New Share Issues – Sources of Finance #Finance

less of a sesh on new share issues so new share issues is when a limited company that can be a private limited company or a public limited company issue Shares in exchange in exchange for a payment and that makes them a shareholder it’s known as a type of

Equity Finance it’s also a long-term source of none;">Finance and it’s definitely an external source of Finance because this is color: #1a73e8; text-decoration: none;">Financed cash coming from outside the business and it’s suited to established businesses the pros and the cons of using new share issues well number one is that this is using Equity this is using Shares

it’s not using Debt or Loans so no interest needs to be paid it’s not alone and also this payment we don’t need to pay it back so that’s a massive advantage you have got this cash in number two is that as I said before this is for limited

companies if you are a public limited company then you are going to be on the Stock Exchange you are going to float a flotation onto the Stock Exchange and this gives you a massive opportunity for enormous enormous volumes of cash of

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance that you could get into your business for your business to grow and expand in the long term other things to think about is that when you open up to share issues well you could

loop in a bit of HR in here because there’s an employee incentive that you could create because lots of companies have a Profit sharing in their business to their employees to their managers because then they are Ascenta buys and they are aligned with the motivations of the

owners of the business because if the employees are going to get a chunk of the Profits each year then they may be more motivated and therefore they may be more productive also sometimes using Shares or Equity is better than using

Debt like Loans because the founders of the business the founders of the business that may have owned the business for 1 5 10 20 years may be looking for an exit strategy or they may in looking for some of the share of their business they want to realize it they

want to sell bit of it to get some cash so go on holiday in Barbados so it’s an exit or cash in method and you can’t do this with a Debt method but you can do this with new share issues it’s a way of turning your percentage of business into cash realising your

investment the cons of using new share issues number one is that you aren’t giving up a share of your business and the big question is is that once you give up 51% of your business are you giving up control in your business are you losing control in your business because you’ve lost the

actual ultimate decision making for the strategical long term point of view because you’ve given up 51% and you only hold 49% as a consequence and that’s a big decision that you can make if you are willing to give up that much and that becomes the turning point you to consider number

two is that it’s expected that you pay your shareholders Dividends Diddy’s because your shareholders they’re gonna demand if you’re making a net Profit they’re gonna demand that they get their Divis they get their

Dividends for the year and you need to make that payment to them and as a consequence of that your retained Profits are going to reduce because your Dividends are paid out of your retained Profits remember your retained

Profits are found on your statement of financial position number three is that if you’re a public limited company well then you’ve got to go through the flotation and floatation when you move to the Stock Exchange can actually cost a lot of cash if

you’re an enormous big big business it could cost up to a hundred thousand pounds in order to do that so that’s a big administrative cost for your business and one that needs to be considered also there’s ongoing fees the year to pay five to six thousand pounds is the annual fee

to beyond the Stock Exchange and also there’s lots of rules lots of regulation that you need to meet for instance you need to have a certain amount of Directors and you need to do a certain amount of Financial Statements per year all things that should be to

consider because that’s gonna be an additional cost through labor so I hope that helps and I’ll see you at the next