What is Capital ?
Capital includes all goods that are made or created by humans and used for producing goods or services. Capital can include physical assets, such as a production plant, or financial assets, such as an investment portfolio. Capital can also refer to money invested in a business to purchase assets (Wikipedia).
Capital can also refer to financial resources or assets owned by any business that are useful in starting and ensuring development, continuity generating income for a business. (Collins dictionary)
capital is also any economic resource measured in terms of money used by business owners (entrepreneurs) and businesses to buy what they need to manufacture their products or to provide their services in order to make a customer and a desired profit.
What then is Capital Generation ?
Capital generation has to do with the various organized activities of raising funds to start and run a business. Capital can be generated in various ways.
Capital for business can be raised in different ways and the fist way starts with the entrepreneur (the business owner) if a business owner is not serious enough or willing to invest in himself, he pushes others away from investing in his business or helping him. But if the entrepreneur is serious, he opens doors for himself by catching the eye of big investors because, it’ll be clear that that investor is fully committed to his plan/ project.
Many entrepreneurs who are very successful today have taken allot of risks which also included putting almost all their savings into their small or little businesses.
Most times, it is better to wait and start a business when an entrepreneur has at least a small portion of the capital to invest. Raising the first/ immediate funds can be very hard and whoever is lending out money, has too see a future in that business through the proposed business plan.
Below are some of the ways capital can be raised for a business :
Self/ small savings
This kind of savings has to do with having a projected vision of the business an entrepreneur is about to go into. It involves saving money gotten from what the entrepreneur gets as his income. It is hard or almost impossible to find when an infant entrepreneur will start a business without investing a single amount of money into the venture or business. This money must not be too big but must be reasonably enough to startup and maintain the infant business/ industry.
Local money lenders and Banks Small loans from local lenders (banks) can bring amazingly good terms and interest rates. This may depend on your credit rating and the type of collateral you can provide. This is when a Solid business plan is needful. From a local point of view, this is the best way of getting capital. In addition, securing this loan helps investors see that your company is a real company.
Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet. Crowdfunding is a form of crowdsourcing and of alternative finance (Wikipedia)
If an entrepreneur does not qualify for a small business loan, he can take crowdfunding for an option. The entrepreneur can make his findings and choose a company with good reputation and rate of success. This is a less local/ traditional way, but it works well for many people in the same position. The entrepreneur should just carefully look at the terms, conditions and rates and also, get a lawyer for legal backing if need be.
Friends and Family
So many business people shy away from this part, but’s its a very good option. It may sound like the entrepreneur is begging or putting his loved ones in a tight corner. If a fantastic and solid business plan is presented and they are taken as potential investors, it will go well even if the entrepreneur is turned down. It may be surprising that someone who is interested in supporting the entrepreneurs dreams will be found and willing to invest.
Venture capital can be said to be funds brought by corporate investors to a business with a view of potential and long term growth.
The great side and advantage of venture capital is that the amount of money funded is usually much. If an entrepreneur should manage and get/ raise venture capital, it will come with market lending support and high profiled teams to help push the process of funding and add greater ideas to the writers en down goals and plans of that reposed business. Although, venture capital is hardly accessible to proposed businesses that will not be able to generate high revenue/ income. The fact is that venture capital is meant for companies that are very big and will have a high and large amount of revenue generation.
After looking at the way capital is raised for a business, we now go down to the various ways revenue is managed when running the business because, one thing is to raise the capital, and another thing is to manage the money raised from that business effectively to bring productive output and foster growth and development.
First of all, what is ‘revenue’ ?
Revenue is the income that a business has from its normal business activities, usually from the sale of goods and services to customers. Revenue is also referred to as sales or turnover. (Wikipedia)
Revenue can also be said to be the income a company or a country receives regularly. (Cambridge dictionary)
Revenue can also be defined as the money generated from a business as the income generated from providing a particular good or service.
What then is revenue management ?
Revenue management has to do with the various ways money earned from a business is controlled and used efficiently to being about further growth to the business.
The following are the ways by which revenue can be managed in a business:
Increase of sales
Though the huge profit a business may be making, it is very important to increase the sales rate of a business. This will help the entrepreneur to meet up with so many expenses that his business will incur as the business goes on. It is therefore the responsibility of the entrepreneur to make sure he makes enough sales and maximizes as much profit as he can.
2. Cutting down unnecessary waste
Cutting down unnecessary waste helps manage the revenue and income of a business. When unnecessary waste is cut down, money is saved and used fir better productive things to make a business grow. Cutting down of unnecessary waste should include managing costs incurred in business especially at the point of rendering certain services. Waste can be cut down in a business through different ways. One of the most effective ways is through ‘kizen’ (a strategy setup by the japanese to reduce unnecessary waste.
5. By reviewing profit and analyzing
It is very important that every business owner goes back to his records and looks at his profit. After looking at his profit, it is very important to make good analysis and know if the business has a potential to grow and expand. This will be of help when it comes to critical planning for business activities that will foster development and maximize profits for a business. For all these strategies to be successful, there should be professional management and good leadership put in place. Proper management is the base for all businesses that stand even when faced with big challenges that can make them bankrupt and crash. If an entrepreneur really wants to maximize profit and still be in business, he needs to put professional strategies in place.