“The Best Advice is always free”
Starting a small business requires bucket loads of wisdom. Financial wisdom offered through various media is not always inherently beneficial to the reader and their business.
The foundations for financial excellence are elementary and logical; here is a new perspective on financial insight to starting your small business. Making use of purely scenario planning this illustrated scenario would be a recommendation for all businesses that you intend financing.
The average cost of setting up a franchise and small business in U.S.A. is currently in the $300,000.00 to $ 474 000.00 marks, a sizeable sum taking into consideration the prevailing economic climate and business confidence levels.
Loans or Finance
In order to stimulate the economy, banks are eager to finance new business as this has a long-term stimulus on the economy and contributes to job and wealth creation.
Most individuals do not have the entire capital amount available to finance their new venture and financing becomes the preferred and logical route to market.
Taking into consideration the average price of a new franchise $474 000.00, the average cash portion of financing that particular business would be $ 153 000.00 which includes the initial, cash joining or franchise fee.
This would equate to a financing portion of $321 000.00 or 68% of the initial set-up cost of the business.
From a personal and statistical point of view, the gearing or debt ratio is too high and the minimum recommended debt ratio should never exceed 50%.
Why is gearing so important?
It is nerve-wracking and soul-destroying to build a business for you only to allocate the major share of your income and profits to servicing a loan and the commensurate interest payments. The strain on the cash flow and reserve funds is too great, and the business rapidly becomes a financial risk to the entrepreneur and the banks concerned.
“The Free Advice”
Total Cost
When using the above figures as our reference and benchmark, if the inclusive cost of the business is $474 000.00.
It would be prudent to assume that if shares were offered at $1.00 per share then the business would have 474 000 shares on offer.
Share Distribution
Taking my advice of a 50% gearing or financing ratio, the business when financed by the entrepreneur would allocate to the entrepreneur, 50%(237 000 shares) of the shares currently on offer (The portion he/she has paid cash for)
The remaining 50% of shares on offer would be the right and technical ownership of the banks or financing institution.
The Thinking Motivating This Strategy
As the entrepreneur pays off the loan, their ownership or share-holding increases exponentially.
Goals are easy to set, time and financing permitting the entrepreneur sees his/her goal of 100% ownership as achievable and desirable.
When the bank is essentially a partner in your business the relationship changes, the entrepreneur can take the banks perspective into consideration as they are a valuable share-holder, the logic of having a “you” and “me” approach becomes a “we” approach to the business.
Any extra funds available will inherently go toward servicing the loan on the business.
The Ultimate Lesson
That our thinking and approach has changed, it is a recommendation that one ignore financing by financial institutions and approach friends, acquaintances, and family to finance your business using this share-holding approach. The entrepreneur develops a fiscal policy that is easy to equate and calculate, profit distribution is just as equitable, and the entrepreneur has a clearer indication of the status of the business free of financing and interest costs and charges.
- Total visitors : 0
- Total page views: 0
Categories
Recent Posts
- Revolutionizing Online Ads Meet [Company Name]
- Digital Art’s Next Wave Stunning New Designs
- Unlock Insights Your Salesforce Data, Simplified
- Discover the Ultimate Golgappa Experience
- Quality Assurance Final Inspection Results
- Natural Knee Pain Relief Find Your Remedy
- Mastering Corporate Social Responsibility
- Sun, Sand, & Serenity Best Beach Resorts 2024
- Smart Home Safety & Security Enhancements
- Expanding Horizons Our New Growth Strategy
- Axtria’s Work-Life Balance Finding the Sweet Spot
- Budget-Friendly Living Room Makeover Top Tips
- Exotic Animal Vet Saving the Wildest Patients
- Illuminate Your Home Introducing the New Smart Bulb
- Apple’s Work-Life Balance The Inside Story
- Introducing Apple’s Revolutionary Smart House
- 1967 GTO Restomod Power and Style Redefined
- Restored Glory A ’66 Mustang’s Transformation
- Gatorade’s Latest Innovation Discover the Difference
- FactoryTalk Streamlining Your Factory’s Efficiency
- Conquer EBV Naturally A Holistic Approach
- Puppy’s First Haircut A Paw-some Experience!
- Step Out in Style Versace’s Latest Black Kicks
- Climate Change A New Threat to Coastal Cities?
- Smart Home Central Your New Zigbee & Wi-Fi Gateway
- Today’s Winners and Losers Market Snapshot
- Four 5-Star Holiday Destinations Your Dream Escape
- AWS Work-Life Balance The Latest Employee Review
- Stunning DIY Decor Budget-Friendly Makeovers
- Car Accident? Know Your Rights & Get Compensation
Archives
- May 2025
- April 2025
- March 2025
- February 2025
- January 2025
- October 2024
- September 2024
- August 2024
- July 2024
- June 2024
- May 2024
- April 2024
- March 2024
- February 2024
- January 2024
- December 2023
- November 2023
- October 2023
- September 2023
- August 2023
- July 2023
- June 2023
- May 2023
- April 2023
- March 2023
- February 2023
- January 2023
- December 2022
- November 2022
- October 2022
- September 2022
- August 2022
- July 2022
- June 2022
- May 2022
- March 2022
- February 2022
- January 2022
- December 2021
- November 2021
- October 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
Partner
ecommerce web design dubai
ecommerce website development dubai
ecommerce website dubai
ecommerce development in dubai
ecommerce development company dubai
ecommerce development company in dubai
ecommerce development dubai
ecommerce website development companies in dubai
ecommerce website development company in dubai
ecommerce website development in dubai
ecommerce website design company near me
ecommerce website design company dubai
ecommerce web development dubai
web ecommerce development
ecommerce website in uae
ecommerce website design dubai
ecommerce web design agency
Partner
app design Dubai
app developers in dubai
app development companies in dubai
app development dubai
application development dubai
app developers uae
app development companies in uae
app development uae
mobile App designer Dubai
mobile App Development Company Dubai
mobile app development company in dubai
mobile app development dubai
mobile application dubai
mobile app development company in uae
mobile app development uae
mobile application development uae
mobile app development company
Patner
Hire Opencart Developers
Hire Zend Developers
Hire VueJs Developers
Hire Symfony Developers
Hire CodeIgniter Developers
Hire ExpressJs Developers
Hire Xamarin Developers
Hire JQuery Developers
Hire NextJs Developers
Hire WooCommerce Developers
Hire ReactJs Developers
Hire NodeJs Developers
Hire Laravel Developers
Hire Magento Developers
Hire Flutter Developers
Hire Swift Developers
Hire Angular Developers
Hire WordPress Developers
Hire IOS Developers
Hire Java Developers
Hire PHP Developers
Hire Hybrid App Developers
Hire Android Developers
Hire UIUX Designers
Hire Native App Developers
Hire JavaScript Developers
Offshore Developers
Hire Graphic Designers
Hire Net Developers
Hire Web Designers