Risks of financial investment vary depending on the line of business one enters into. Perhaps, small business venture is the easiest and simplest thread to penetrate because control and operation concern management of clear-cut transactions, small work force, and moderate inventory. Aside from private operation, many would prefer undertaking small business because red tape rigidity, which beefs up the difficulty to secure bureaucratic approval, may be averted unlike large business. Small business is usually a misnomer. It does not only embrace sole proprietorship but also corporations and partnerships owned privately. Apparently, the amount of capitalization and line of business determine the size of the business.
Normally, small business owner’s start-up with less than $1 million worth of equity to run a convenience store, small apparel shop, beauty salon, and refreshment stalls. However, no matter how easy it is to appear, small business still entails good planning and profitable appropriation of capital. Since the amount of capital is relatively low, all payable and receivables must be paid when they fall due to keep up liquidity of the business. This has been a common rule of thumb to avoid under-capitalization. If the business does not have enough funds to continue operation any longer, it is more likely to stop business to prevent further loss and liability. Read More