are various sources of finance. In fact there is no hard and fast rule to differentiate among short and medium term sources or medium and long term sources. A source for example commercial bank can provide both a short term or a long term loan according to the needs of client. However, all these sources are frequently used in the modern business world for raising finances.

Affiliate Marketing Coach – Speed Up Your Affiliate Progress With A Coach

An affiliate marketing coach is someone who can help you lift the invisible ceiling which may be holding your affiliate business back. So much in business it is the limits of our thinking which stop us from achieving the things we set out to achieve.In affiliate marketing this is very much the case. You don’t know what you don’t know! You may even be running down a rabbit hole in the complete wrong direction. I did this for years before finding an affiliate marketing coach who helped me.Before this point I was trying to do everything alone. Many affiliates are doing the same but don’t realise their actions aren’t aligned with their desired outcomes. For me, I was focusing only on the things I liked to do, not the things which would drive my business forwards.A clear perspective from a coach who isn’t so myopic in their thinking can change everything. If you keep doing what you’ve always done as an affiliate, your results will likely be the same. But if you’re prepared to step outside your comfort zone, you can make far greater changes in a small amount of time.Much of affiliate marketing is about trial and error. You try several things and focus on the things which work. This is Pareto’s principle, or the 80:20 rule. But if you have no results to draw from, you could easily be focusing on strategies which will take years to gain any traction.A few of the small shifts I made in my affiliate marketing endeavours are: shifting to promoting products which offer recurring commissions, I stopped promoting small value, low commission products, and I started using high ticket digital products instead.These steps alone hugely helped me start generating tactics in my affiliate business. But I also got coaching and mentoring, and decided to take affiliate marketing more seriously. In the beginning, it was just a hobby, and I treated it like a hobby. But if you look at your affiliate business like a hobby, you’ll earn a hobby wage from it. Treat it more seriously, and focus on building a sustainable income which can replace existing work, and you can achieve much more. You get what you focus on!Goals are useful signposts for affiliates too. For such a long time I was without a rudder as an affiliate. A goal gives you a specific destination you can measure and work towards. If you don’t have either a goal, or a strategy you can stick to with affiliate marketing, it’s easy to lose purpose and drift off in another direction.When you’re looking for results and don’t have any, it can become completely demoralising! You need to stoke the fire of your own enthusiasm continually or you’re likely to become disillusioned and drop out. This happens to around 95% of affiliate marketers.But you need to be in the 5% who stick at it and eventually break through and start making consistent sales. When this occurs will depend on the actions you take and how long you keep going for. If something isn’t working, try something else. Focus on the small wins like a hit on a website, or an email lead. Keep your enthusiasm high and you’ll be able to surmount the obstacles which come with the territory. But if you allow yourself to become dissatisfied, it’s much more difficult to keep going.Affiliate marketing isn’t easy. It’s performance related which means that if you don’t make a sale, you don’t make any money. This is tough in the beginning because you can do a lot of activity which is unrewarded. But once you make a sale, there’s some light at the end of the tunnel. This is the goal of many new affiliate marketers – to make their first sale.Once you have some positive feedback in terms of success, you can focus on the activities which brought it about. But until this happens, you very much need to trust the process. If you’re also paying a membership fee while this is happening, there can come a point where you decide it’s simply not working! This is common, and people drop out. But if you have a coach you can trust, things are so much more sustainable.An affiliate marketing coach can help you overcome negativity, indecision, hesitancy and self belief issues. A coach can help you see things in a different light and to notice limitations in your thinking.For me this has been a complete game changer, and not just for affiliate marketing. When you notice your own self talk is talking away your success and happiness, you realise you are the creator of your own outcomes. As you remember to change your self talk and thinking habits, you realise without belief there is no action. So belief is everything.The person we listen to more than anyone else in life is ourselves. We talk to ourselves in our head constantly. Re reaffirm what we think and believe about ourselves continually. If we can learn to tap into this power, and start giving ourselves more positive commands, then we can grow both personally and professionally in a much more congruent way than simply through thinking, planning and attempting things in only the physical aspect of our affiliate business.When we talk badly of ourselves, or of our business, we act in ways which reflect this belief. As Henry Ford said “whether a man believes he can or he can’t, he’s right”

Best Practices With What to Allow on Forums

A forum is a great way of discussing a topic that you are interested in and knowledgeable about with like minded people or of sharing your experiences and possibly helping beginners in the subject. A well run forum is a pleasure to visit – you feel welcomed and amongst friends.

Running a forum is more than just about letting every Tom, Dick and Harry join and then letting them dictate the ‘mood’ of the forum. It’s up to you, as the administrator, to set some ground rules and abide by them.

