Month: July 2025

FINANCING BASICS COURSE

LESSON 2

FORMS OF FINANCING – OVERVIEW

 

1. WHICH FORMS OF FINANCING EXIST?

 

THERE ARE GENERALLY THREE FORMS OF FINANCING:

• GRANT
• DEBT FINANCING
• EQUITY FINANCING

 

Ad1)  DEFINITION OF GRANT

A grant is a fund given by a person or organization, often a public body, charitable foundation, a specialised grant-making institution, or in some cases a business with a corporate social responsibility mission, to an individual or another entity, usually, a non-profit organisation, sometimes a business or a local government body, for a specific purpose linked to public benefit. (BY COURTESY OF WIKIPEDIA)

 

UNLIKE A LOAN, A GRANT DOES NOT INCLUDE THE OBLIGATION TO PAY IT BACK. SO, IF YOU ARE LUCKY TO GET A GRANT TO LAUNCH YOUR OWN BUSINESS, KEEP TO THE CONDITIONS OF THE GRANT AND BE HAPPY. ALL YOU NEED TO DO IS TO MANAGE YOUR BUSINESS SUCCESSFULLY. BUT THAT IS A SUBJECT FOR A DIFFERENT COURSE…

Ad 2: DEFINITION OF DEBT FINANCING

 

Debt financing occurs when a company raises money by selling debt instruments, most commonly in the form of bank loans or bonds.

WHERE DEBT IS A SUM OF MONEY OWED OR DUE.

WHEN YOU SEE THIS DEFINITION, YOU WILL REALISE THAT FOR YOU AS A SMALL OR MICRO START-UP, THE ONLY PART OF THIS DEFINITION THAT APPLIES TO YOU ARE THE BANK LOANS. DON’T WORRY IF YOU SEE THE WORD “COMPANY” IN THE DEFINITION. WHETHER YOUR BUSINESS IS PART OF A COMPANY YOU HAVE REGISTERED WITH THE REGISTRAR GENERAL (MORE ABOUT THAT IN A DIFFERENT COURSE “BUSINESS MANAGEMENT”), OR YOU OWN THE BUSINESS AS A SINGLE PERSON (SELF-PROPRIETORSHIP) OR TOGETHER WITH OTHERS (PARTNERSHIP), YOU WILL USUALLY FACE THE SAME ISSUE: YOU HAVE TO GO TO THE BANK. MORE ABOUT DEBT FINANCING IN THE NEXT LESSON.

 

AD 3: DEFINITION OF EQUITY FINANCING

Equity financing refers to the sale of company shares in order to raise capital. Investors who purchase the shares are also purchasing ownership rights to the company. Equity financing can refer to the sale of all equity instruments, such as common stock, preferred shares, share warrants, etc.

WHERE EQUITY IS THE VALUE OF THE SHARES ISSUED BY A COMPANY.

HERE WE MUST BE CAREFUL. THIS DEFINITION MAINLY REFERS TO EQUITY OF A COMPANY LISTED ON A STOCK EXCHANGE (E.G., THE GHANA STOCK EXCHANGE – GSE). HOWEVER, IF YOU LAUNCH A BUSINESS AS SINGLE OWNER (SELF-PROPRIETORSHIP), THE BUSINESS IS EQUITY. THE SAME REFERS TO A BUSINESS PARTNERSHIP, IN WHICH EACH OF THE PARTNERS OWNS A PART OF THE EQUITY. THIS IS IMPORTANT WHEN WE DIG INTO EQUITY FINANCING IN ONE OF THE FOLLOWING LESSONS.

 

1. QUESTIONS

 

• IN YOUR OWN WORDS: WHAT IS A GRANT?
• IN YOUR OWN WORDS: WHAT IS DEBT FINANCING?
• IN YOR OWN WORDS: WHAT IS EQUITY?
• IN YOUR OWN WORDS: WHAT IS EQUITY FINANCING?

 

TRY TO ANSWER THE QUESTIONS WITHOUT LOOKING AT THE TEXT.

THE NEXT LESSON WILL FOLLOW IN A FEW DAYS.

FINANCING BASICS COURSE

LESSON 3

DEBT FINANCING

 

BEFORE WE GO INTO DETAILS, HERE IS FIRST OF ALL A DEFFINITION OF DEBT FINANCING:

DEBT FINANCING OCCURS

when a company raises money by selling debt instruments, most commonly in the form of bank loans or bonds

(Debt Financing – Overview, Options, Pros and Cons)

AS YOU AND YOUR MICRO AND SMALL BUSINESS WILL HARDLY ISSUE A BOND TO FINANCE EITHER AN EXPANSION OR RAISE MONEY TO PAY OUTSTANDING BILLS, YOU WILL SURELY TAE A BANK LOAN OR A LOAN FROM A RELATIVE OR A FRIEND. ALTHOUGH A LOAN FROM A RELATIVE OR A FRIEND MIGHT BE LOOKING AS NOT SO FORMAL, IT IS ADVISABLE TO USE THE SAME METHOD AS IF YOU TAKE A BANK LOAN. ALWAYS IMAGINE THAT ANY DISPUTE OVER THE LOAN CAN AFFECT YOUR RELATIONSHIP SERIOUSLY.

AS THE BANK WILL PRESENT YOU WITH A FORMALISED  LOAN APPLICATION WHICH YOU CAN’T CHANGE, WE WILL FOLLOWING LOOK AT THE BASICS OF A LOAN AGREEMENT.

