Factors to consider when choosing a source of finance

Deciding on where you will get funding for your business can be an arduous task that takes a lot of time. This is because there aren’t so many sources of finance available. Each source has different criteria and implication on your business. It is imperative first to take a look at the benefits as well as the costs to help you decide which source of funding is suitable for you and your business. Below are the factors to consider when choosing a source of finance.

The risk

I put this as the first point because I feel it is the most important factor that you should consider whenever you choose a source of funding. Try and imagine what would happen if you are unable to pay back this money. If you take a loan from a bank, look at the implications that they have should you become incapable of paying the loan or if the business fails. If you are thinking of borrowing from family or friends, take a look at what will happen to your relationship if it gets to a point where you can’t pay back.

The costs

The cost of finance is a huge factor to consider when determining the source of finance. This is because you want to minimize your costs as you maximize on wealth. Will your cost of equity increase if you increase your borrowing? If shareholders see the borrowing as something that is steering you towards bankruptcy, then they may want something more to compensate the risk. Understand also that there are so many costs involved in borrowing such as the fee for the broker or interest rates. Consider all this before you arrive at a decision.

Amount needed

An important factor to consider is the amount required by the business. Some sources are not good for a large amount of money. Bank overdrafts, for example, have set limits to the amount of money that you can withdraw. Some sources also are not suitable if the amount of money you are raising is small.

The purpose

What kind of project is this money going into? This is one of the most important things to consider. A capital expenditure will require a long-term source of finding. A revenue expenditure, on the other hand, will require short-term sources. An example of a capital expenditure is building a factory. Payment people on the supply chain is a revenue expenditure.


Factors to consider when pricing your products

Various pricing strategies are incorporated in determining the price of a product. Choosing a suitable pricing strategy can be quite tasking because there is a lot that is involved in ensuring that that is the perfect price. There are four important considerations you should look at to help you rice your products.

The costs

In any good business, the costs should be covered by the revenue that will be generated. You want to make sure that this revenue is enough. You need to ask yourself how much costs you have incurred in manufacturing your product all the way to when it is consumed. Find out the exact costs. Factor in all aspects. Look at the labor, the cost of the raw material, how much was used in assembling the product? When you can tell the costs involved in a single product, then you are at a place where you know the kind of revenue that you will have to generate if you want to cover these costs comfortably.

The customers

You need to understand your customer’s financial abilities as well as their traits and their preferences. The kind of lifestyle that your customers live is an excellent pointer. It should help you decide the kind of pricing technique that you will use in pricing your products. If you have a product that does not have any close substitutes and is an absolute necessity, then a higher price will not make much of a difference because your products will still be bought.


This is one of the biggest pointers in determining the strategy that you will use to price your products. Find out if you have competitors who are offering close substitutes. Take a look at the quality of their products and their prices as well. You might set your prices high or low. Whichever the case, you still want to make sure the price says something about the quality of your products.

Economics of units

An important factor to consider is that the price that you set has to enable the business to make some profit. If you are not making profits, then it doesn’t matter how happy every department is. You might decide on a lower price which generally will increase your sales. The demand for your products will significantly rise but even in all this, if the set price is not putting your business in a position to make a profit then its all in vain.…

Hartford Courant Alumni Association and Refugee Camp | Where The Latest On Former Hartford Courant Employees Can Be Found

Even Non-Profits Are Not Profiting

0 | February 7th, 2009 | Posted in News
Gary Duchane, former Courant.com editor, reports that the St. Petersburg Times, his current employer, has stopped contributing to employees’ 401k plans. It’s a cost-saving measure.

The outfit is also trying to sell Congressional Quarterly to raise money and reduce debt, Gary says.

I sure hope Fox News doesn’t buy it.

The Courant As Metaphor

0 | February 6th, 2009 | Posted in News
The Hartford Courant becomes the metaphor for all struggling papers in single-paper cities in this NPR piece. Cliff ducks the press. Dick Blumenthal sticks up for the paper. Paz waxes sentimental. (Check out the audio.)

Part 1. Part 2. (about non-profit journalism)

Katie And The Credit Default Swap

0 | February 6th, 2009 | Posted in Members
Katie Melone has landed a new, if temporary job in the Big Apple.

Here’s what she has to report:


I’ve landed, but not permanently. It’s a contract position. I’m working on a new show at WNET (PBS in NYC) called “It’s the Economy, NY!” — a 7-part weekly series on how the financial crisis is affecting the New York area. So I have a job only as long as the show exists, and it’s slated to stop production at the end of February. But, there’s word it will get extended, which would be nice. (The show was recently mentioned in a story on WNET in the NY Times, so I was psyched!)

It’s been interesting so far, and I’ve learned a lot about the financial services world — I now know what a credit default swap is and I never would’ve probably wanted to try to wrap my mind around something like that in my past life.

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