Tag: Finance and Economics
101: Financial Leverage
In a recent post we demonstrated that increasing a firm’s operating leverage, by replacing variable costs with fixed costs, could lead to greater profits; but that it also increased the firm’s risk level. This week, as promised, we’ll take a look at financial leverage and see how the mix of debt and equity financing affects [...]
Posted by Gregg Schoenberg on Monday, March 25th, 2013Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Operating Leverage
In our recent posts on breakeven analysis and capital structure we touched upon a very important concept that all business owners should understand: leverage. Employing fixed costs rather than variable costs increases a firm’s operating leverage, while issuing debt rather than equity increases financial leverage. Both types of leverage can lead to greater profits, but [...]
Posted by Gregg Schoenberg on Monday, March 18th, 2013Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Capital Structuring
A few months ago we ran a series of articles on HBS about various methods of raising capital for your business, from friends and family to angel investors, venture capitalists and crowd-funders. But no matter where you wind up raising your capital it will come in one of two forms: debt or equity. The choices [...]
Posted by Gregg Schoenberg on Tuesday, March 12th, 2013Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Break Even Analysis
When it’s time for a large corporation to evaluate the merits of bringing a new product or service to market they have a host of options available to test its financial viability. From marketing surveys to focus group studies to detailed analysis by the finance department, it can seem that the only limit to their [...]
Posted by Gregg Schoenberg on Monday, February 11th, 2013Posted in Finance and Economics
Tags: 101, Finance and Economics
101: Capital Budgeting
How do you as an entrepreneur decide whether or not to make big financial investments such as expanding your operations or upgrading your infrastructure? Do you rely on your business acumen and gut instincts, or perhaps consult with a trusted mentor? While these strategies may work if you’ve really got the Midas touch, you’ll probably [...]
Posted by Gregg Schoenberg on Monday, February 4th, 2013Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Forecasting
As a business owner you probably spend a great deal of time trying to figure out how to grow your business by increasing sales. But are you also taking the time to analyze how an increase in sales would affect your financing needs? If not, then you may be setting yourself up for a nasty [...]
Posted by Gregg Schoenberg on Monday, January 28th, 2013Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
Budgeting: Part 2
In our previous HBS post we discussed the importance of setting an annual budget and introduced readers to the operating budget, which can be used to predict your company’s net income for a one-year period. And while net income represents your firm’s bottom line, you may remember from our series on financial statements that it [...]
Posted by Gregg Schoenberg on Monday, January 14th, 2013Posted in Finance and Economics
Tags: Finance and Economics
Budgeting: Part I
Of all of the exciting things that come with running your own your business, setting an annual budget is rarely near the top of anyone’s list. In fact, many entrepreneurs never get around to it, or do a half-hearted job, as they get caught up in the excitement of pursuing their dream. But those who [...]
Posted by Gregg Schoenberg on Monday, January 7th, 2013Posted in Finance and Economics
Tags: Finance and Economics
Year-end Tax Planning for Your Business
The year IS coming to an end. You’re already tax planning, or if you’re not… you should be. Even if the fiscal cliff and future health care costs scare you a bit, you should be getting ready to SPEND MONEY NOW for the last year of the IRS Section 179 option to depreciate certain purchases [...]
Posted by Gregg Schoenberg on Tuesday, December 18th, 2012Posted in Finance and Economics
Tags: Finance and Economics
101: Fiscal Cliff
With the seemingly interminable election cycle finally behind us, all eyes in the nation’s capital are now fixed upon the rapidly approaching fiscal cliff—the package of automatic tax increases and spending cuts that will hit the economy in January unless Congress can agree on a new deficit-reduction plan. While most Washington watchers seem to think [...]
Posted by Gregg Schoenberg on Monday, December 3rd, 2012Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Cash Management
Last week we covered the topic of cash reserves and offered some advice on how to build an appropriately sized reserve for your business. We also alluded to the fact that in today’s extremely low interest rate environment it can be hard to find attractive places to invest those cash reserves. While some of you [...]
Posted by Gregg Schoenberg on Tuesday, October 30th, 2012Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
101: Cash Reserves
One financial decision that a lot of entrepreneurs seem to struggle with, particularly in the current ultra-low interest rate environment, is the question of how much of a cash reserve their business should maintain. Hold too little cash and you could find yourself in serious trouble if your business takes a turn for the worse. [...]
Posted by Gregg Schoenberg on Monday, October 22nd, 2012Posted in 101, Finance and Economics
Tags: 101, Finance and Economics
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