FIRST OF ALL, ANY AGREEMENT CONCERNING A LOAN MUST ALWAYS BE IN WRITING (KEEP IN MIND THAT YOU CAN ONLY CHANGEA WRITTEN AGREEMENT ALSO BY WRITING, AND AGREED UPON BY ALL PARTIES TO THE ORIGINAL AGREEMENT). A WRITTEN LOAN AGREEMENT MUST HAVE THE FOLLOWING CONTENT AS A MINIMUM:

• THE COMPLETE NAMES AND ADDRESSES OF THE PARTIES TO THE AGREEMENT;
• THE AMOUNT THAT IS GIVEN TO THE ONE WHO TAKES THE LOAN, AND WO GIVES THE LOAN;
• THE PURPOSE FOR WHICH THE LOAN IS GIVEN;
• THE INTEREST RATE PER YEAR THAT HAS TO BE PAID FOR THE LOAN;
• HOW THE LOAN SHALL BE REPAID (MONTHLY RATES, ETC.), AND UNTIL WHEN;
• WHICH COLLATERAL IS GIVEN FOR THE LOAN, IF ANY;
• WHAT SHALL HAPPEN IF THE LOAN IS NOT REPAID IN TIME, OR MONTHLY RATES ON THE LOAN ARE NOT PAID.

 

THE LOAN AGREEMENT MUST BE SIGNED BY ALL PARTIES TO THE AGREEMENT, AND, IF THERE ARE ANY, BY WITNESSES TO THE SIGNING. SAMPLES OF THE SIGNED AGREEMENT MUST BE GIVEN TO ALL PARTIES TO THE AGREEMENT,  AND, IF APLLICABLE, TO THE WITNESSES.

WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF DEBT FINANCING?

FINANCING BASICS COURSE

LESSON 4

EQUITY FINANCING

 

WE ALREADY LEARNT IN LESSON 2, NAMELY THE VALUE OF THE SHARES ISSUED BY A COMPANY; AND AS YOU USUALLY WON’T ISSUE ANY SHARES FOR YOUR SMALL OR MICRO BUSINESS, YOUR BUSINESS IT SELF IS EQUITY. THAT SAID, IF SOMEBODY INTENDS TO GIVE YOU MONEY IN THE FRAME OF EQUITY FINANCING, HE OR SHE WANTS “A SHARE” IN YOUR BUSINESS. “A SHARE” IN THIS CONNECTION MEANS NOT ONLY ONE SHARE (BECAUSE YOU DON’T ISSUE ANY SHARES OF YOUR BUSINESS), BUT IT MEANS “PART” OF YOUR BUSINESS.

HOW BIG THIS PART IS MAINLY DEPENDS ON THE AMOUNT OF MONEY THE FUTURE PARTNER WANTS TO PUT INTO YOUR BUSINESS, AND OF THE KIND OF BUSINESS YOU WANT TO ESTABLISH. USUALLY IT WILL BE AROUND 25% OF IT, BUT IT SHOULD ALWAYS BE LESS THAN 50%. THAT’S BECAUSE IF IF THE PERCENTAGE IS 50 OR MORE, YOU WILL LOSE CONTROL IF YOUR BUSINESS, AND THAT IS SURELY NOT IN YOUR INTEREST.

A PERSON WHO PUTS SEED MONEY INTO A START-UP BUSINESS IS CALLED AN “ANGEL INVESTOR”. ANGEL INVESTORS ARE EITHER PROFESSIONAL INVESTORS, OR THEY ARE FOUND AMONG FAMILY AND FRIENDS. THERE ARE TWO TYPES OF SUCH INVESTORS: EITHER THOSE WHO JUST PUT MONEY TO START A BUSINESS (OR, NOT LIMITED TO A START-UP BUSINESS, INTO AN ESTABLISHED BUSINESS), OR THOSE WHO ENGAGE THEMSELVES ACTIVELY IN THE BUSINESS BY GIVING ADVICE OR EVEN RUN A SECTION OF THE BUSINESS, LIKE, E.G., MARKETING.

AN EQUITY FINANCING AGREEMENT – JUST LIKE A LOAN AGREEMENT – IS WRITTEN IN FOUR PARTS:

• IDENTIFYING THE PARTNERS TO THE AGREEMENT

WHO IS THE INVESTOR (NAME AND ADDRESS, CONTACT INFORMATION);

WHO IS THE BUSINESS OWNER (NAME AND ADDRESS, CONTACT INFORMATION);

• MAIN PART

WHAT IS THE BUSINESS TO BE INVESTED IN?

WHAT IS THE AMOUNT TO BE INVESTED?

WHAT IS THE PERCENTAGE OF THE BUSINESS TO BE GIVEN TO THE INVESTOR?

IS THE PERCENTAGE OF THE BUSINESS TO BE GIVEN TO THE INVESTOR LEGITIME AND FREE OF OBLIGATIONS (PAYABLE TAXES, ETC.);

DATE AND LOCATION OF THE ACQUISITION OF THE PERCENTAGE OF THE BUSINESS;

• ADDITIONAL TERMS

DISTRIBUTION OF LEGAL FEES;

TERMS FOR TERMINATION OF THE AGREEMENT?

ANY OTHER TERMS THE PARTIES TO THE AGREEMENT CONSIDER IMPORTANT;

 

 

• FINAL PART

SEEK LEGAL ADVICE TO FINALISE THE AGREEMENT (FEES SHOULD BE PAID BY THE INVESTOR, AS THE BUSINESS OWNER IS THE ONE WHO SEEKS FINANCIAL ASSISTANCE);

CHECK THE DRAFT OF THE AGREEMENT THOROUGHLY BEFORE SIGNING IT.

