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: Constructive criticism encourages growth and learning by being positive and encouraging, offering solutions to problems, targeting specific areas for improvement and by being expressed only in private.
Explanation:
Here is the correct question:
Support this statement using complete sentences: “Constructive criticism is offered in a way that encourages growth and learning.”
Constructive criticism is when an individual offers valid opinions about what others have done in a way that doesn't fault the person but rather encourages the person to improve.
The person offered constructive criticism should not be criticised in public but rather praised in public while he or she is then criticised in private. Criticism should be done in a friendly manner and not an unfriendly or aggressive manner.
Every individual has a different sense of thinking and perceiving things and moments. Perceiving things is all about judging, observing and percipient. IN that regard, two people having the same experience can perceive things differently. People interpret things based on their perceptions. Perception can change through experience and knowledge. So, an important factor which shape perception depends on perceivers.
Based on the information provided within the question it can be said that the creation of these departments was a result of a market opportunity. This term refers to a specific need that arises for the product or service that you are providing in a specific location or to an individual/company. Which is what happened in this situation as an increase in demand for organic food gave Webmans Inc. the opportunity to enter that market and answer that demand by creating organic food departments within their large stores.
Portugal has comparative advantage in producing olives.
Switzerland has comparative advantage in producing fish.
Portugal can gain from trade if it receives more than 3 pounds of fish per crate of olives.
Switzerland can gain from trade if it receives more than 1/11 of olives for each pound of fish.
d. 18 pounds of fish per crate of olives.
Explanation:
Switzerland and Portugal both countries can produce Olives and fish. One country has advantage in producing fish while other has advantage in producing olives. Both countries can gain from trade if they find a intermediary way so that both countries can be in win win situation. It is beneficial for Portugal if it trades with Switzerland if it receives more than 3 pounds of fish.
