Category: COURSES

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.

IN THE LAST WEEKS, I HAD SOME TECHNICAL PROBLEMS WITH MY WEBSITES, AND WEN I RE-CONSTRUCTED THE CONTENT, I REALISED THAT SOME LESSONS OF MY COURSES “BASICS OF BUSINESS MANAGEMENT” AND “FINANCING BASICS” GOT LOST DURING THE RE-CONSTRUCTION OF THE WEBSITES.

I APOLOGISE SINCERELY FOR ANY INCONVENIENCE CAUSED, AND I CAN ASSURE EVERYBODY THAT THE MISSING LESSONS WILL BE REPLACED IN THE COMING WEEKS.

 

STAY CONNECTED TO RECKLING ENTERPRISE!