 

THE CHARACTERISTICS OF EQUITY FINANCING SHOW ITS ADVANTAGES AND DISADVANTAGES:

EQUITY FINANCINGIVES THE INVESTOR PART OWNERSHIP IN THE BUSINESS.

CAPITAL INVESTED IN THE BUSINESS IS PERMANENT; IT DOES NOT NEED ANY PAYBACK.

NO INTEREST MUST BE PAID ON THE CAPITAL INVESTED; HOWEVER, IF THE BUSINESS RUNS WELL, A DIVIDEND MUST BE PAID.

IN CASE OF THE BUSINESS GOING BANKRUPT, THE INVESTED CAPITAL IS THE LAST TO BE REPAID (AFTER ALL DEBTS).

AS THE INVESTOR OWNS PART OF THE BUSINESS, EQUITY FINANCING IS AT THE LONG RUN USUALLY MORE EXPENSIVE THAN DEBT FINANCING.

IF THE INVESTOR HAS EXPERIENCE IN THE BUSINESS HE OR SHE INVESTS IN, THERE CAN BE ASSISTANCE IN BUSINESS MANAGEMENT.

 

AS WE HAVE NOW LEARNT THE BASIC STRUCTURE OF EQUITY FINANCING, WE CAN COME TO THE QUESTIONS:

 

QUESTIONS

 

• IN YOUR OWN WORDS; WHAT IS EQUITY?
• WHAT SHOULD BE THE CONTENTS OF THE MAIN PART OF THE EQUITY FINANCING AGREEMENT?
• WHO SHOULD PAY FOR THE LEGAL FEES OF AN EQUITY FINANCING AGREEMENT, AND WHY?
• WHAT ARE THE CHARACTERISTICS OF EQUITY FINANCING?
• WHAT ARE FOR YOU THE ADVANTAGES OF EQUITY FINANCING, AND WHAT ARE ITS DISADVANTAGES?

 

THE NEXT LESSON WILL FOLLOW AT THE BEGINNING OF NEXT WEEK.

FINANCING BASICS COURSE

LESSON 5

WHICH FINANCING OPPORTUNITIES ARE THERE IN GHANA?

 

IN THE LAST TWO LESSONS WE HAVE LEARNT ABOUT DEBT FINANCING ABD EQUITY FINANCING. NOW IT IS TIME TO CHECK SOME OPPORTUNITIES FOR START-UP AND MICRO, SMALL AND MEDIUM ENTERPRISES IN GHANA WHETHER THEY CAN BE OF BENEFIT FOR YOUR BUSINESS.

FIRST OF ALL, YOU CAN GO TO THE BUSINESS ADVISORY CENTER (BAC) IN YOUR DISTRICT. THEY CAN GIVE YOU ADVICE, AND IF THERE IS MONEY IN THE BUDGET, THEY MIGHT EVEB GIVE YOU SOME FINANCIAL ASSISTANCE.

THEN THERE ARE SOME INSTITUTIONS WHICH OFFER ASSISTANCE, BUT SOMETIMES WITH CONDITIONS WHICH FOR SOME BUSINESSES – ESPECIALLY THE MICRO ONES – ARE DIFFICULT TO FULFIL:

• GHANA ENTERPRISE AGENCY (GEA, WEBSITE: https://gea.gov.gh)

GEA CAN ASSIST IN FUNDING, DEVELOPMENT OF MICRO, SMALL AND MEDIUM ENTERPRISES, ETC.

• 2) SME GROWTH & OPPOREUNITY PROGRAMME (WEBSITE:
  https://sme-go.mofep.gov.gh/guidelines/gea

FOR MICRO AND MANY SMALL ENTERPRISES, THE GUIDELINES ARE NOT EASY TO FULFIL. NEVERTHELESS, THEY SKOULD BE MENTIONED HERE:

 

Minimum requirements for the G&O Programme

• SMEs must have majority Ghanaian shareholding (51% or more)
• SMEs must be considered as an SME as per the legal definition
• SMEs must be registered under Ghanaian law as a limited liability company, a partnership, or sole trader
• SMEs must meet the eligibility criteria for the product they apply to
• SMEs must comply with the Programme monitoring requirements
• SME must have been operating for 2 years or more

HOWEVER, THERE ARE SEVERAL PROGRAMMES OFFERED BY THE GEA; THEREFORE, IT MIGHT BE OF BENEFIT FOR OWNERS OF MICRO, SMALL, AND MEDIUM ENTERPRISES TO LOOK INTO THESE PROGRAMMES. THE BUSINESS ADVISORY CENTER (BAC) IN YOUR DISTRICT CAN SURELY CAN SURELY HELP YOU WITH YOUR RESEARCH.

THERE ARE ALSO SEVERAL APPS TO DOWNLOAD ON THE INTERNET, WHICH OFFER LOANS FOR BUSINESSES. YOU SHOULD, HOWEVER, BE VERY CAUTIOUS WITH THESE OFFERS. MORE OFTEN THAN NOT, THERE WILL EITHER BE PROBLEMS WITH EXTREMELY HIGH INTEREST RATES OR WITH PRESSURE THEY MIGHT EXECUTE ON YOU, IF YOU GET PROBLEMS WITH THE REPAYMENT.

