Business Finance

Financial planning is the application of planning to various aspects of finance function. Basically, business finance involves the formulation of a financial plan that states the quantum of finance required, the pattern of financing and the policies to pursue for the administration of the financial plan. A business enterprise requires short-term and long-term capital. The total capital required by a concern is called capitalization. The short-term capital or the working capital is the capital required to meet the day-to-day obligations or the operating expenses. The long-term capital is required to acquire the fixed assets. Generally, on a conservative ground, a portion of the working capital is also met out of long-term capital.The capital required may be collected from different sources. A substantial share is raised from internally generated funds. The remaining part is raised from outside sources such as issue of shares and debentures and loans. This pattern of financing is known as capital structure. It is designed in such a way to obtain the required amount needed at the lowest possible cost. Once the required amount is raised, then the funds are allocated in the best possible way to obtain the maximum benefits.Implementing proper control systems can ensure the efficient use of the funds. Finally, all-important matters are reported to the top management to take proper actions at the right time. The financial reports are analyzed to evaluate the performance of the firm. According to Cohen and Robin, business finance aims at determining the financial resources required meeting the company’s operating program. Business finance also forecasts the extent to which these requirements are met by internal generation of funds and the extent that they will be met from external resources. Business finance helps in establishing and maintaining a system of financial control governing the allocation and use of funds.

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D-Day and Small Business – a Story of Success in World War II

Earlier this month, we saw the anniversary of one of the greatest-and most terrible-days in human history: The D-Day Invasion of France. When we think of D-Day, we think of the landings at beaches called Omaha and Utah, Juno, Sword and Gold; brave U.S. Army Rangers scaling cliffs to take German Gun emplacements; fierce naval bombardment and air attacks. We think of the men on the battlefield who took those first, hard fought steps to liberate Europe from Hitler and his Nazi cohorts and it is right that we should think of them first, but we should also take a moment to reflect on the contributions made at home, especially by small businesses across the nation, that helped our soldiers and sailors in Europe and in the Pacific prevail.The Reconstruction Finance Corporation and the Smaller War Plants CorporationThe aid small businesses received during the war years actually stems from programs that were developed in the early 1930s as a response to the Great Depression; agencies that, over time, coalesced into what we know as the Small Business Administration. The Reconstruction Finance Corporation (RFC) was created by President Herbert Hoover in 1932-and later adopted by his successor, Franklin Delano Roosevelt-to help deal with the financial crisis of the Great Depression. The RFC was a federal lending program for all businesses-large and small-that had been hurt by the Depression.With the start of World War II, specific concern for small businesses intensified. The way things were, small business couldn’t compete against large industries that could more easily increase their production-or retool entirely-to meet their wartime defense contracts. A way to alleviate this problem was found in 1942 with the creation of the Smaller War Plants Corporation (SWPC). This new entity, like its precursor, the RFC, provided loans to small businesses and entrepreneurs. However, it went further than that. The SWPC also encouraged large financial institutions to extend credit to small business and advocated small business interests to both federal procurement agencies and big businesses.This set the stage for a resurgence of small business activity in the war effort that was a marvel of both efficiency and productivity.Small Business Success during World War II: The Army-Navy E-AwardIt was a document written in 1942 with the unassuming name of War Department Circular No. 228 that announced the creation of the new Army-Navy Production Award, which would bring the existing Navy E-Award, the Army A-Award and the Army-Navy Star Award together into a single joint award. While it was officially called the Army-Navy Production Award, it was referred to more often as the Army-Navy E-Award.All plants, large or small, privately owned or government-run, prime contractors or subcontractors, that wholly or partially engaged in war production and construction work, were eligible for the Army-Navy Production Award. The criteria, which were strictly applied by the judges of the Army Board of Production Awards, were as follow:
Quality and quantity of production in the light of available facilities (given the greatest weight in selecting recipients).
Overcoming production obstacles.
Avoiding production stoppages.
Maintaining fair labor standards.
Training additional labor forces.
Effective management.
A good record on accidents, health sanitation, and plant protection.
Properly utilizing subcontractors.
There were nearly 87,000 plants working on war-related projects or construction during World War II. Of these, only 4,283, roughly 5% of the total met the criteria for this award. Of that number, fully 50% were small businesses that employed fewer than 500 people. The excellence and productivity of these businesses that ranged from one-man shops to small factories was undeniable and for many it was ongoing.Plants maintaining an outstanding record of performance for six months after receiving the original Army-Navy E-Award received a Star Award, indicated by a white star on their “E” flag. Additional stars could be won by continued outstanding performance for succeeding six-month periods until the flag carried four stars, after which the interval was increased to one year.Of the 4,283 plants that were granted the Award, eight won six Star Awards when the program ended. Four of these had retained their original Navy “E” Awards and were as follows: Cameron Iron Works, Houston, Texas; General Motors Corporation, Fisher Body Division, Die & Machine Unit, Detroit Michigan; Midvale Company, Nicetown, (Philadelphia), Pennsylvania; and Northern Ordnance, Inc., Minneapolis, Minnesota. The other four, which had converted from the Navy “E” Award to the Army-Navy “E” Award, were as follows: Arma Corporation, Brooklyn, New York; Ford Instrument Company, Inc., Buildings 1, 2, 3, and 4, Long Island City, New York; Keuffel & Esser Company, Hoboken, New Jersey; and Miehle Printing Press and Manufacturing Company, Chicago, Illinois.Of these six-star plants, Cameron Iron Works, which made army ordnance, particularly depth-charge projectors and arbors for the navy in World War II, along with gun barrels, gun mounts, and rockets; Arma Corporation, which built fire control computers for the Navy; and the Keuffel & Esser Company, a leading manufacturer of drafting equipment, surveying instruments, slide rules and related products were certainly small concerns.Of the remaining Awards, 763 had been granted one Star Award, 723 had been granted two Star Awards, 776 had been granted three Star Awards, 820 had been granted four Star Awards, and 206 had been granted five Star Awards. That is a total of 3,296 companies that were able to maintain the high standards of the award for at least 6 months after receiving it, a remarkable achievement, especially during the unstable wartime economic conditions that existed then.So, What did They Win?Primarily, these plants won recognition as being the “best of the best,” back when a phrase like that actually meant something. After all, they don’t call that “the greatest generation” for nothing. These happy few could use the award to market themselves and instill pride and boost morale in their people during the war and as long afterwards as they wished. According to Circular No. 228, the companies received:A pennant for the plant and emblems for all employees in the plant at the time the award is made. These will be paid for by the Department making the award.The pennant was swallow-tailed and had a white border and a white capital letter E within a yellow wreath of oak and laurel leaves. These were over a vertically divided blue and red background with the word ARMY on the red part and NAVY on the blue. The employee emblems had a capital letter E within a wreath of all silver oak and laurel leaves, and horizontal swallowtail wings divided in five-red, white, blue, white, red.The Bottom LineThese companies faced a wartime economy and they did it with strength and determination. As Secretary of the Navy Frank Knox wrote to Clark S. Judd, President of the American Brass Company, April 7, 1942, “As the Secretary of the Navy, and as a fellow American, I congratulate you upon the achievement of this honor. And in so doing, let me remind you that your company’s contribution, together with that of other of our patriotic countrymen, is only the beginning! This production, increased manyfold, must and will become the tide of victory!”There was a goal-victory over the Axis powers-and businesses large and small were united in reaching that goal. The first steps toward success, pushed along by Secretary Knox’s “Tide of Victory” were taken on the beaches of Normandy 64 years ago tomorrow. Tomorrow, as you think of those brave men and the tremendous economic engine that carried them to success, consider what you might have done as a business owner to help, and what you can do today.Today, the conflict isn’t with other world powers, but with big box retailers and it is a matter of economic survival for small business all over America. You are out there in the trenches every day and America’s Best Companies is standing with you, just as the SWPC stood with small business during the war, ready and able to help you reach your goals while working hard every day to improve the conditions under which you operate. If you are a member, you already know about the benefits of membership. If not, check us out. You might be surprised.

