“I can see the finish line – running the entrepreneurs race” – Random thoughts on the financing life cycle of a business

“I can see the finish line – running the entrepreneurs race” – Random thoughts on the financing life cycle of a business

090611-N-3271W-012 CHATTANOOGA, Tenn. (June 11, 2009) Local area children test their fitness skills during a Junior Seal Fitness Challenge at Warner Park organized by the Navy and the Chattanooga Parks and Recreation Department. The event is in conjunction with Chattanooga Navy Week, one of 21 Navy Weeks planned across America in 2009. Navy Weeks are designed to show Americans the investment they have made in their Navy and increase awareness in cities that do not have a significant Navy presence. (U.S. Navy photo by Senior Chief Mass Communication Specialist Gary Ward/Released)

Just like a human being, so does a business have its financing lifecycle.
At the start up phase, many a businessman or woman for that matter must dig deeply into one’s pockets in order to finance a venture. Many financing institutions shy away from start ups because of their risk profile. If however  one has a credible dream but no financing one may seek venture capitalists or angel investors to plug in capital into ones business idea.
Enter the growth phase  where many businesses plough back

profits made into the business. Many times however, the  capital required may exceed  existing funds. Enter financial assistance from the likes of banks and other financial institutions  in the form of loan  or overdraft facilities to  support the growth. Also consider the option of private or public listings  for injection of equity to the business.

The maturity phase or plateau phase presents a unique problem to many a businessman. That is new income streams to reignite dormant business. It is at this juncture that many businesses  diversify into new product and service lines or consider partnerships and joint ventures.

 

The decline phase is also real for several businesses. This may arise due to several factors but the bottom line is that the business is not able to sustain itself. To ensure that the business owner does  not face any other significant losses, many a businessman would consider selling the assets of the business at this juncture.
However, not all businesses follow this path hence it is wise for very businessperson to consider the unique circumstances of ones  business.
Here is to the entrepreneurship race! Marking the end of the month when we focused on entrepreneurship.
© Kwambie Nyambane,
October 2015
Source:
The author is an M.B. A. – Marketing (2009) graduate of the University of Nairobi, Kenya.
Images – from google images