My personal capital - Essay Example

My Personal Capital Introduction Technically speaking capital is the net result when liabilities are deduced from total assets of an entity. Similarly personal capital of consists of net positive attributes possessed by the person. In order to benefit the group my capital assets will be invested to attain the desired business objectives. Any business plan can be divided into four segments, namely, deciding the business to be pursued, funding the business, execution of planned business strategies, and attaining desired profitability. I endeavor to exploit my attributes for researching business plan under these four segments. Nature of Business What exactly will be the nature of business under the plan for my group? As a business consultant and empanelled with local chapter of chamber of commerce, I will seek to organize a seminar on emerging businesses that involve local as well as international venturing. Technical experts from various fields will be invited to take part in the workshop and discussions forming part of this seminar. Ideas about new products and services on the horizon will get exchanged; and after attaining details about two or three alternative ventures from these workshop and discussion forum the matter will be deliberated at the group level in order to take a final decision about the venture to be pursued. Next step will involve utilization of my capabilities in deciding the type of business entity to be established for the business. Do we need to incorporate our business or form a partnership is a crucial decision to be taken? The fact is that ‘the nature of your business is one of the factors that must be evaluated in determining the best business entity for your business.’(Sherri K. DeWitt)1. Though corporation provides certain protection from liabilities to shareholders, but partnerships have certain advantages as well. Partnership can be a general partnership or limited liability partnership. Then there is another alternative in shape of LLC. So the decision about incorporating the business or not is a crucial one; and my experience and capabilities intuit me to suggest corporation status as the business should always be of permanent nature and not depending upon the vagaries of ownership. Legal process to incorporate a business depends upon the place where registered office will situate, like incorporating a business in London will be procedurally different from incorporating in New York. Practically this means that law of land is to be taken care of and I am well experienced in incorporating businesses in different parts of the world. Financing the Business Financing is another segment where my personal capital can provide researched guidance to the business plan of my group. Any business require two type of finances, long term and short term finances. Long term funds of a company are capital investments and those come in the shape of long term debts and equity investments for a corporate entity. ‘Debt capital includes all long term borrowings incurred by a firm, including Bonds. Equity Capital consists of long term funds provided by the firm’s owners, the stockholders. A firm can obtain equity capital either internally, by retaining earnings rather than paying them out as dividend to its stockholders, or externally by selling common or preferred stock.’ (Lawrence J. Gitman, 2006, page 326)2. As the concept of long term funding suggests that such funds are available for long term, my researched idea for the business plan of my group is to finance only long term assets out of such funds to start with, though such funds may be used for short term funding of the business only in case of emergencies when solvency of the business is at stake. Working capital required for the business represents ‘the portion of investment that circulates from one form to another in the ordinary conduct of business. The idea embraces the recurring transition from cash to inventories to receivable and back to cash.’(Lawrence J. Gitman, 2006, page 628)3. There are also two sources of short term funding of the business. One is financing from the normal course of business that results from accounts receivables and other accruals, and these are completely unsecured short term financing. The second sources of short term business funding are bank loans and commercial papers that are negotiated. Bank loans are normally secured against inventories and/or receivables. Banks also lend unsecured loans through line of credit and revolving credit agreements. Commercial paper short term funding is also unsecured and are in the shapes of promissory notes but are available only firms with a high credit standing. I envisage such a status for the business of my group and will plan accordingly, so that in no time the business of the group start generating short term funds internally and externally on the basis of its reputation and credit worthiness. Execution of Business Plans Researched business planning is to establish strategic objectivities of the business. Such planning is of no use unless those are implemented as desired under the scheme of business. A number of business conflicts arise because of lackluster way the business plans are executed. Definitely my researched plans will include checks to gauge the implementation of the business plans. Shoreh (Oct.8, 2007)4 has summarized the following five actions whereby the implementation of business plans can be ensured for attaining the business objectives: Have/ communicate and drive your vision/ purpose Strategy Financial Planning and review at least monthly Establish and communicate all company goals Commit to goals. My researched planning for the group business will contain provisions of periodic checks to ensure implementation of the plans. Attainment of Profitability The business is to earn profits and not to incur losses. Attainment of profitability is the ultimate objective of any business plan. ‘Since the business start up strongly reflects the wishes and behavior choices of the founder, it is important to focus on the behavioral choices of this person.’(Hunt & Adams, 1996)5. Taking cue from this I will exploit my attributes or capital assets in such a fashion that make the business follow the planned steps right from start up, so that work is carried without interruption as per business plans till the achievement of desired profitability. Planned profitability has to be as per available facts and circumstances. I have seen that to get the business established some time losses have to be suffered during initial years. That does not mean that business is away from planned objectivities. In fact initial years are testing times for any new ventures, and I will provide all my expertise to attain stability and profitability as per my researched plans. Conclusion Personal capital assets do not develop over night. These are the results of hard work over a period of time. Accordingly different segments of researched business plans for my group will get all my expertise to ensure success. The key to successful business planning is safeguard business from all unforeseen risks, and I will ensure that on basis of my personal capital assets. References Read More