Starting your own business

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Short Term Financing

 

Short term funding requirements would centre on the financing which the start-up business would need in order to launch and sustain it in its initial period of operation.

Short Term Periods

The short term for most new enterprises is usually the first year of its operations. Sourcing from suppliers and setting up a viable structure in order to start trading might extend this period to dates well before the business is actually operational.

Depending on the infrastructure required by the new venture, the short term could cover a pre-trading period of up to two years and then include the first post-trading year.

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Expenditure vs. Income

This pre-trading start-up period is perhaps the most dangerous for new businesses. Typically, there might be extensive setup costs covering both the time before and after the operations actually commence, whilst the first sale is yet to be achieved.

Most investors of the business favour this period being as short as possible as the longer it takes to produce income, the greater the likelihood that external factors will alter and adversely affect the probabilities of success.

Generally, the requirements for the financing of a start-up business fall in to two categories: Short-term working capital needs and long-term investment and funding.

 
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