Firstly, you must manually activate every new member registration. Spammers are unfortunately attracted to forums like flies to honey, and even the newest forums will start getting a trickle of these every day. Although it’s tempting to allow these to join to up the membership levels to make it look like you’ve got an active forum, allowing these in will be a bad mistake. At the least you’ll be inundated with advertising, and at the worst some very unwelcome posts might be made. You, as the site owner, will be responsible for what’s on your forum. As you go through the registrations each day obvious spammers with made up email addresses or user names which are simply advertising products will be easy to spot. If you need to go further you can check on the IP address and where the person is coming from. If you’re still not sure, do a search at StopForumSpam – an excellent website that keeps up to date records of spammers, as these people try to join every forum going. You’ll soon become quite quick at spotting spammers against bonafide registrations.

You can’t start a forum and then lose interest in it. Unless you are working to activate registrations, moderate comments, administer the forum and contribute to discussions yourself it’s not going to get very far. Running a forum takes time every day.

You need to decide where the boundaries lie and the kind of behaviour you’ll tolerate. Some forums I have been on insist people search for answers already given to similar queries before posting a new question, and when a ‘newbie’ posts they get responses fired at them to search the forum for answers first. Or are you more tolerant, and encourage individual replies? It might take more time repeating the same information, but it does make the forum more personal. What happens when someone asks a daft question, and gets shot down rather rudely by another member? Do you tolerate that? Or do you try to set ground rules for how people should behave towards each other.

Sometimes this might depend on the audience for your subject matter. I run a specialist forum for keeping bearded dragons, and we’re likely to have older children joining as well as adults. Sometimes an incredible ignorance is shown about keeping these reptiles – people should have done their research before taking them on, and as such these poor creatures are now looking at short unhealthy lives unless their owners can be given correct advice on how to keep them. On another similar forum, new members asking stupid questions are shot down in flames, and they leave after making one post, and without gaining any help at all. On my forum I actively encourage all members to be welcomed, and their most basic questions answered so that they get the information they need to the benefit of them, and their pets.

Now this is obviously just an example, but do you want to help and encourage people? Or just have a membership of ‘experts’? That is a decision you need to make, as it’s you, and the moderators you might have to help you, who can influence this by the way in which your members respond to posts and also the way you moderate. Sometimes you need to PM posters who aren’t interacting in the way you want them to, and accept this might lead to losing a member, but if it helps for a better community overall, the loss of one might prevent all those ‘guests’ who visit before taking the plunge think twice before joining. It’s interesting, but I’ve only had one problem with a member in the 5 years I’ve been running the forum and had to ban them. Most members pick up the friendly culture of the forum very quickly.

When your forum starts to become very active you might find it is too much to moderate all the posts yourself. You will find regular posters are flattered if you ask them to become a moderator and help you run it. You should ensure that anyone you ask has views that do not diametrically oppose yours (although healthy debate should always be welcomed), and whose approach to answering posts is in line with the ‘feel’ you’ve developed for your forum. You might also want to appoint someone or more than one (depending on the size and activity on your forum) to be other administrators, particularly to help with the activation requests for new members. Sorting out 150+ spammers a day is better with help! I’m in the lucky position of having an administrator in Australia – from my point in the UK I do the day shift, and he does the night!

You may think you are very knowledgeable about your subject, but it’s great if you attract someone to join who’s known as an Expert in their area. I invited two such people from their contributions on other forums and their expert knowledge and experience has been a real boon to my forum.

If you allow people to sell items or services, you might want to think whether you’re going to let people join just for this purpose, or whether you want to restrict this service to contributing members. You might also want to restrict what they can offer. A good rule is that someone needs to make 10 posts before being able to put up information about what they want to sell.

Something that encourages people to post is always helpful in trying to get a lively forum. Assigning different ranks to people who post above a certain number of posts can encourage people to try to reach the next level. On my Bearded Dragon forum we go from Egg, through Hatching to Adult – obviously not appropriate to many forums, but you get the idea.

I found that forums don’t actually help you to make money – having Google ads on the forum did not bring me any revenue despite a high number of visitors to the extent that I abandoned them. People come to the forum for advice or to chat, not to click on adverts. Linking your response through to informative pages on your website is the best suggestion I can make, and of course, having a forum increases the number of visitors to your main site.

If you have a forum but it’s becoming less active, look at the tone of the posts and see if the feel of the forum has changed. Unless it was once more relevant that it is now (a forum about the London Olympics will be less topical in 2013!) you might want to try to make it more positive, friendly and welcoming to newcomers. This means posting a lot yourselves, and engaging the moderators in trying to turn round the feel of the forum. If a particular member is causing problems, then don’t feel bad if you need to ban them. It’s your forum after all, and it’s totally up to you who you allow on there. You need to make sure you and your moderators keep active and posting – people want to feel important, and like someone ‘official’ to respond to them.

Forums are a great addition to the internet – there’s one set up for almost every niche subject, and people enjoy using them to get information they need, or to share their knowledge. A well run forum is a pleasure to visit, just like going to your friendly local pub. But no one will want to put themselves in the firing line to get abuse from bullies. So it’s your job to keep them out.

Paying attention to your forum and keeping to these best practices will keep your forum active, friendly and attracting the right kind of visitors and new members.

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