SME Financing Strategy Elements

The establishment, survival and development of enterprises must be based on the following aspects: financing, investment and refinancing.

Capital is the blood of enterprises and the first driving force and driving force of economic activities of enterprises.

With the gradual improvement of China's market economic system and the rapid development of the financial market, enterprises, as the main body of the market economy, are in the dynamic market environment. The financing mode of the planned economy has been fundamentally changed, and the efficiency of enterprise financing has increasingly become the key to the development of enterprises.

Because of the needs of economic development, some new financing methods have come into being, and the financing channels are numerous and complicated.

For small and medium-sized enterprises, how to choose financing methods, how to grasp the scale of financing and the timing, conditions, costs and risks of all kinds of financing methods are all seriously analyzed and studied before financing.

Currently, with the development of economy, financing has become a hot topic in small and medium-sized enterprises, and many enterprises are keen on it.

However, before financing, enterprises should not look directly at all kinds of exciting financing ways, but also do not rush to make financing decisions.

The first thing to consider is that enterprises must finance.

What are the investment returns after financing?

Because financing means cost, financing cost has interest cost of capital, and may be expensive financing cost and uncertain risk cost.

Therefore, it is necessary to consider how to raise funds only after in-depth analysis, and make sure that the total revenue expected from the raised funds is greater than the total cost of financing.

This is the first prerequisite for enterprises to make financing decisions.

The financing scale of enterprises should be done according to their capabilities. The financing of enterprises needs to pay the cost. Therefore, when raising funds, enterprises must first determine the financing scale of enterprises.

Excessive financing, or may cause idle and wasted funds, increase financing costs, or may lead to too much responsibility for enterprises, so that they can not afford to repay difficulties, increase business risk.

However, if the enterprise financing is insufficient, it will also affect the normal development of the investment and financing plan and other businesses.

Therefore, at the beginning of the financing decision, enterprises should do their best to determine the reasonable financing scale according to the needs of enterprises, the actual conditions of enterprises, the difficulty and cost of financing.

In practice, enterprises can use the experience method and financial analysis method to determine the scale of raising funds.

This is to say that when determining the scale of financing, enterprises should first consider the nature of internal financing and external financing, give priority to their own funds, and then consider external financing.

The difference between the two is the amount of external financing.

In addition, the amount of corporate financing usually takes into account the size of the enterprise itself, strength and strength, and what stage of development the enterprise is in. Then, combined with the characteristics of different financing methods, it chooses the financing method suitable for the development of the enterprise.

For example, in order to raise funds for enterprises of different sizes, generally speaking, they have already obtained larger development, considerable scale and strength shareholding enterprises, and can consider issuing stock financing in the sovereign market. Small and medium-sized enterprises belonging to the high-tech industry can consider issuing stock financing in the growth enterprise market, and some enterprises that do not meet the listing requirements can consider bank loan financing.

For example, for small start-ups in the early stage, bank financing can be selected; if high-tech small enterprises can be considered, venture capital fund financing can be considered; if the enterprise has developed to a considerable scale, bond financing can also be issued, and enterprise strategic financing can also be considered through mergers and acquisitions.

The financial analysis method refers to the analysis of the financial statements and the management of the enterprises through the analysis of the financial statements of the enterprises, so as to determine the reasonable financing scale.

Because this method is more complex and requires higher analytical skills, there are many uncertain factors in the process of financing decisions.

Using this method to determine the scale of financing, enterprises are generally required to make public financial statements, so that capital providers can determine the amount of funds provided to enterprises according to the reports, and enterprises themselves must determine how much funds they can raise through the analysis of statements.

The best financing opportunity for enterprises is the so-called financing opportunity, which refers to a favorable financing environment and opportunity that is made up of a series of factors that are conducive to the financing of enterprises.

The process for enterprises to choose financing opportunities is the process of enterprises seeking external environment compatible with the internal conditions of enterprises. It is necessary to make a comprehensive and concrete analysis of various possible factors involved in enterprise financing.

Generally speaking, we should give full consideration to the following aspects: first, because corporate financing opportunities are an objective environment at a specific time, although the enterprises themselves will have an important impact on financing activities, the impact of enterprises themselves on the financing environment is limited compared with the external environment of enterprises.

In most cases, enterprises can only adapt to external financing environment and can not control the external environment. This requires enterprises to give full play to their initiative and actively seek and seize all kinds of favorable opportunities in time to ensure the success of financing.

Second, because the external financing environment is complex and changeable, enterprise financing decisions need to be ahead of the foresight. Therefore, enterprises must be able to grasp all kinds of information in domestic and foreign financial markets such as interest rates and exchange rates, understand the macroeconomic environment at home and abroad, national monetary and fiscal policies, and domestic and foreign political environment, and so on, analyze and predict various favorable and unfavorable conditions that can affect the financing of enterprises, and possible changes in various trends, so as to find the best financing opportunities and make decisive decisions.

