In addition to the similarities and differences of preferred/common stock, there is also several offerings that can be done. Common stocks can be privately owned (owned by single individual), closely owned (owned by a small group of investors) or publically owned (owned by various individuals or institution of no relation). There are also different options that can be included in the agreement to essentially protect the investment that is being made because the last thing anyone wants is to lose their percentage of ownership when new shares are issued. These are known as pre-emptive rights (Investopedia/Pre-emptive rights, 2016).
Issuing common stock is not the easiest thing to do. There are certain steps that need to be taken beforehand …show more content…
If you have only equity financing (which either uses funds injected into the business or equity raised through share offerings), you won’t benefit from any of the tax deductions that debt financing provides, and if you only have debt financing, your financial leverage will be greater but your overall profits will suffer and you run the risk of becoming insolvent if you don’t remain liquid enough to pay your short term debt obligations. Therefore, conducting extensive research on the right mix for your type of business is highly advised. Just remember, there is an appropriate mix of both that will give you the best results. And who better to learn from than people who are already doing it?? Let’s take a look at some of the insight I acquired when I went out into my …show more content…
I was however able to find an interview online that was conducted on a gentleman that owned 3 McDonalds franchises in New Zealand (now down to 2 after selling one off for $1.4 million). He states he was able to get a business loan from the bank for $650,000 because of the well-established brand and had it repaid within 10 months of being open. No personal funds were used to open the business. While the interviewer didn’t go into detail about his monthly expenses, he did delve a little deeper into the owner’s actual profits, which are about 15% after all operating expenses. Just to give a better depiction of what his 15% looked like, “The average monthly gross income across the two stores last year was $341,462. Divide that by 30, which is $11,382 per day across two outlets, or an average $5,691 per outlet, per day (McSoldit, 2014).” For this year in particular, he took home around $600,000. When asked about the recipes, he remarked that the suppliers took care of making the actual product, all he had to do was order them. He did state however that all the ingredients used by McDonalds were locally grown or harvested. When asked about decision making he stated “I have very limited control in the way the store was developed, and run. Color schemes, furniture and interior fittings
Issuing common stock is not the easiest thing to do. There are certain steps that need to be taken beforehand …show more content…
If you have only equity financing (which either uses funds injected into the business or equity raised through share offerings), you won’t benefit from any of the tax deductions that debt financing provides, and if you only have debt financing, your financial leverage will be greater but your overall profits will suffer and you run the risk of becoming insolvent if you don’t remain liquid enough to pay your short term debt obligations. Therefore, conducting extensive research on the right mix for your type of business is highly advised. Just remember, there is an appropriate mix of both that will give you the best results. And who better to learn from than people who are already doing it?? Let’s take a look at some of the insight I acquired when I went out into my …show more content…
I was however able to find an interview online that was conducted on a gentleman that owned 3 McDonalds franchises in New Zealand (now down to 2 after selling one off for $1.4 million). He states he was able to get a business loan from the bank for $650,000 because of the well-established brand and had it repaid within 10 months of being open. No personal funds were used to open the business. While the interviewer didn’t go into detail about his monthly expenses, he did delve a little deeper into the owner’s actual profits, which are about 15% after all operating expenses. Just to give a better depiction of what his 15% looked like, “The average monthly gross income across the two stores last year was $341,462. Divide that by 30, which is $11,382 per day across two outlets, or an average $5,691 per outlet, per day (McSoldit, 2014).” For this year in particular, he took home around $600,000. When asked about the recipes, he remarked that the suppliers took care of making the actual product, all he had to do was order them. He did state however that all the ingredients used by McDonalds were locally grown or harvested. When asked about decision making he stated “I have very limited control in the way the store was developed, and run. Color schemes, furniture and interior fittings