Research On Financing Strategy Based On Enterprise Life Cycle

The concept of financial strategy has been paid much attention in the academic and practical sessions from its appearance.As one of the three strategies of corporate financial strategy,financing strategy is related to the enterprise's daily production,operation,investment and other sources of funding.Enterprises need to determine the appropriate financing strategy for achieving sustainable development.The development process of the enterprise is divided into several stages by enterprise life cycle theory,which reveals the operation characteristics of the enterprises in different stages.Under different characteristics,enterprises need different financing strategies.Therefore,it is of great theoretical and practical significance to study the combination of corporate financing strategy and life cycle theory,which is not only an extension of the traditional financing theory,but also could optimize financing strategy and improve the financing efficiency.In this paper,the financial characteristics and corresponding financing strategies of enterprises in different life cycle stages was analyzed,which based on the previous life cycle theory and financing theory.Enterprises in start-up period are of high risk but not high visibility,financing difficulties,they need a large number of long-term,stable funding.Therefore,entrepreneurs' personal savings,government investment,venture capital and other equity financing should be used in start-up period.The strength of the enterprises is grown in growth period,so not only long-term funds are need to expand the size of the market,but also short-term funds are need for daily operations.Enterprises should broaden the financing channels and consider a variety of financing strategies.In mature period,business performance in good condition.They own abundant funds,and can use the financial leverage to choose debt financing and internal financing based low-cost financing strategy.In recession period,the enterprises should reduce the financial risk.They should give priority to the internal financing,reduce the external debt financing.They can increase the investment,internal debt and other ways to raise money.Anshan Iron and Steel Company was selected to analyze by the basis of the analysis of the life cycle financing strategy.First of all,combined with methods,the life cycle of Anshan Iron and Steel Company was divided into three periods,including growth period,mature period and late mature period.Secondly,the financing strategy of Anshan Iron and Steel Company in different period was analyzed from the financing environment,financing methods,financing structure and financing risk.In the growth period,equity,bonds,bank loans based diversified rapid expansion of the financing strategy were mainly used by Anshan Iron and Steel Company.In early mature period,the financing strategy is based on the development of low cost external financing,mainly based on commercial credit.In late mature period,the financing strategy is mainly based on exogenous financing,in which the proportion of bond financing is the most stable.Finally,the successful experience and shortcomings of the financing strategy were summarized,and some suggestions for the future financing strategy planning were put forward.Anshan Iron and Steel Company had a reasonable match between the internal and external sources of financing structure in different life cycle.The financial leverage effect of debt was used reasonably.Reasonable financing strategies were adopted to match each life cycle.Shareholders played a better role in corporate governance.