FURTHERMORE, THERE ARE GOVERNMENT-BACKED PROGRAMMES WHICH ARE OFFERED THROUGH COMMERCIAL AND RURAL AND COMMUNITY BANKS. IF YOU ARE LOOKING FOR A LOAN TO HELP FINANCING YOUR BUSINESS, THEY SHOULD VE PREFERRED COMPARED WITH THE ONLINE LOANS, BECAUSE

— THE INTEREST RATES ARE USUALLY LOWER, AND

— IN CASE YOU HAVE PROBLEMS WITH REPAYMENT, YOU CAN ALWAYS TALK WITH THE LOAN OFFICER IN YOUR FINANCIAL INSTITUTION TO FIND A SOLUTION.

OFTEN, THESE PROGRAMMES ARE TARGETED FOR LOCAL COOPERATIVES; SO, IT IS ADVISABLE FOR A YOUNG E ENTREPRENEUR TO JOIN SUCH A COOPERATIVE.

YOU MUST GENERALLY BE VERY CAREFUL WITH FINANCING YOUR BUSINESS THROUGH A LOAN. THE AMOUNT OF LOAN YOU TAKE SHOULD NEVER BE MORE THAN 60% OF THE CAPITAL YOU ALREADY HAVE. IF YOU DON’T KEEP TO THAT RULE, YOUR BUSINESS IS SURELY CONDEMNED TO FAILURE.

AS ALREADY MENTIONED IN AN EARLIER LESSON, IF TAKING A LOAN FOR DEVELOPING YOUR BUSINESS IS TOO MUCH OF A RISK FOR YOU, YOU CAN LOOK OUT FOR AN “ANGEL INVESTOR”.

THE GHANA ANGEL INVESTOR NETWORK (CHECK THEIR WEBSITE UNDER Gain – Ghana Angel Investor Network )

COULD BE THE ORGANISATION YOU ARE LOOKING FOR. YOU CAN FIND A LINK FOR FUNDING APPLICATION THROUGH TIS LINK”:

Funding application – Gain

YOU CAN ALSO CHECK THEIR PROGRAMMES FOLLOWING THIS LINK:

Ghana Angel Investors Network (GAIN) – Impact Investing (impactinvestinggh.org)

 

AND A PERSONAL HINT TOO: FROM FEBRUARY, 2025 ON RECKLING ENTERPRISE THROUGH ITSINVESTMENT COMPANY C.K.J. RECKLING STAR WILL OFFER TWO FINANCIAL ASSISTANCE OF GHC 3,000 EACH TO MICRO BUSINESS START-UPS FOR A 25% SHARE IN THE BUSINESS. INTERESTED ENTREPRENEURS-TO-BE SHOULD COnTACT US THROUGH THE EMAIL ADDRESS recklingenterprises@hotmail.com FROM BEGINNING OF JANUARY, 2025 ON. FURTHER CONDITIONS WILL THEN BE DISCUSSED WILL THEN BE DISCUSSED WITH THE APPLICANTS.

 

AND NOW TO THE QUESTIONS:

 

• WHAT ARE THE CONDITIONS OF THE GHANA ENTERPRISE AGENCY (GEA) FOR PARTICIPANTS-TO-BE IN THEIR PROGRAMMES?
• WHY IS IT DIFFICULT FOR OWNERS OF MICRO AND SMALL ENTERPRISES TO FULFIL THE CONDITIONS OF THEIR PROGRAMMES?
• WHAT INFORMATION DOES THE GHANA ANGEL INVESTOR NETWORK WANT TO HAVE FROM AN APPLICANT?
• IS THERE AN ANGEL INVESTOR IN YOUR DISTRICT?
• ARE YOU GENERALLY INTERESTED IN THE OFFER MADE BY RECKLING ENTERPRISE?

THE NEXT LESSON WILL FOLLOW AT THE BEGINNING OF NEXT WEEK.

FINANCING BASICS COURSE

LESSON 6

A BRIEF EVALUATION OF THE FORMS OF FINANCING AND HOW YOU FIND THE BEST FOR YOU

 

OF COURSE, THE BEST FORM OF FINANCING YOUR BUSINESS IS THE GRANT. IF YOU ARE ONE OF THE LUCKY ONES WHO GETS ONE, YOU MUST ONLY TAKE CARE THAT YOU USE THE MONEY FOR THE PURPOSE IT WAS GIVEN FOR.

MORE DIFFICULT IS THE DECISION BETWEEN THE OTHER TWO FORMS OF FINANCING. IF YOU ARE ONE OF THOSE BUSINESS WNERS WHO DON’T WANT OTHER PEOPLE TO GET INVOLVED IN YOUR BUSINESS, YU WILL SURELY BE MORE INCLINED TO CHOOSE DEBT FINANCING, AND TAKE A LOAN.

ON THE OTHER HAND, IF YOU ARE OF THE OPINION THAT TWO BRAINS ARE BETTER THAN NE, CHOOSE THE EQUITY FINANCING. IN THIS CASE, YOU MUST ONLY SEE TO IT THAT YOU GET AN ACTIVE INVESTOR WHO WANTS TO CONTRIBUTE TO THE SUCCESS OF YOU BUSINESS WITH HIS OR HER IDEAS. IF YOU GET A SO-CALLED “SILENT INVESTOR”, YOU WILL ONLY GET THE MNEY. THOSE KIND OF INVESTORS WILL PROBABLY CHOOSE A BUSINESS TO INVEST IN WHICH ALREADY HAS A CERTAIN DEGREE OF SUCCESS.

