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Other Added - Investors, or a Loan: How Do You Know What Type of Capital is Best for Your Business?
(1) Relevance The convention of relevance emphasizes the fact that only such information should be made available by accounting as is relevant and useful for achieving its objectives. For example, business is interested in knowing as to what has been total labor cost? It is not interested in knowing how much employees spend and what they save.(2) ObjectivityThe convention of objectivity emphasizes that accounting information should be measured and expressed by the standards which are commonly acceptable. For example, stock of goods lying unsold at the end of the year should be valued as its cost price not at a higher price even if it is likely to be sold at higher price in future. Reason is that no one can be sure about the price which will prevail in future.(3) FeasibilityThe convention of feasibility emphasizes that the time, labor and cost of analyzing acc
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers t
The United States is the land of opportunity. There are more jobs for people to do than you can possibly imagine. And with the advances in technology, there are even more jobs for people to do. Well, actually, that's not really true. See, with the advances in technology, there are a lot of old jobs that are pretty much disappearing if not gone altogether. We're going to take a look at a few of those vanishing dinosaurs in this article.One job that is almost non existent these days is the job of the shoe salesman, at least in the traditional sense. Today with stores like Pay Less popping up all over there really is no need for shoe salesmen anymore. The reason is because with the new style of shoe store, shoes are now openly on display, not just display pairs. You simply go to the rack, pick out the shoe you want and if it fits and you like it, you bring it up to the cashier and pay for it. No need for a salesman. Now those Mar
The answer is dependent on the answers to several questions: Why does the company require additional capital? What stage is the company at? What is the financial condition of the company? How much capital is required? What constraints will the financing source put on the day-to-day operations of the company? And finally, what impact will the financing source have on the ownership of the company?
Why Does The Company Require Additional Capital?
The reasons funds are required, or how they will be put to use, may lend themselves more to debt than to equity or vice versa. Debt is often a source of funds for the day-to-day operations of the company or to refinance a current loan. Expansion capital can be debt or equity. Start up funds most often come from equity sources. A turnaround situation, refinancing a delinquent loan, covering a deficit in revenues, could be either, but in these cases the financing will come with a high price.
What Stage Is The Company At?
Companies grow through several different stages: seed, start-up, first stage, and second stage. The stage of the company can be an indicator of the risk involved. While neither debt nor equity would be prohibited at any stage, the older and more established the company is, usually the less risky it is.
Seed Stage--the idea for a product or company is in the mind of the founder, but there is still substantial research and development necessary to determine whether the idea is viable.
Start-up--the company has a business plan, a defined product, and basic structure, but little or no revenues are being generated. The product may still be just a prototype.
First Stage--the product is either ready for market, or is generating some revenues. The structure of the company is in place.
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers to
This is a true story.I was 25 years old when I answered an ad in the Toronto Star one day.It read "GROUND FLOOR OPPORTUNITY". The content of the ad basically discussed the fact that the company was new,willing to train managers in every facet of the business and would promote successful candidates into their own office.As well they had large ,international intentions.I walked into a cramped ,shabby interior of an office smack dab in the heart of Chinatown but what struck me was the energy of the place and the confidence of the gentleman who interviewed me ( unbeknownst to me at the time but he was a millionaire by the age of 30).I was hired on a 100% commission plan only and thus I entered the world of telemarketing selling paper rolls and ribbons for POS,cash registers and credit card machines.It was a classic boiler room only the business was a legitimate model through and through.However,hustle and attitude were the vernacular of
The reasons funds are required, or how they will be put to use, may lend themselves more to debt than to equity or vice versa. Debt is often a source of funds for the day-to-day operations of the company or to refinance a current loan. Expansion capital can be debt or equity. Start up funds most often come from equity sources. A turnaround situation, refinancing a delinquent loan, covering a deficit in revenues, could be either, but in these cases the financing will come with a high price.
What Stage Is The Company At?
Companies grow through several different stages: seed, start-up, first stage, and second stage. The stage of the company can be an indicator of the risk involved. While neither debt nor equity would be prohibited at any stage, the older and more established the company is, usually the less risky it is.
Seed Stage--the idea for a product or company is in the mind of the founder, but there is still substantial research and development necessary to determine whether the idea is viable.
Start-up--the company has a business plan, a defined product, and basic structure, but little or no revenues are being generated. The product may still be just a prototype.
First Stage--the product is either ready for market, or is generating some revenues. The structure of the company is in place.
