| Capital is normally required for three possible | | | | infusion to increase the plant size to keep up with |
| applications, namely:1. Fixed Capital:Fixed capital refers | | | | the huge demand.Just a final note on equity financing, |
| to your business needs to buy fixed assets. This | | | | in general there are two main sources of funding for |
| means that you need the capital to buy things like | | | | a business namely debt and equity financing. The |
| buildings, machines, computers, vehicles and furniture. | | | | main difference between the two is that with debt |
| These items are normally purchased for use in the | | | | financing the lender does not acquire ownership or |
| business and not for resale. The purpose is to | | | | any say in the day to day running of the business. |
| generate sales. They do not have a resale value and | | | | However, the cost of such a benefit is interest that |
| can be liquidated again, but in most instances lose | | | | you must pay on the amount borrowed. Equity |
| value over time. This is called depreciation. | | | | financing does not normally involve any costs such as |
| Depreciation is seen as an expense and is recorded in | | | | interest but you might have to sacrifice a certain |
| the income statement. Land is the only item that | | | | percentage share in ownership.Forms of equity |
| does not depreciate. Fixed assets on the other hand | | | | financing:1. Personal fundsIt is the most common |
| are recorded in the balance sheet. When planning | | | | source of funding a business. It comes either from |
| your business you must determine how much you will | | | | personal savings or a re-mortgage on a house.2. |
| need for fixed assets. This capital will then be fixed | | | | Friends and relatives:As the name suggests, this form |
| and will not be available to for something else. Note | | | | of financing is derived from the support of friends |
| that there is generally a cost linked in obtaining such | | | | and family. People who know you and trust your |
| capital. This will limit the amount that you can justify. | | | | business concept. However there are potential pitfalls, |
| careful planning of your fixed asset requirements is | | | | money, friends, family and an unsuccessful business |
| therefore necessary.2. Working Capital:Apart from | | | | do not go hand in hand.3. Equity shares:This form of |
| buying assets for your business, you will need cash | | | | financing normally refers to partnerships and closed |
| to run your business. Capital that will work for you | | | | corporations. This option provides an opportunity to |
| and generate a profit. Working capital is used to buy | | | | get hold of additional capital for the business by |
| items like raw materials, paying wages and electricity. | | | | accepting a partner or a member who possesses the |
| Since you wont have have an unlimited amount of | | | | financial means, but usually means a sacrifice in |
| money available and sales income is not always | | | | percentage ownership. where you will find Global |
| sufficient, planning your money supply is very | | | | solutions and ideas. |
| important. To know how much money you are going | | | | Turtle Herb Estate Holdings consists of 3 forward |
| to need and at what stages, you will have to compile | | | | thinking entrepreneurs with expertise in marketing & |
| a cash flow statement. Remember working capital is | | | | DTP advertising, farming culinary and medicinal herbs, |
| not profit, it is money needed to generate profit in | | | | web design and online marketing, horse breeding |
| the long term.3. Growth Capital:Growth capital | | | | (sport horses),animal health products, import and |
| surfaces when an existing business expands or | | | | export, engineering and industrial design (water |
| changes it direction. For example, a small | | | | solutions), arts and crafts. With a combined wealth of |
| manufacturer of TV cabinets sees his business | | | | 80 years experience in various lines of business, we |
| skyrocket in a short time period. With orders | | | | embrace a holistic approach to entrepreneurship. |
| streaming in , the business needs a sizeable cash | | | | |