 

SUCH A “SILENT INVESTOR” WOULD ALSO BE AN ALTERNATIVE FOR THOSE BUSINESS OWNERS WHO OTHERWISE WOULD CHOOSE DEBT FINANCING. IN THIS CASE, YOU MUST BE AWARE THAT YOU ARE NOW RESPONSIBLE FOR TWO – OR MORE – PEOPLE WITH THE SUCCESS OF YOUR BUSINESS.

AND WITH THAT WE GET TO THE PERSONAL ASPECT OF YOUR FINANCING CHOICE: ARE YOU MORE SOMEONE          WHO PREFERS TO WORK ALONE, OR ARE YOU SOMEONE WHO IS WILLING AND ABLE TO COOPERATE WITH OTHER PEOPLE FOR THE SUCCESS OF YOUR BUSINESS? YOUR DECISION MIGHT ALSO BE INFLUENCED BY THE SIZE OF YOUR BUSINESS AND YOUR PERSONAL AMBITIONS. THE BIGGER YOUR BUSINESS IS, AND THE FURTHER YOUR AMBITIONS ARE GOING, THE MORE YOU WILL NEED SOMEONE WITH WHOM YOU CAN SHARE THE  RESPONSIBILITY FOR YOUR BUSINESS..

ON THE OTHER HAND, IF YOUR BUSINESS IS SMALL AND MIGHT NOT BE ABLE TO SUSTAIN THE FINANCIAL EXPECTATIONS (PROFIT!) OF TWO OR MORE PEOPLE, YOU MIGHT BE MORE INCLINED (OR EVEN FORCED )  TO TAKE A LOAN TO FIRST OF ALL TAKE YOUR BUSINESS TO A STAGE WHERE IT IS ABLE TO ATTRACT INVESTORS.  IF YOU DECIDE TO TAKE A LOAN TO IMPROVE YOUR BUSINESS, YU MUST ONLY BE CAREFUL THAT YOUR MNTHLY NET INCOME IS ENOUGH TO PAY FOR THE PRINCIPAL AND INTEREST OF THE LOAN WITHOUT ANY PROBLEMS.

AND NOW THE QUESTIONS:

• WHAT IS THE EASIEST WAY OF FINANCING, AND WHY?
• WHEN SHOULD YOU CHOSE DEBT FINANCING?
• WHEN SHOULD YU CHOOSE EQUITY FINANCING?
• WHAT IS THE DIFFERENCE BETWEEN AN ACTIVE INVESTOR AND A SILENT INVESTOR?
• WHICH ARE THE PRINCIPLES ACCORDING TO WHICH YU SHOULD CHOOSE BETWEEN DEBT FINANCING AND EQUITY FINANCING?

FINANCING BASICS COURSE

LESSON 7

CONCLUSION

 

IN THIS COURSE, WE HAVE FIRST OF ALL LEARNT THE DIFFERENCES BETWEEN DEBT FINANCING AND EQUITY FINANCING. THE MAIN WAY OF DEBT FINANCING OCCURS IF YOU TAKE A LOAN FROM A BANK, THE MAIN WAY OF EQUITY FINANCIN OCCURS IF YOU TAKE AN INVESTOR – WHETHER PASSIVE OR ACTIVE – AS A PARTNER INTO YOUR BUSINESS.

THERE ARE SEVERAL ORGANISATIONS IN GHANA APART FROM BANKS WHICH GIVE OUT LOW-INTEREST LOANS – OR EVEN GRANTS – MAINLY TO START-UP BUSSINESSES. ON THE OTHER HAND, THERE ARE ALSO ORGANISATIONS OF SO-CALLED “ANGEL INVESTORS” THAT WOULD INVEST IN SMALL AND MEDIUM ENTERPRISES, ALSO FOR START-UP BUSINESSES.

THERE ARE ADVANTAGES AND DISAVANTAGES FOR BOTH FORMS OF FINANCING. ONE ADVANTAGE OF DEBT FINANCING IS THAT IS THAT IT IS MORE SHORT TERM THAN EQUITY FINANCING, ONE DISADVANTAGE – ESPECIALLY IN GHANA – IS A HIGH INTEREST RATE FOR LOANS. ONE ADVANTAGE OF EQUITY FINANCING IS THAT YOU DOM’T NEED TO PAY ANT INTEREST, AND THE RISK IS SHARED. ONE DISADVANTAGE IS THAT YOU GIVE AWAY PART OF YOUR BUSINESS, AS LONG AS THE BUSINESS EXISTS.

AT THE LONG RUN, WHETHER YOU PREFER DEBT FINANCING OR EQUITY FINANCING DEPENDS ON THE NATURE OF YOUR BUSINESS, AND ESPECIALLY ON YOUR OWN RISK PROFILE. WHETHER YOU ARE READY TO TAKE A BIG RISK OR YOU ARE A LOW-RISK TAKER, ONE THING YOU MUST DO BY ALL MEANS: YOU MUST ANALYSE YOUR INTENDED BUSINESS, WHETHER AS OBJECTIVELY AS POSSIBLE THE BUSINESS WILL BE SUCCESSFUL.

