Business Valuation Methods

When a business is seeking funding it will usually require a valuation. There are various business valuation models which can be used including PE multiples, assets based and discounted cash flow techniques.

Business Valuation Methods October 20th, 2016Team
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Convertible Loan Notes

Start-up businesses use convertible promissory notes to raise seed capital finance as they avoid the difficult process need to value the business valuation. The loans are repaid by the issue of new shares to the noteholders.

Convertible Loan Notes May 25th, 2017Team
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Cost of Equity Financing in Startups

Equity financing is one method of funding a business. The cost of equity financing arises from the fact that part of the ownership of the business is sold in return for the funds, and a percentage of the profits now belongs to the investor shareholder.

Cost of Equity Financing in Startups April 5th, 2017Team
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Cost of Debt Financing

Debt financing is one method of funding a business. The cost of debt financing is the interest and fees paid on the debt which are usually allowable for tax purposes. For this reason, the aftertax cost of debt financing is normally cheaper than the cost of equity financing.

Cost of Debt Financing April 5th, 2017Team
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Sustainable Growth Rate

The sustainable growth rate calculator formula can be used to calculate whether a business can finance its planned growth from internal sources of finance such as retained earnings, or whether it has to seek additional external finance by issuing new equity or amending its financial leverage.

Sustainable Growth Rate October 5th, 2016Team
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Crowdfunding and Financial Projections

Crowdfunding is a technique for a business to obtain finance in which small amounts of funding are raised from a large number of people (the crowd). Crowdfunding can be either rewards, debt or equity based depending on the requirements of the business.

Crowdfunding and Financial Projections October 5th, 2016Team
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Cost of Trade Credit Financing

When early payment discounts are offered by suppliers, the cost of trade credit needs careful consideration as the effective interest rate can be very high compared to other forms of finance.

Cost of Trade Credit Financing October 23rd, 2017Team
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Cost of Offering Early Payment Discount

The cost of offering early payment discount to customers needs careful consideration by a startup business as the effective annual rate is normally very high compared to other sources of finance.

Cost of Offering Early Payment Discount October 23rd, 2017Team
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Five C’s of Credit

The 5 C’s of credit is one technique used by financial institutions to assess the credit worthiness and risks associated with lending to a business seeking debt finance. An understanding of the five C’s of credit combined with financial projections, will allow a business to be better prepared when approaching lenders for debt funding.

Five C’s of Credit October 5th, 2016Team
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Bootstrapping Finance Methods

There is a wide variety of funding available for a startup business, but one of the fundamental decisions which must be made by the entrepreneur is whether or not to seek outside equity and long term debt finance to fund growth or to rely on bootstrapping finance methods such as founders equity, short term debt, and revenue to grow the business.

Bootstrapping Finance Methods June 20th, 2017Team
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How to Calculate Working Capital Requirement

The fundamentals of a businesses trading activity are that it buys from a supplier, holds inventory, and sells to the customer.

The amount of finance a business needs to carry out this day to day trading activity is known as the working capital requirement, and varies from industry to industry depending on the amount of time the business takes to pay suppliers, the amount of inventory held, and the time it takes to collect cash from customers.

How to Calculate Working Capital Requirement July 19th, 2017Team
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