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Alternative Sources of Business Growth Finance: There Is More Than One Way to Fund Growth

Talk to any business owner or read the business section of any newspaper and you’re likely to come across stories of struggles to access sufficient finance to grow or maintain their business. But we are beginning to witness a change in how business owners access finance with many now actively seeking out alternative sources.A survey carried out by the UK’s Forum of Private Business found that 26% of businesses were hunting out alternative financial products, with 21% seeking them outside of the traditional main High Street lenders. In fact, in another survey undertaken by the Federation of Small Businesses, it was discovered that only 35% of respondents used a traditional overdraft facility in 2011.So, if banks are continually reluctant to lend to all but the lowest risk businesses, how can the remainder of the UK’s business population finance growth? Here are some of the increasingly popular alternative sources of finance to investigate.Better Management of Working CapitalThis may appear to be an odd source of finance but very often businesses are sitting on undiscovered cash reserves which can be used to finance growth. A report issued by Deloitte in 2011 revealed that the UK’s largest businesses were sitting on £60 billion of unproductive working capital. Inefficiencies in how working capital (debtors, stock and creditors) is handled can unnecessarily tie up your cash. Cash can be unlocked and released back in to the system thereby allowing self-financed growth plans by taking a close look at credit procedures, how credit terms are granted and how outstanding payments are chased.Ensuring that stock is kept at an optimum level via better inventory management is another area where cash can be released to support and finance growth. Take a good look at your inventory management process and identify areas where cash is trapped.Good management of working capital is not just about better control of debtors and stock, it is also about maximising the terms given by creditors. Are you too eager to maintain a first class relationship with your suppliers by paying well before the due date? You can positively impact your cash position by taking full advantage of terms offered by your suppliers. Have you fully leveraged your position by seeking an extensive of terms from say 30 days to 45 days?Being more efficient in how working capital is managed can release sufficient funds to self-finance growth plans.Personal ResourcesWith traditional avenues of funding being more difficult to access business owners are now looking to their personal resources to fund growth. Whether it be drawing on cash savings, using personal credit cards or taking additional mortgages on residential properties, such sources are an instant solution. A survey by the Federation of Small Businesses found that 33% of respondents had utilised their savings to fund growth. As well as being more immediately accessible using personal resources is often a cheaper source of finance.Family and FriendsSometimes referred to as the three F’s – family, friends and fools – this can appear to be a less stressful way of raising finance. In some ways it can but it can also be a journey fraught with danger. Tapping into their personal network business owners source finance by either seeking a loan and offering to pay an interest rate higher than that on offer on a High Street savings account, or offering a slice of equity in the business in return for investment.Raising finance in this way can be relatively easy because the request and fulfilment is very much based on personal trust. Typically a Business Plan would be presented highlighting both the investment opportunity and the risks but at the end of the day success is down to the depth of the relationship and level of trust.The danger in raising funds this way is that the nature of the relationship will change from that of a personal nature to a business transaction. Failure to regularly pay as per agreed terms, or even total failure to pay, can irreparably damage the relationship so tread with care.Asset FinanceThe Asset Finance industry is based on the concept of either preserving cash or speeding up access to it. Asset finance, which consists of invoice discounting, factoring and funding of asset purchases, has been available as a source of finance for many years, yet it’s only now gaining more recognition. Figures released by the Asset Based Finance Association, a trade association representing the industry, show that to the third quarter of 2011 the amount financed by the Association’s members increased by 9% compared to the same period in the previous year. Whilst the increase may not seem significant it is against the backdrop of a fall in traditional bank lending.In a world where ‘cash is king’ asset financiers help preserve cash by financing the purchase of assets such as vehicles, machinery and equipment. Because the financier is looking to the underlying asset as security there is usually no requirement for additional collateral. According to the Asset Finance and Leasing Association one in three UK businesses that have external finance now utilise asset finance.Asset financiers can help speed up the flow of cash within a business by allowing quicker access to cash tied up in the debtor book. An invoice discounting and factoring facility gives businesses the ability to immediately access up to 80% of an invoice instead of waiting for the agreed credit terms to run their course. Such finance facilities will speed up the velocity of cash within the business thereby allowing the business to fund a high rate of growth.New players such as Market Invoice are entering the market to allow businesses to raise finance against selected invoices. Tapping into high net worth individuals and funds Market Invoice acts as an auction house with funders ‘bidding’ to advance against certain invoices.Crowfunding and Peer-to-PeerA relatively new phenomenon is the concept of raising finance by tapping into the power of the crowd. The historically low rates of interest payable on savings have led to depositors seeking out new ways to increase their returns. With business owners struggling to raise the funding they need it’s only natural that a market would be created to bring these two parties together.CrowdCube entered the market in 2010 to match private investors seeking to be Dragons with those businesses looking to raise capital. Once a business passes the initial review stage their proposal is posted on the site and potential investors indicate the level of investment they wish to make with the minimum amount being as low as £10.Businesses looking for a more traditional loan should consider Funding Circle. Established in 2010 Funding Circle also matches individual investors looking for a better return with those businesses seeking additional finance. Businesses can apply for funding between £5,000 and £250,000 for a period of 1, 3 or 5 years. As a minimum the business has to have submitted two years Accounts with Companies House and be assessed in order to arrive at a risk rating which guides potential investors.As the crowd sourcing concept matures we are likely to see more players enter this market to capitalise on the need for better investor returns and easier access to business finance.There is More Than One Way to Fund GrowthAccessing finance to fund growth plans does not have to be difficult if you are prepared to seek out alternative providers. Funding growth is now no longer the exclusive preserve of the traditional High Street bank and it’s now down to business owners to seek out the alternative routes.

