Money operations

When you set up a business, it may so happen that you are short of mon­ey. In this case you will need some help in financing your business. You should know how to calculate the amount of money you need to borrow. It is usually done by drawing up a plan – a cash flow chart. What is cash flow? Money does two things in a business: it comes in and it goes out, like water in a bath. This is called cash flow. If money comes in faster than it goes out, the business is said to be effective, and money is available for expansion or investment. But if money goes out faster than it comes in, the business can dry up.

Borrowing from a bank.This involves preparing a campaign to con­vince the bank manager that your business is a good investment. The bank manager may ask you to provide with security (a promise that you will sell a valuable possession to pay off your debts if your business goes bust), or a guarantor (a friend or relative who agrees to repay the loan if you can’t). Usually, you borrow money from a bank in the form of a loan.

You may be interested to know that...

- paper money was first used in China in about 650 AD, but was not introduced in Europe until the XVIIth century. It was popular because it was easier to carry than large amounts of heavy coins;

- nowadays many commercial transactions are done through the banking system without money. Financial information is spreading all over the world via satellites;

- at one time the Romans used cattle as money;

- people started to exchange goods and services for tokens that could be stored and exchanged later. The first tokens were shells, shark's teeth and large stones;

- in ancient times, business was done by exchanging, a farmer could exchange corn for goats, or sheep for cattle. This is called bartering.

Vocabulary

in this case – в этом случае

to finance a business – финансировать дело

chart – график, диаграмма, схема, таблица, чертеж

to come in – поступать (о деньгах)

to go out – уходить, тратиться (о деньгах )

to be available – быть доступным

to convince – убеждать, уверять

to provide with security – предоставить обеспечение (гарантию, залог)

to pay off a debt – погасить, выплатить долг

to go bust – обанкротиться

guarantor – поручитель

coin – монета, мелкая монета

transaction – сделка, соглашение

cattle – крупный рогатый скот

token – знак, символ

UNIT 3

Text 1

Many new businesses fail. Why?

There are several reasons why many new businesses fail. First of all there has been general recession. Then there's the question of labour relations. What is officially called "industrial action", which actually means strikes, contributed to the rapid disappearance of many little enterprises. But it is more than likely that what really accounts for most of the failures is simply bad management.

Let's look at some of the ways in which a business may be badly managed. First, many new businesses are undercapitalised, that is there isn't enough money available to them to give them a real chance to succeed. Those enterprises which are undercapitalised are sure to be in trouble. Therefore, never attempt to start a new venture if you haven't got enough capital.

Second, many new businesses fail because they are in the wrong place or their premises are unsuitable; they operate inefficiently, because they haven't got enough room or appropriate facilities. So, don't hurry to settle on premises which turn out to be unsuitable.

Third, some ambitious new businesses spend too much of their capital on presenting a glossy image, expensive office furniture and fittings which don’t contribute anything to meeting the expenses.

Fourth, far too many businesses fail because their managers don’t carry out the necessary research of the market to make sure that their product is in demand and needed by the people. Therefore, always research the market before you decide to enter it.

There are a lot of other factors to be taken into account: installing the right equipment, hiring a suitable workforce, ensuring a supply of raw materials on term you can afford; controlling production, keeping a close check on prices and customer credit. Briefly speaking, plan every step of the way before you start your business. Weigh all pros and cons. Never make haste while making a decision. Remember: haste makes waste.