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Money is the lifeblood of Business

  • 21-Jul-2022

A human being without blood is the best example of money being the lifeblood of any business. 

Money is the lifeblood of a business, and a business needs to generate enough cash from its activities so that it can meet its expenses and have enough left over to repay investors or bankers and grow the business. If the flow of money stop in the business, then the business cannot survive any longer.


You might have the best business idea, a group of talented people, a great product, and a vastly growing market opportunity. However, absence of money management can lead to failure.


Every single MSME ought to follow an equivalent guideline as kept by huge corporate. Most MSMEs make no present moment or long-haul strategies and work without an objective set. They go for fundraising support in the debt or equity form when there is a financial crisis. A large portion of the MSME owners is in technical or marketing backgrounds. They are not much aware of financial preparation.


MSMEs tax consultants likewise don't have a genuine thought of raising money for clients in the form of debt or equity. MSME are additionally not taking counsel from CA in such a manner. MSME reaches its CA at the end of the financial year for audit purposes only. Considering this reality, there could be no other conversation held during the year for financial preparation. In this way, there is a vast gap between understanding the need of business finance and choosing the right financial products.


Do you aware? Additionally, EX Banker or DSA of banks are not experts in appropriate financial advisory. They are selling what they have. They are experts in a single specific kind of credit product and commonly attempt to provide the same product for every financial necessity. This is a very blunder mistake.


Let’s assume that someone is facing a medical problem, the reason shall vary from one to another. The best practice is to have a proper doctor’s consultant, thereafter, take the correct medicine, in the same way, one should get the proper financial consultant to decide on the right financial product that most accurately fits their business model and requirements.

I have studied more than 3000+ MSMEs over a period of 20 years, 90 percent of MSMEs have chosen the wrong loan product. They bought the product which is sold by EX Banker or DSA of bank or existing banker without analysing the cash flow of business, profitability of business, and cost of funding.


When it comes to choosing financial products, a checklist is hardly on our minds. Most depend on random tips from friends, peers, or agents to invest our hard-earned money in different instruments without thinking twice.


Such an approach can cause significant heartburn later. It’s important to adopt due diligence while opting for a financial product.


The key thing to understand here is that you, as an individual need to do extensive market research on different types of financial products available in the market. Based on your business model and specific requirements choose the product wisely. Ensure you have chosen the right financial product!

Author Bio

Name : Vikas Jain
Qualification : ca_practice 🎓
Company : Financeseva
Location : New Delhi, Delhi (DL), India

About me

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