Minimising Costs to Raise Capital

The world is moving fast and technology is growing every day. This is making the companies to act quickly, make the decisions quickly, and introduce new products to the markets quickly. This is all because of the competition level in the market which is making every one to be on their toes. Most of the new companies concentrate on generating profit rather than minimizing costs and controlling costs from the beginning.

The working capital is a measurement of liquid assets to establish business availability. Under normal circumstances, the enterprise will be more successful because they can expand and improve their business if there is a lot of working capital. Companies without working capital may lack the funds necessary for growth.

Small businesses often use to pay short-term debt, such as inventory or advertising, but it can also be used for long-term projects, such as renovation or expansion. These are the elements of the business cycle which can rapidly absorb cash. If the working capital dips too low, the risk of an enterprise's cash. Even if it is a very profitable business encounters trouble, if they lose the ability to meet its short-term debt. Commercial financing or small business loans can be used as a quick cash option, when traffic is not ideal, or ready-to-use buffer period.

In the football business when a club want to generate money either they sell player or release them if there is no one who wants to buy them players. This can help them in buying new players and generating more money to spend. The drawback of this can affect the performance of the team. This can be demotivating for the team.  What about the fans? Are they going to be happy?   Losing a player to generate more capital and minimize cost is not going to make the fans happy but sometimes business are in a kind of situation where they do not have any other options. Business who plans for long term always do good because they know who to get profits because the profits can make the board of directors happy, shareholders and stakeholders happy.

For example Premier League football club Arsenal recorded a £2.5m ($4m) loss in the half year to December 2010, largely on the back of reduced player revenues. There were no major player sales in summer 2010, unlike in previous years when the club made a big-name sale. The loss contrasts with a £29.2m profit in the corresponding period a year earlier.

According to the BBC News the proportion of income that Premier League clubs spend on wages hit a new high in the 2010-11 season, says a Deloitte report into football finance. Clubs in England's top football league paid some 70% of their income on salaries for the first time. Manchester United, who won the league that year, spent 46% of revenue on pay, but Manchester City spent 114%.The Deloitte report says that control of wages "continues to be football's greatest commercial challenge”. Its 21st Annual Review of Football Finance also says that pay discipline is needed "in order to deliver robust and sustainable businesses"

What makes the costs of the football clubs to increase? In my opinion it’s the wages of the footballers which is the main reason of the costs. Business can get rid of this cost by selling the players and generating more money to buy other players on a lower wages but can they get the same replacement?