My Business is a Salon that serves men and women\'s Given your profit and loss p

Question

My Business is a Salon that serves men and women's

Given your profit and loss projection from last week, do you anticipate needing to borrow money for any reason? Keep in mind the seasonality of your company. You might make a lot of money in the winter, and have essentially no business in the summer — think of how that is true for a ski resort, for example. If you foresee having to use someone else’s money, how do you anticipate getting that? Discuss using both debt and equity financing. Also think about how you can use other people’s money (like suppliers). Be sure to address any bootstrapping measures you might take. Even if you plan to keep your business small, imagine what you would need to do if you wanted to grow. This exercise requires you to use your imagination. The only wrong answer for these discussion purposes will be if you state you do not need money now and never will. Even if that is true, imagine what you would do if you needed it. men's

Explanation / Answer

As I understand from the question that there many ways to manage short term fund requiredment in Business

1. Maintaining Negative core working capital , howver keeping postitive total working capital i.e. extending zero / very less credit limit to customers while taking more credits from suppliers

2. taking Short term loans or inter company deposits from other companies

3. taking Bank overdraft from Bank for short term wherein you can repay during the time you have exyra fund availble

Ideally speaking, cost of each source of funding has to be seen & comaprision has to be done before rasing fund

& NOrmally Cost of Debt is always less then the cost of equity, so therefore it is important to access cost of these various options of financing then decision should be taken

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