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers t
Are you interested in having a Great Business? Sure you are and it is not as hard as you think. In fact consider if you will what the customer really wants. They want a friend to sell them a great product and give them terrific service. But as consumers and customers how often do we really get that?Well not so often and when someone or some company gives that to us whether it is a small business or Large Corporation, well we tend to remember it don’t we? Even better we go tell all of our friends and add a “Buzz” or create fresh new word of mouth advertising for that company.Consider yourself one of their many new salesmen and the better the products, service and people at that company are the more “Free” salesmen out promoting them. And let’s face it; testimonials from happy customers are in fact the best advertising any marketing consultant could ever come up with no matter how many marketing
What Stage Is The Company At?
Companies grow through several different stages: seed, start-up, first stage, and second stage. The stage of the company can be an indicator of the risk involved. While neither debt nor equity would be prohibited at any stage, the older and more established the company is, usually the less risky it is.
Seed Stage--the idea for a product or company is in the mind of the founder, but there is still substantial research and development necessary to determine whether the idea is viable.
Start-up--the company has a business plan, a defined product, and basic structure, but little or no revenues are being generated. The product may still be just a prototype.
First Stage--the product is either ready for market, or is generating some revenues. The structure of the company is in place.
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers t
Kaizen is a proven performance improvement tool. Adopted from modern Japanese manufacturers, like Toyota, Kaizen generates breakthrough improvements quickly, without huge capital investments and/or extensive commitments of employ time. Kaizen is an efficient, effective technique for producing change in manufacturing operations.Kaizen improves performance in non-manufacturing situations as well. Ideal for a wide variety of industries, it’s well suited for non-manufacturing situations like those found in professional services, corporate headquarters, and branch offices. Entities like finance departments, corporate headquarters, national banks, and hospital emergency rooms all benefit from it.Kaizen is appropriate for relatively straightforward, simple problems, problems that don’t involve numerous functions or complex processes. It is also appropriate for well-defined problems or when the dissatisfactory performance of the current
Start-up--the company has a business plan, a defined product, and basic structure, but little or no revenues are being generated. The product may still be just a prototype.
First Stage--the product is either ready for market, or is generating some revenues. The structure of the company is in place.
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers t
One of the most effective methods for growing and improving upon your current business is to solicit feedback regarding your products or services directly from your customers. There are many ways the information you attain from customers can be valuable, including:Gauge overall customer satisfaction - You can see just how satisfied your customers are, and if they aren't, ask them exactly what the problem was and what you can do to fix it. For customers that are satisfied, you can learn more about what they like about your company.Estimating customer loyalty - You can gauge the likelihood that a customer will use your products or services again through their survey answers.Gauge effectiveness of marketing campaigns - By simply asking the client how they found out about your company, you can see what marketing campaigns are bringing in the sales and which are not, and make adjustments to your marketing efforts accordingly. the company is in place.
Second Stage--full scale production. The company's product has been selling and accepted by the marketplace. The company is ready for a major national introduction of the product or introduction of a second product.
Established--the company has been operating successfully for at least three years.
Turnaround-- the company has been operating for a number of years but is underperforming. A hard turnaround refers to a company that is not only underperforming, but has been in a cash deficit position with little hope of returning to a positive position without major restructuring.
What Is The Financial Condition Of The Company?
In certain situations the company's financial condition will suggest one kind of capital over the other. If the company needs all its cash to fund its growth, then a loan is not feasible, because the company could not afford interest and principal payments. If the company just needs a line of credit to fund a cyclical increase in orders, then it doesn't make sense to bring in an equity investor.
A lender looks at the asset base to secure a loan, and the cash that has been generated to pay the interest. They also look at what other debt or liabilities the company has and very often the debts and liabilities of the owner(s). The old adage that it's easiest to get a loan when you don't need one is close to the truth. A strong balance sheet, top heavy on cash, and light on the side of liabilities is easier to finance.
Investors look at how healthy the company is by reviewing trends in the operating statements and the balance sheet. A company that has demonstrated a positive trend in the past is looked upon favorably. However, the future outlook for the company's product and market is just as important to an investor as the past performance. A company with a somewhat shaky past in a currently booming industry is probably preferable to an equity investor than a great performance in the past in an industry that's on the downslide.
But what if your company is a start-up and doesn't have much, if any, history? Then other factors will be reviewed such as:
How much money the owners contributed to the company.
How strong is the management team.
How dedica
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