THE 17TH BRICS SUMMIT IS OVER – THESE ARE THE RESULTS: FOR THOSE OF YOU WHO ARE INTERESTED IN THE DETAILS, HERE IS NOW THE RIO DE JANEIRO DECLARATION FROM THE 6TH OF JULY, 2925:

BRICS RIO DE JANEIRO DECLARATION 2

FOR ALL THOSE FOR WHOM IT IS TOO MUCH TO READ, HERE IS A SHORT SUMMARY:

THE SUMMIT WAS UNDER THE THEME “STRENGTHENING GLOBAL SOUTH COOPERATION FOR A MORE INCLUSIVE AND SUSTAINABLE GOVERNANCE”. AS THE TITLE SUGGESTS, THE SUMMIT DISCUSSED THE IMPORTANCE OF GOVERNANCE FOR ALL ASPECTS OF ECONOMY, FINANCE, AND POLITICS, WITH A SPECIAL FOCUS ON THE GLOBAL SOUTH. THE EXPRESSION “GLOBAL SOUTH” REFERS TO EMERGING AND DEVELOPING COUNTRIES AS WELL AS LEAST DEVELOPED COUNTRIES.

SINCE ITS INAUGURATION, BRICS HAS A REMARKABLE INCREASE IN MEMBERSHIP, ESPECIALLY IN THE LAST YEARS. ON THIS SUMMIT, INDONESIA WAS INTRODUCED AS NEW MEMBER. APART FROM THAT, MANY COUNTRIES JOINED THE SUMMIT WITH OBSERVER STATUS. INCLUDED FROM AFRICA WERE NIGERIA AND UGANDA.

THE SUMMIT ACKNOWLEDGED THE NECESSITY OF AN EFFECTIVE GLOBAL GOVERNANCE WHICH TAKES INTO ACCOUNT THE COUNTRIES OF THE GLOBAL SOUTH. IN THIS CONTEST, A FAIR TRADE AND EFFICIENT HEALTH POLICIES ARE OF UTMOST IMPORTANCE.  THE SUMMIT CONDEMNED THE EXAGGERATED POLICY OF TARRIFS INTRODUCED BY US-PRESIDENT TRUMP AS MAINLY AFFECTING COUNTRIES OF THE GLOBAL SOUTH NEGATIVELY.

THE SUMMIT ALSO ACKNOWLEDGED THE IMPORTANCE OF ARTIFICIAL INTELLIGENCE (AI) FOR GLOBAL DEVELOPMENT IN THE FUTURE. HERE, THE SUMMIT EMPHASIZED THAT AI MUST BE USED POSITIVELY. IN THIS CONNECTION, THE SUMMIT DECLARED THAT IT WOULD FIGHT ANY KIND OF CYBER ATTACKS; BRICS MEMBERS WOULD COOPERATE IN THE FIELD OF CYBER SECURITY.

THE SUMMIT ALSO DECLARED ITS INTENTION TO WORK TOGETHER FOR IMPLEMENTING GLOBAL PEACE, SECURITY AND INTERNATIONAL STABILITY. HERE, THE SUMMIT CONDEMNED ISRAEL’S ATTACK ON THE ISLAMIC REPUBLIC OF IRAN AS WELL AS THE GENOCIDE IN GAZA. THE UKRAINE CONFLICT ONLY PLAYED A SIDE ROLE, OBVIOUSLY TRYING NOT TO OFFEND RUSSIA.

THE SUMMIT ALSO MENTIONED THE CONFLICTS IN SYRIA, SUDAN AND HAITI, ADVOCATING LOCAL AND REGIONAL PROBLEM SOLVING. IN THE CASE OF SUDAN, THE SUMMIT ATTRIBUTED AN IMPORTANT ROLE OF THE AFRICA UNION. GENERALLY, THE SUMMIT CONDEMNED ANY KIND OF TERRORISM, AND PLEDGED COOPERATION TO FIGHT IT INTENSELY.

THE SUMMIT CONSIDERED INTERNATIONAL COOPERATION IN ECONOMY, TRADE, AND FINANCE AN IUMPORTANT PART OF GLOBAL GOVERNANCE, ESPECIALLY IN VIEW OF THE ACTIONS OF THE CURRENT US-PRESIDENT. IN THIS CONTEXT, THE SUMMIT MENTIONED THE NEW DEVELOPMENT BANK (NDB). THE BANK HAS SINCE ITS INAUGURATION BEEN A SUCCESS STORY WITHIN THE BRICS ORGANISATION. IT PLAYS AN IMPORTANT ROLE BY, E.G., GIVING LOANS IN LOCAL CURRENCIES TO MEMBERS INSTEAD OF US-DOLLARS. THEREBY, IT EASES THE BURDEN OF LOAN REPAYMENT. IT ALSO FACILITATED THE ECONOMICAL COOPERATION BETWEEN BRICS MEMBERS. 

NEW IN THE REPERTOIRE OF BRICS FINANCIAL INSTRUMENTS ARE THE PROPOSED NEW INVESTMENT PLATFORM AND THE INTERBANK COOPERATION MECHANISM, WHICH WILL SURELY FURTHER ELABORATED WITHIN THE NEXT YEARS.

FURTHER AREAS OF COOPERATION BETWEEN BRICS MEMBER STATES ARE INFORMATION AND COMMUNICATION TECHNOLOGY AS WELL AS SPACE EXPLORATION, BOTH IN VIEW OF FORMING A BASE FOR FUTURE GENERATIONS.

