In the words of Steve Jobs, “Innovation is the ability to see change as an opportunity—not a threat.” Are you an entrepreneur/small business looking to quickly and effectively scale your finances? Good news — there are a variety of business-changing and game-changing strategies for business finance growth that can help take your dream venture to the next level. Details of how personal finance, business finance, digital banking, and equity funding can advance a business’ money management for the better are definitely worth a look. It’s time to revolutionize our understanding of what financial success looks like. Get ready as we dive deep into innovative tips and tricks guaranteed to catapult your team from novice financier status to industry guru.
1. Decoding the Financial Puzzle: Understanding the Difference between Business Finance, and Personal Finance
Business finance encompasses concepts such as capital structure management and funding sources. It involves managing financial operations, including operational expenses, salaries, marketing budgets, and other costs. Models like Discounted Cash Flow (DCF) and Three Statement Model are commonly used in this domain.
This term is especially important for small businesses that are just starting out, as it has been reported that around 66% of these newly established businesses face financial problems, with 43% reporting having the most difficulty in managing operating costs. One important thing to note, however, is that business and personal finance don’t need to be linked. In other words, separate financial tools – namely credit cards – can and should be used for these two separate areas to cover essential costs.
It is also worth highlighting that 40% of small business enterprises struggle with debts reaching $100K. For such businesses, it’s all about creating a profitable strategy for a company so they can grow financially over time — they tend to make investments in stocks, bonds, mutual funds, and also figuring out credit requirements for long-term borrowing and cash flow planning. Relating to the point discussed, 73% of small businesses also tend to invest in social media marketing to gain promotion.
On the other hand, personal finance involves managing individual or family finances, including budgeting, goals, investing, expenses, debt management, and saving for retirement or other objectives like buying a house. Its focus is on maximizing wealth through personalized investment strategies based on income level, risk tolerance and so on.
When it comes to Americans’ ability in both areas of finance, not everyone has mastered the art. According to an article by Gitnux – 60% of Americans don’t have a budget or maintain any kind of financial plan. Similarly, 19% increased their investing while 22% focused on paying down their existing debts instead — 33% had absolutely nothing saved for emergencies at all.
And 69% are saving 10% or less of their income, while Debt.com reported that consumers owed $807 billion across almost 506 million card accounts. So regardless of which type of finance you’re focused on, it pays to stay educated and on top of your game—otherwise, you really could take a hit in either long-term business investments or personal financial goals. Understanding the differences between business finance and personal finance can help ensure both scenarios will be taken care of properly and securely — also, don’t forget that given how the global economy is, a recession is always around the corner.
2. Empowering Financial Agility: Innovations Reshaping Business Finance
Digital banking first rose to prominence around 2007-2008 during the Global Financial Crisis when home foreclosures spiked significantly across several countries, including the USA & UK. Digital Banking is an innovative approach to the world of banking that has changed how individuals interact with money and have countless financial services available at the touch of a button. According to a recent survey by Bankrate, the majority of consumers (61%) use digital banking services at least once a week.
With digital banking, you can securely access your accounts from anywhere in the world, manage payments directly from your phone and view up-to-date information about any aspect of your finances.
What’s more is that according to some figures on the market overview for Digital Banking in the U.S., it’s estimated that by 2024, 3.6 billion people will prefer banking via their mobile app or website rather than doing so in person. Today’s modern consumer wants speed and convenience when it comes to their finances—and digital banking offers just that.
You no longer need to waste time standing in line at a bank branch or dealing with operators on the phone; now you have access to some pretty advanced technology right at your fingertips! Plus, digital banking means cost savings as well as more accurate records, which could potentially benefit both banks and customers alike.
3. A Debt-Free Path to Business Financing
The rise in popularity of equity funding goes hand in hand with the astonishing statistic reported by Warren Senate.gov, which stated that private equity currently boasts $4.4 trillion in assets under management globally, including 18,000 private funds spread around multiple regions of the world. This is particularly true in North America, where the estimated fund value ran at $1.1 trillion alone. Investors and business owners will either use a DCF valuation calculator or some complicated math to determine a company’s true value.
Equity funding is an innovative way of raising capital or financing for businesses without taking on debt. Instead of a loan, private investors put in their own money and become partners with the business owner, receiving equity ownership in return. So instead of having to pay back what they borrowed plus interest — like traditional bank loans would require — they save cash while accessing capital from outside investors.
It’s been estimated that the global market size of equity funding is expected to reach $28.9 billion in only about 4 years. And here’s what’s not surprising at all – when anyone sees these figures, it’s no wonder that this type of banking has been gaining outstanding traction. It’s also a beneficial alternative for companies looking to finance projects that require substantial resources but are not able to borrow at favorable rates due to higher leverage ratios or less desirable profit outlooks.
In the previous three years, equity crowdsourcing has risen rapidly, raising more than $400 million alone in 2020 and 2021. Plus, startup founders often use equity crowdfunding platforms as an online shop window seeking investment from venture capitalists—let alone accredited angel investors—so they can commercialize products and services on larger markets with more potential sales opportunities.
The mantra ringing out in the current millennial world is ‘don’t get left behind’—digital innovation should always remain a main priority of your company strategies, whatever shapeup stakeholders decide to adopt. With globalization playing an increasingly substantial role in defining today’s landscape, savvy marketers recognize the importance of staying current, exploring optimum solutions affecting sustainable outcomes, and bolstering future successes, and that’s the bottom line.
As you can see, businesses can now use swanky tech like digital banking and equity crowdfunding to make some serious income. But things change fast – so keeping up with finance trends is key if you’re planning to keep on top and keep growing.
