Question

Why should companies pay attention to economic factors when managing the organization's current and future financial information? Describe the strategy for financing a startup company with plans for expansion. Briefly describe types of potential risk

Answer 1

The finances of an organization are intimately linked to local and global markets. Consequently, regular monitoring of economic factors such as employment, inflation, supply and demand, and interest rates will certainly provide useful information. So understanding the impact of economic factors on current and future operations and finances of an organization is important.

Many new businesses are failing because the owners do not have enough cash to last them through the critical first few months of trading, while their sales revenue is only beginning to grow. You need to ensure you have enough funds to set up the company and cover the initial operating costs before you start trading. If you or your business partners don't have enough money on their own, you'll need to approach other financing sources.
Potential funding sources for new startups
Private investments, and informal family or friends loans.
Credit vouchers.
Commercial investors.
Government funding sources.
Local Governments.

Investing in startups will endanger the entire amount of your investment. There are several cases where the company may collapse entirely or you may not be able to sell the stock you hold inside the company. You may be losing the entire amount of your investment in these situations. Total capital loss is a highly likely outcome for startup investments. Investing in startups entails a high level of risk and you should not invest any funds unless you can bear the investment's entire loss.

The amount of investment return, if any, is highly variable, and not guaranteed. Some startups will be successful and generate large returns, but others will be unsuccessful and generate only small returns, if any. Any returns you can get will vary in number, frequency, and timing. You should not invest any funds in which you need a stable, predictable and/or regular return.

It may take several years for any returns to materialise. It takes five to seven years for most startups to generate any return on investment, if any at all. It may also take many years before you know if any return will be generated from a startup investment. You should not invest any funds within a certain timeframe in which you require a return