Why does business enterprise need finance?

1.	Why does business enterprise need finance?
Answer» A business needs finance because: 1. Business is concerned with production and distribution of goods and services for the satisfaction of needs of society. There are four factors required for any production: land, labour, capital and entrepreneur. All these factors need to be paid for their services. 2. No business can be carried without availability of adequate funds. 3. As soon as a decision is taken to start a business, requirement of funds initiates. 4. Finance is called ‘life blood of a business’. 5. It is very important to assess financial needs of the organization and the identification of various sources of finance.

Answer»

A business needs finance because:

1. Business is concerned with production and distribution of goods and services for the satisfaction of needs of society. There are four factors required for any production: land, labour, capital and entrepreneur. All these factors need to be paid for their services.

2. No business can be carried without availability of adequate funds.

3. As soon as a decision is taken to start a business, requirement of funds initiates.

4. Finance is called ‘life blood of a business’.

5. It is very important to assess financial needs of the organization and the identification of various sources of finance.

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