10 things you must know before starting your own business

Having your own business and becoming your own boss is an exciting reverie every employee may dream of. But before you leave your job, which gives you a fixed monthly salary and a variety of nice monetary and non-monetary benefits, you should carefully consider the following things before you start your new business.

1. It’s harder than we thought. Thinking business is so exciting, but doing it is a different story. Along the way to your entrepreneurial journey awaits your worst nightmares (bankruptcy, shame, frustrations, isolation, despair and depressions). Sounds horrible? But don’t worry – the saying “no pain no gain” may not be absolute anyway. Just like body building, you should do warm-up first and make a perfect program to achieve your goal.  There’s no need to hurry, instead, you need to do things according to your strategic plan. It’s indeed hard and it takes a right process. But you should not lose patience, hard work and intelligence to avoid the pains of doing business and eventually become a successful businessman. Read more

How to Generate Funds for your Startups

According to SBA 90% of the startups fail within first two years of the operation. The second common frequent reason due to which most of the startups fail after poor management is lack of funding for startups normal operations and marketing campaigns. In this article we would be discussing tips which you should follow to generate enough funds for your startups.

Decide the Nature and Amount of Funds: – Before searching for funding opportunities you need to evaluate how much and when you would need funds. Whether you need Funds for Long-term or Short-term? How quickly you can pay back your funds? Whether you need entire amount at the start or you want them in small intervals? Whether those funds would be used for company expenses like paying salaries etc or whether those funds would be used in developing assets like real estate. Read more

Definitions and sources of owner’s, partners’ and stockholders’ equity:

Ownership equity is the residual interest in the assets of the entity after deducting all its liabilities. In the accounting equation as presented in the balance sheet, equity equals assets minus liabilities. This means that ownership equity is composed of all the entity’s resources which are not obtained from debts. In other words, it consists of all the resources derived from owners’ contribution.

Equity differs depending on the structure of an entity. A sole proprietorship which is owned solely by a proprietor presents its equity as an owner’s equity. Accounting for owner’s equity in a single proprietorship is simple. Owner’s equity in this form is increased when the owner contributes capital or realizes net profit. It is then decreased when the owner draws capital or incurred a net loss. Read more

How do the cash flow statement flows?

After understanding your financial condition and performance by reading your balance sheet and income statement, you may now have the picture of how your business is running. However, seeing a positive equity in your balance sheet or a profit in your income statement doesn’t make your financial understanding complete. The cash flow statement is one of the five main financial statements of a company. The cash flow statement tells us how sustainable a company is in a short run. If cash is increasing and cash flow generated by operations is positive, then we can tell that a company is healthy in the short-term. Increasing or stable cash balances means that a company is capable of meeting its cash needs, and remain solvent. This information cannot always be seen in the balance sheet or income statement of a company. For example a company may be generating profit, but still it cannot meet or pay its short –term payables or obligations. Read more

Understanding the Balance Sheet

A balance sheet is a formal statement showing the financial position of an entity as of a particular date. The balance sheet is the only financial statement that reports as of a particular date compare to income statement, statement of changes in equity, and cash flows which all reports for a particular period of time. The balance sheet presents the three elements of financial position, namely assets, liabilities and equity.

Assets are defined as resources controlled by the entity as a result of past transactions and events and from which future economic benefits are expected to flow to the company. In layman’s language these are the properties owned by the entity. Read more

Next Page »