OF EXTRAORDINARY IMPORTANCE FOR BRICS COUNTRIES ARE THE AREAS OF CLIMATE CHANGE AND SUSTAINABLE, FAIR AND INCLUSIVE DEVELOPMENT. THE SUMMIT SUPPORTS THE PASIS AGREEMENT ON CLIMATE CHANGE AND PLEDGES THE COOPERATION WITH EVERY COUNTRY THAT WANTS TO MAKE IT A SUCCESS. THIS AND SUSTAINABLE, FAIR AND INCLUSIVE DEVELOPMENT IS EXPECIALLY NECESSARY FOR COUNTRIES OF THE GLOBAL SOUTH. ONSEQUENTLY, THE SUMMIT REQUESTSE ASSISTANCE FROM THE DEVELOPED NATIONS. , THE SUITMMMORE GENDER-BALANCED LEA MORDERSHIP, EXPECIALLY FROM THE GLOB AL. SOUTH, IN INTERNATIONAL ORGANISSATIONS

ALL IN ALL, WE CAN JUDGE THIS SUMMIT TO BE A SUCCESS, ALTHOUGH MANY MORE THINGS MUST BE DONE TO FULFIL THE ASPIRATIONS OF THE BRICS COMMUNITY. THIS IS ALSO REFLECTED BY THE ANALYSIS OF THE SOUTH AFRICAN PRESIDENT RAMAPHOSA CONCERNING THE BRICS INVESTMENT PLATFORM, WHICH YOU CAN READ HERE:

Ramaphosa Embraces Exciting New Vision for a BRICS Investment Platform!

THE BRICS ORGANISATIN WOULD SURELY ALSO BE AN INTERESTING AREA FOR ANY GHANAIAN GOVERNMENT FIRST OF ALL AS OBSERVER. PERHAPS THEY SHOULD CONTACT THEIR NIGERIAN COUNTERPARTS FOR MORE INFORMATION, AS THEY ATTENDED THE SUMMIT AS SUCH AN OBSERVER.

THE NEXT BRICS SUMMIT WILL TAKE PLACE IN INDIA IN 2026.

THE 17TH BRICS SUMMIT TAKES PLACE IN RIO DE JANEIRO (BRAZIL). THE BRICS ORGANISATION ORIGINALLY CONSISTED OF FIVE MEMBERS – BRAZIL, RUSSIA, INDIA, CHINA, AND SOUTH AFRICA. -, BUT RECENTLY MORE COUNTRIES, EXPECIALLY FROM AFRICA AND THE MIDDLE EAST, HAVE JOINED THE ORGANISATION.

BRICS SUMMITS TAKE PLACE EVERY YEAR IN A DIFFERENT MEMBER COUNTRY. IN THE CENTER OF THIS YEAR’S SUMMIT ARE TOPICS GLOBAL GOVERNANCE AND TRADE. BOTH TOPICS BECAME MORE IMPORTANT RECENTLY IN VIEW OF THE UNITED STATES OF AMERICA’S EVEN MORE AGGRESSIVE ATTEMPT UNDER PRESIDENT TRUMP TO INFLUENCE THE GLOBAL ORDER BY IMPOSING TARRIFS ON EVERY COUNTRY THAT DOES NOT PLAY HIS RULES. ACCOTDING TO OUR FINFORMATION, HE NOW IMPOSED AN ADDITIONAL 10% TARRIF ON EVERY BRICS MEMBER. FURTHER IMPORTANT TOPICS ON THE AGENDA ARE ARTIFICIAL INTELLIGENCE (A.I.) AND CLIMATE CHANGE.

PRESIDENT LULA DA SILVA OF BRAZIL URGED THE BRICS MEMBERS IN HIS INAUGURAL SPEECH TO STAND UNITED AGAINST ANY ATTEMPTS TO INFLUENCE THE WORLD ORDER BY FORCE, BE IT MILITARILY OR ECONOMICALLY. HE EXPECIALLY MENTIONED GAZA, UKRAINE, AND THE TARRIFS POLICY. INSTEAD, HE EMPHASIZED THAT ONLY DIALOGUE WILL BE ABLE TO SOLVE GLOBAL PROBLEMS. THESE ISSUES WERE ECHOED BY THE PRIME MINISTER OF THE PEOPLE’S REPUNLICH OF CHINA.

ON THE SIDELINES, THERE ARE MANY BILATERAL MEETINGS WITH FOLLOW-UP AGREEMENTS WHICH SHOW THE INCREASING COOPERATION AMONG THE BRICS COUNTRIES.

THE BRICS SUMMIT WILL END TODAY, ON THE 7TH OF JULY. RECKLING ENTERPRISE WILL TOMORROW PUBLISH AN OVERVIEW ABOUT THE RESULTS OF THE SUMMIT. ADDITIONALLY, RECKLING ENTERPRISE IS CURRENTLY WORKING ON A WIDER ARTICLE ON THE BRICS ORGANISATION AND ITS IMPORTANCE FOR AFRICA. YOU CAN FIND A SPECIAL BRICS REPORT ON THE SUMMIT HERE;

special brics report – rio summit 2025

RECKLING ENTERPRISE WILL SURELY FOLLOW THE DEVELOPMENT OF THE BRICS ORGANISATION AND WILL ALWAYS ADVOCATE A MEMBERSHIP OF GHANA AND OTHER AFRICAN COUNTRIES FOR THE BENEFIT OF THE CONTINENT.

WE WISH THE SUMMIT GOOD LUCK IN ITS EFFORTS.

THE MAIN PROBLEM FOR MICRO ENTERPRISES IS BUSINESS MANAGEMENTMANY OWNERS OF MICRO ENTERPRISES – SMALL SHOPS, ETC. – BELIEVE THAT THE MAIN PROBLEM WHY THEIR BUSINESSS HAVE DIFFICULTIES TO SURVIVE IS THE LACK OF ADEQUATE FINANCING. ALTHOUGH FINANCING PLAYS A VERY IMPORTANT ROLE FOR YOUR BUSINESS, I BEG TO HAVE A DIFFERENT OPINION, AT LEAST TO SOME EXTENT.