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Succeed With an Established Business For Sale

There are many compelling reasons to buy an existing business rather than starting one from scratch. Existing businesses for sale can be a much less risky investment compared to new start-up ventures. Consider that building a brand new business from the ground up can be a very time consuming process. Even though new business owners put all their energy into generating revenue, perfecting their operation and sorting out the kinks of their enterprise, many start-up businesses don’t succeed.Anyone considering going into business for themselves at least consider existing businesses for sale, rather than building a new company from scratch. When purchasing a business through a business broker, entrepreneurs can step into a fully or partially established organization with an operating history and clientele. The flip side to this is that business owners that are looking to sell their businesses can profit from the track record of their businesses for sale and generate a premium on the selling price.There are many advantages to purchasing an already established business for sale compared to starting a brand new company. People purchasing existing businesses from owners benefit from the company’s history and goodwill. The firm’s previous relationships with vendors and employees are already established, for instance. With existing suppliers providing merchandise, existing customers purchasing products and services and trained employees handling the day to day operations of the business, new owners are able to focus on improving the company’s operations and generating profit. One of the most important things a buyer needs to consider is whether the business for sale has a solid operating history and will be able to maintain profitability after the transaction is completed. Although existing businesses for sale may be less risky than start ups, please do your due diligence on any business for sale. Consult with your lawyer, accountant or business broker for assistance.Many people hesitate to purchase a business because they are not quite convinced that it is the right move. Passion is a key ingredient to building a successful venture and all potential business buyers need to assess whether they are passionate about the businesses for sale they are considering. After buyers consider their interests and skill, they will go into purchasing businesses for sale more informed and more likely to succeed. Businesses are bought and sold all the time where the purchasers go in without doing a personal assessment. It’s much better to know what you’re getting into before the deal closes. Starting a brand new venture can be a daunting process. To make it easier, you consider existing businesses for sale (franchises for sale are something to consider also). Unlike starting an enterprise from scratch, buyers are able to build up a business that already has an established foundation. This lightens the workload and improves the likelihood of success!

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