Third, when analyzing financing opportunities, enterprises must consider the characteristics of specific financing methods, and formulate reasonable financing decisions in accordance with the actual conditions of the enterprises themselves.

For example, an enterprise may not be suitable for issuing stock financing in a specific environment, but it may be suitable for bank loan financing. Enterprises may not be able to issue bond financing in a certain area, but it may be quite suitable in another area.

As far as possible, we should reduce the financing cost of enterprises. Generally speaking, financing costs refer to all expenses incurred by enterprises to raise funds without considering the cost of financing risks.

It mainly includes: organization and management cost in financing process, capital occupation after financing and other expenses paid during financing.

The financing cost of enterprises is the decisive factor to determine the financing efficiency of enterprises, and it is very important for small and medium-sized enterprises to choose which way of financing.

Because the calculation of financing cost involves [FS:PAGE] and many factors, it is difficult to use it concretely.

Under normal circumstances, the financing costs of various major financing methods according to the source of financing are arranged in financial order, commercial financing, internal financing, bank financing, bond financing and stock financing.

This is only the general order of financing costs of different financing modes. The specific analysis should be based on specific circumstances.

For example, financial appropriation in financial financing is not only cost free but also net income, while low interest loans for policy banks need less interest cost.

For commercial financing, if the enterprise uses commercial credit in the cash discount period, there is no capital cost; if the cash discount is waiver, the cost of capital will be very high.

As for stock financing, the cost of issuing common stock and issuing preferred stock is also different.

In order to make the best financing deadline, corporate finance is divided into short-term financing and long-term financing according to the deadline.

When making a trade-off between short-term financing and long-term financing, enterprises choose to make a financing term. The choice depends mainly on the use of financing and the risk preference of the financiers. Two.

From the point of view of fund use, if financing is used for the current assets of enterprises, according to the characteristics of liquid assets such as quick circulation, easy realization, small amount of supplementation needed in operation and short occupancy time, it is suitable to choose various short-term financing methods, such as business credit and short-term loans. If financing is for long-term investment or acquisition of fixed assets, it is appropriate to choose various long-term financing methods, such as long-term loans, internal accumulation of enterprises, leasing financing, issuing bonds, stocks and so on, for such purposes require large amounts of capital and long occupation time.

From the perspective of risk preference, we can have three types of moderation, radicalism and stability.

The principle of "golden mean" financing is that enterprises use short-term financing to raise funds for fluctuating assets, while long-term assets are used to raise funds for permanent assets.

The advantage of this financing decision is that enterprises can avoid the risk of debt repayment due to the short duration of funds and reduce the high interest payments due to excessive borrowing of long-term funds.

1, cost - why financing?

What is the total cost and total cost of financing?

Only when total income is greater than total cost can financing be made.

Financing costs range from small to large: financial allocation, commercial credit, internal fund-raising, bank loans, issuing bonds and issuing stocks.

2, scale - raising too much capital, increasing financing costs, increasing liabilities, repaying burdens, and increasing risks (business and credit risks).

Inadequate financing, business impact, lack of product strength, relatively increased costs.

On the scale of financing, we must remember eight words: do what we can and make comprehensive decisions.

3, timing: from the inside of the enterprise, we must choose the key time of operation, development and development, and cooperate with appropriate and timely funds.

From the outside of the enterprise, we should seize the good opportunity for the banks and other financing institutions to introduce the latest financial products and improve the financing environment of the enterprises.

4, control, which often leads to loss of enterprise ownership and control rights, resulting in profit diversion and damage to the interests of enterprises.

Such as: mortgage of real estate certificate, patent technology disclosure, investment discount, exposure of important customers from upstream and downstream, and clarity of internal privacy of enterprises will affect the stability and development of enterprises.

Under the premise of guaranteeing considerable control over enterprises, the company should achieve both the purpose of financing and the pfer of ownership in an orderly manner.

The main purpose of corporate finance is to expand the scale and occupy the market. 5

It is necessary to consider what products will be used to expand and increase sales, and how much market share will be brought to the enterprises.

At the same time, we must consider whether we can win other funds, enter the capital market, use various funds and resources, and make decisions in two markets to achieve complementary effects.

6, risk factor: A, choose less risky financing and financial products, B, risk control financing means, C, when the risk is large enough, we need to have greater financing income as a guarantee; D, we need to have a clear and accurate understanding of the risk of financing projects.

The bank executives and investors believe that the more you know about project risks, the more you have the awareness and ability to guard against risks.