A New Definition of Technology – The Scientific Texts That Guide Human Activity

The advances in technology will send humans to Mars in the near future. Internet of things, 5G, artificial intelligence, automated driving, and so on and on, probably no one is able to list all the new technologies that are emerging. The complexity of the technological world is wonderful but just as bewildering, and difficult to grasp. Yet, the researchers, engineers, and technicians just need to focus on their own portion of the work. The complex robots are composed of smaller functional units that are manageable by the respective professionals. They are guided by scientific texts and in the minds. Despite the complexity of technologies, they will finally be traced to the simple origin in scientific texts.

Wikipedia defines technology as “Technology is the sum of techniques, skills, methods, and processes used in the production of goods or services or the accomplishment of objectives, such as scientific investigation.” In the bing.com search, technology is defined as “the application of scientific knowledge for practical purposes, especially in industry.” The definitions are broad, seemingly to include all useful ways of humans achieving something. Indeed, technology is itself a broad term with many valid definitions. Both definitions are correct in that they describe facts. But they don’t explain the meaning of the terms such as “techniques”, “application” and “scientific knowledge”, which are vague terms and could involve all the things in the universe.

Since we defined science in terms of texts in the paper “a new definition of science – the textual foundation that represents the real world”, technology should also be defined in terms of texts due to its scientific nature. Science and technology are closely related and inseparable in the modern world.

1. Scientific texts – the core of technology

We consider texts as the core of science, which should also be in the core of technology due to the essentially same nature of science and technology. Now we are not repeating the textual nature of science/technology, interested readers can refer to our article “language – the core of science”.

Science is able to represent everything, including human behavior. Not only natural phenomena are represented and accumulated, so are human activities. The procedures, methods, details of making achievement are recorded in texts, which are then established as representations. With the textual representations, human activities are organized, classified, and building upon existing known technologies.

Characteristics of technology

Usually, technology is viewed from the angle of its effect on the societies, such as its relations with culture, its practical use, its relation with the economy, politics, etc. These are more of its manifests than its essence. They are of non-textual nature or centered on non-texts. Attributing the characteristics of technology to the various aspects of societies not only complicates the issue, leading to endless interactions but also switch people’s intentions away from technology’s true nature.

Facing the complexity, variations of the ubiquitous and ever-changing technologies, we should think deeply into the characteristics common to all technologies, which texts possess. Represented by texts, technology gets its essential features common to all technologies.