THE MAIN PROBLEM FOR THESE OWNERS IS THAT THEY DON’T MANAGE THEIR BUSINESS IN A PROPER MANNER. IT STARTS WITH THE PLANNING OF THE BUSINESS, WHICH IS ESSENTIAL BEFORE YOU EVEN START YOUR ENTERPRISE.

TO REMAIN WITH THE FUTURE SHOPOWNER: IT IS NOT ENOUGH TO RENT A SHOP, BUY SOME GOODS, PUT THEM IN THE SHOP, AND SELL THEM FOR A HIGHER PRICE, FOR WHICH YOU PURCHASED THEM. INSTEAD, YOU MUST INVESTIGATE WHICH GOODS WOULD SELL BEST, AND IF YOU COULD GET THEM CHEAPER THAN WHERE YOU PURCHASED THEM. IF YOU ARE LUCKY, YOU WOULD EVEN BE ABLE TO GET A WHOLESALE CONTRACT FOR SOME GOODS.

LET’S ASSUME THAT NOW YOU HAVE YOUR SHOP, AND YOU ARE STARTING TO SELL THE GOODS YOU HAVE.. NOW YOU MUST ALSO BEGIN ACCUNTING FOR YOUR BUSINESS. AS A MICRO BUSINESS OWNER STARTING YOUR BUSINESS, IT IS SURELY NOT NECESSARY TO APPLY DIFFICULT ACCOUNTING METHODS LIKE DOUBLE-ENTRY ACCOUNTING. BUT A SIMPLE INCOME/EXPENSES ACCOUNTING IS AN ABSOLUTE NECESSITY FOR YOUR START-UP BUSINESS, WHICH YOU SHOULD APPLY FROM THE FIRST DAY ON. ONLY BY DOING SO, YOU WILL HAVE A CLEAR OVERVIEW OF THE FINANCIAL SITUATION. AND IF LATER ON YOU DECIDE TO TAKE A LOAN FROM A BANK, OR MONEY FROM AN INVESTOR TO EXPAND YOUR BUSINESS, THEY WILL SURELY ASK FOR INFORMATIOIN ABOUT THE FINANCIAL SITUATION OF YOUR BUSINESS – CASHFLOW, MONTHLY NET PROFIT, AND SO ON. AND PLEASE, DIFFERENTIATE THOROUGHLY BETWEEN EXPENSES FOR YOUR SHOP AND PRIVATE EXPENSES, IF YOU TAKE MONEY OUT OF YOUR BUSINESS FOR YOUR PRIVATE USE.

TALKING ABOUT BANKS; I ALSO CONSIDER IT VERY IMPORTANT TO HAVE AT LEAST ONE BANK ACCOUNT THROUGH WHICH MOST OF YOUR INCOME AND EXPENSES WILL FLOW. THE STATEMENTS OF ACCOUNT YOUR BANK WILL SUPPLY YOU WITH WILL SURELY HELP YOU TO WORK OUT AN EXACT BOOKKEEPING. FOR A MICROBUSINESS ESPECIALLY IN THE RURAL AND SEMI-RURAL AREAS, YOUR LOCAL RURAL AND COMMUNITY BANKS SURELY OFFER SERVICES THAT WILL ASSIST YOU IN GROWING YOUR BUSINESS.

RELATED TO ACCOUNTING – AND PART OF BOOKKEEPING – IS KEEPING AN INVENTORY. THE INVENTORY GIVES YOU AN OVERVIEW HOW MANY GOODS YOU HAVE IN YOUR STORE AT A CERTAIN POINT IN TIME. THIS POINT IN TIME CAN THEORETICCALLY BE ANY DATE, BUT IN ORDER TO HAVE A BETTER MANAGEMENT BASE, IT IS ADVISABLE TO ALWAYS USE THE SAME DAY IN EVERY MONTH, E.G., THE LAST DAY OF THE MONTH. ON THIS DAY, YOU MUST REGISTER HOW MANY GOODS YOU STILL HAVE IN STOCK.  IF YOU DO THAT EVERY MONTH, YOU WILL SOON HAVE AN IMPORTANT INFORMATION ON HOW YOUR STORE DEVELOPS. IF YOUR INVENTORY IS TOO SMALL, THERE IS A PROBLEM WITH THE SUPPLY; IF YOUR INVENTORY IS TOO LARGE, THERE IS A PROBLEM WITH THE DEMAND.

BUSINESS MANAGEMENT GENERALLY COMPRISES FIVE ELEMENTS: PLANNING, ORGANISING, STAFFING, LEADING, AND CONTROLLING. SOME OF THOSE WON’T PLAY A BIG ROLE, OR EVEN NO ROLE, IN YOUR MICRO BUSINESS, IF YOU MANAGE IT , STAFFING AND LEADING ARE THEN MORE  OR LESS OBSOLETE. BUT AT LEAST THE REST OF THESE ELEMENTS MUST BE OBSERVED CONSEQUENTLY, IF YOU WANT TO BE SUCCESSFUL IN YOUR BUSINESS.

RECKLING ENTERPRISE IS CURRENTLY WORKING ON A BASIC COURSE IN BUSINESS MANAGEMENT, WHERE WE DEAL WITH ALL THOSE ELEMENTS. YOU CAN THEN HAVE A MORE THOROUGH IDEA OF WHAT IS IMPORTANT FOR YOUR BUSINESS SUCCESS.