If you are hoping to start a new business, the first thing you will need to figure out is where you will get your financing from. Without a reliable source of financing at your disposal, it will not matter if your idea for a new business is the greatest in the world—you won’t even be able to turn your lights on. Once you have secured financing, you will be able to focus on the more creative components of your business and move closer to turning your dreams into a reality. However, before you go applying for financing everywhere it happens to be available, ask yourself, “what kind of financing is best for my business?” Generally speaking, all business financing options fall into one of two categories. With debt financing, your business borrows from a lender and plans to pay that amount back (plus interest) over time. With equity financing, on the other hand, you are selling partial ownership of your business. While this type of financing does not need to be “paid back” in the future, you do lose some control of your business and you may also lose a portion of your profits. Both debt and equity financing have pros and cons for all new business owners. The choice that is right for you will be very specific to your business. In this article, we will briefly discuss seven factors to consider when choosing between debt and equity financing options.
1. Long-Term Goals As the owner of your new business, it will be critical for you to think about what you actually hope to achieve in the long-run. What is the purpose of starting your business? Where do you hope for your business to be in ten years? Twenty years? By answering these questions, it will be easier for you to decide how financially entrenched in your business you will actually be. Though you don’t need to come up with a future “exit strategy” this very minute, it is certainly a good thing to think about.
2. Available Interest Rates Naturally, the opportunity cost of choosing equity over debt finance will be largely determined by how much you will actually need to pay to borrow money. If your business has access to low-interest rates or specialty loans (such as an SBA loan), the total cost of borrowing will be relatively lower. In order to make sure you are getting competitive quotes from potential lenders, it will be a good idea to compare multiple options before making any final decisions. Working to improve your business’ current credit score can also make a major difference.
3. The Need for Control By surrendering partial ownership of your business you are, to a certain extent, giving up control. In order to make sure they can still outvote all other stakeholders, many business owners will maintain 51 percent ownership of the business while selling the remaining 49 percent. If having total or significant control of your business is something that’s important to you, be sure to limit the amount of equity you end up distributing.
4. Borrowing Requirements There are many different things lenders will look at when deciding whether to issue a loan. In addition to a general financial background check, lenders will also want to see some hard numbers on paper. The factors they may look at include things such as your debt-to-equity ratios, your fixed monthly expenses, your overall business plan, and various others. These requirements can often be rather rigid, which is why your business needs to plan its financing strategy in advance.
5. Current Business Structure Another variable that will impact the opportunity cost of borrowing (or issuing equity) is your business structure. If your business is already formally structured as a partnership, for example, this may complicate the process of selling equity. Additionally, if you hope to secure your equity finance via public means—such as selling stocks on the open market—you will need to formally declare your business to be a public corporation. Though your business structure is something that can (and likely should) be changed in the future, there is no doubt that the preexisting structure will have a major impact on your short-term financing decisions.
6. Future Repayment Terms While many business loans are simple, flat loans with a fixed interest rate, there are many loans with repayment terms that are notably more complicated. For example, some loans will not require any repayment for several years down the loan. When this is the case, you will need to calculate both the average total interest rate as well as the time value of money. If you are hoping to borrow from a single venture capitalist or angel investor, they may be able to dictate additional terms that are not found in traditional bank loans. Sometimes, these investors will offer a complex mix of debt and equity financing for new businesses.
Answer: D. Why the customer needs 5,000 extra flyers
Explanation:
The important factors that Sara will consider to know whether her company can accommodate the request are:
• Whether her company has enough paper on hand
• Whether her company can print the additional flyers without negatively affecting the other projects
• Whether there is enough time to print the additional flyers by tomorrow.
These factors above are important as they'll determine if she can accept the request or not. For example, in a situation where there's no enough paper, then the request should not be accepted.
The least important factor for Sara to consider will be "Why the customer needs 5,000 extra flyers". This is not of concern to Sara and shouldn't bother her.
The four Ps happens to be the four significant factors that come into the vicinity when certain service or the good is being marketed with the public as the buyer. And the four Ps are product, price, promotion and the place. We need to select the bank which is nearest to us, and about which we have heard a lot and are confirmed about good service. The $100s checking account is not going to print interest for us, but we need 24 x 7 service as its a sort of current account, and we need to do the daily transaction through it. And hence the bank should provide all the time good service, and most probably 24 x 7 service. And this defines their product. Also, they should charge the least service charge, and that is the price. The bank which best fit according to above 4 p's, is the bank I will choose.
Your line of sight is the noticeable path of travel from your vehicle to your destination area. This line can be obstructed by a curve, a hill, high-forest wooded zones, large truck or other obstruction that prevents drivers from seeing the vehicle ahead. Therefore, if you cannot see around an obstruction, you should slow down and be willing to adjust your position until you can reestablish a clear line of sight to your path of travel and targeting area.
Ultimately, the onus is on the state government to balance the checkbook, so the state has to decide the benefits maximum amount, duration, and eligibility to receive the benefits. For this reason, you notice that unemployment benefits largely vary by state. Some states like Massachusetts could pay as high as $1,220 depending on the eligibility criteria.