Technical documentation

Methods, skills, materials, procedures, principles, and so forth, all need to be documented for understanding, learning, communication, and recording purposes. User manuals, technical specifications are usually the first stuff needed by customers and engineers, either during product shipment or during product development stages. Technical documents even describe a product more accurately than the product’s actual operations. Despite the complex operations, deviation in operating conditions and by different individuals, abundant materials, changing personnel, documents are relatively stable, simple, accurate, reliable, and explanatory.

Again, it should be emphasized that scientific texts take effect in mind. The technical documents should take effect in mind and don’t equate to the technological texts in mind.

2. Differences between science and technology

It is needed to find the differences between science and technology. Although they have the essential cores, their appearances and emphases are different to account for various aspects of the human world.

Science and technology have similar branches and knowledge. The main difference between science and technology is their goal and objective. Science’s purpose is to observe and explain, while technology aims at taking action and making changes. Their direction is opposite to each other. Science is more of observation, while technology emphasizes action. The same texts can be considered as science or technology depending on the objective and usage. For example, the law of motion is itself a science, but it becomes technology when being utilized to make and operate machinery.

Technology is tightly associated with the man-made world. Human activities have changed the world’s appearance and the way people live. These are the direct result of technologies, although it can also say the people applied science to achieve all these. By intuition, science is a deeper and basic level of knowledge, while technology is more associated with direct applications. Science tends to be fundamental while technology tends to be detailed. But texts play an equally central role in their formations.

Nowadays, information spreads instantly; products are transported speedily. People increasingly lived in environments surrounded by machine-manufactured products and constructions. It became easier for people to achieve their goals by employing existing knowledge and tools. On the other hand, many curiosities can be answered by entering questions into search engines, in seconds. It seems everyone possesses enough knowledge. All one needs is to take action. As a result, more people became action-oriented, the term “technology” is becoming more popular than the term “science”.

3. The text-based definition of technology

Regarding the essential nature of and differences between science and technology, now we provide a new definition of technology as:

The scientific texts that guide human activity.

This definition contains two points:

First, technology is scientific texts.

Second, these texts are employed as guidance.

Our definition doesn’t attempt to invalidate current definitions. Instead, we view from a different angle, focusing on a deeper level, situating on the text-centered model of the world.

Usability of technology

Usually, human activities are purpose-oriented. Hence, technology usually has practical applications. But the extent of application varies depending on specific technologies. Also, a technology useful on one occasion or for some people might not be useful on another occasion or for other people. The activities might be beneficial or bad for society.

Possible extension of the definition

Animals and machines might employ technology in the future and probably currently, such as AI. In those cases, scientific texts exert their effect not directly via human activities, but via animals or machines. Their use of technology is imitations of human intelligence, without essential differences. The definition could be expanded to all human and non-human activities that are guided by scientific texts.

Unifying the non-textual technology with textual technology

People might argue illiterate societies and even animals possess some form of technology, although not so advanced as the modern form. Without going into deep confusion with endless, some are ambiguous, examples, we focus on principles. Sequentiality, clarity, and representation of reality are the three defining features of science. Modern, true-sense technology also possesses these features. In essence, the technologies in illiterate societies also came from the sequential minds with scientific properties in primitive form, which manipulate non-texts instead of texts, in a less efficient/effective manner. Scientific texts truly demonstrate those properties, facilitate visual processing, and make progress in the capability of human minds.

4. A text-centered model of science and technology

We can now propose a text-centered model of science and technology that starts from investigative observations, which derive scientific/technological texts, which in turn lead to actions through proper application. That is to say, science and technology are both integrated into the texts. If the purpose is in the non-text to text direction, focusing on deriving theories, these texts are more about science. If the purpose is in the text to non-text direction, focusing on taking action, these texts are more about technology. The actions change the environment, which becomes a new subject of observation, leading to the derivation of new scientific/technological texts. In this way, scientific and technological activities form endless iterations, surrounding texts in the center.

5. Conclusion

By this new definition, the nature of technology is made known. The relation between science and technology is defined and integrated into the texts. The complexity of understanding technology is reduced. A new basis is provided for future discussion of our technological world.