Every business from its commencement and through its development and growth will need finance. The problem often based by every businessman and woman is on deciding what type of finance is best suited to the development of his or her business, and who they should approach for finance. This article provides some generic advice on types of finance available and outlines the planning required before approaching any lending institution.googlea4d4458564b71066.html
The first issue to consider is whether the finance required. If indeed finance is required, consider what it will entail. Additional funding requires a commitment in terms of capital and interest payments. Embarking on this course of action must therefore be planned carefully. The business must be capable of sustaining any additional commitment to growth or expansion, and consideration will need to be given to effects on manpower, materials and space.
The second issue is considering the various sources of finance. Before seeking outside finance, a business must consider whether it could improve its working capital from within. Particular attention should be given to stock and debtors to ensure that both are kept to a minimum. Consider how long it takes to bill customers and collect debts and look at ways to reduce this time.
Assuming external funding is necessary, planning is essential in achieving success. A well drawn up business plan is essential to enable you set out clearly the nature of the project you want to finance and the timing of the required financing.
A business plan is also key requirement for to any lending financial institution. Banks are unlikely to provide any financial assistance without a properly drawn up business plan.
A well thought out and drawn business plan should include the objectives and aims of the business, the purpose of the required funding, the business ownership and history, management and responsibilities, products and market share, sales plan and strategy, the financial position of the business with detailed cash flow forecasts and past accounts.
Business finance is available in many forms, but it is important to make sure that it is right for your business. The most common sources of business finance is bank overdrafts, medium to long term loans and mortgages, but rates of interest can vary considerably. Whatever form of finance is offered, the lender will always require some form of security. However the level of security sought may vary depending on a number of factors such as, the amounts required, the nature of the business, the risk exposure to the lender and the period for which finance is required.
Other methods of finance that specifically relate to acquiring capital assets for the business include leasing assets, hire purchase or outright purchases. Each method of funding has its own tax advantages and disadvantages. Typical tax issues to consider when evaluating difference business financing options include – whether the finance arranging costs are tax deductible, whether the interest expense will be tax deductible, and whether they are any withholding tax implications which both parties need to be aware of.
It is for this reason that every business should always consult their tax advisers before they commit to any business financing arrangements, so as to ensure that all tax implications of the proposed financing are fully considered and if necessary provided for in the loan agreements accordingly.
Tuesday, April 15, 2008
Monday, April 14, 2008
African dictatorship rooted in her traditional culture!
Kenya’s coalition government is still out there in the air and civil strife might resume. In Zimbabwe there is a rumor President Robert Mugabe has ordered a vote re-count before the Electoral Commission even announces the results. In Cameroon, President Paul Biya has had his way to a third term and past and future crimes cleared by the national parliament through a constitutional amendment on April 10th, 2008. This pattern is all over the continent. Africa seems to be under siege with itself which might explain a possible mass clash of culture as the world globalizes.
Some years back my grand mother deep in Luwero explained to us around a fire place that she can’t eat chicken because traditionally women are "not" allowed to eat chicken. Yes, women were not allowed to eat the high protein stuff but greens. She actually argued that in many homes a gizzard being misplaced could spark a storm in a cup of tea. Men were treated like kings and children grew up knowing that a man, as ahead of family was treated with many privileges. Young boys aspired to assume their rightful position in the home by marrying early. While the positive aspects of early marriages could be for genetic continuity as expected by community, the motive for early marriages (family formation) by many could be the power and control that comes along with the position of family head. Traditionally, polygamy was also a source of power and wealth as a large family provided a labor supply for the family head in the number of wives and children.
This family environment, church or school is therefore the breeding ground for dictatorship in Africa. Are leaders at family level instilling the moral fabric that is required of leaders at home? Are fathers role models to their children and family? Are church leaders leading by example or have turned into con-men? Are our professionals leading by example at their work place or more interested in money rather than service of those they supposed to serve? With women emancipation, women have taken leadership roles as family heads and corporate institutions. We need to examine the behavioral pattern of leaders at a broad spectrum in order to understand the economic-political hemorrhage that has hit the face of Africa in the post-independence political regime. Too powerful is the African teacher, church-man, president, traditional leader since he/she has been an absolute source of information while his subordinates remain silent recipients rather than having an interactive dialogue or multilogue. It is now common to hear elites use a phrase “Africa Leaders” with an element of exclusivity both in public conferences and virtual communities on the internet. This African leader disease is hard to identify in oneself but easy to see in others and thus the ease of pointing finguers. “African leaders” is a phrase used to refer to the usual military “strong men” but in actual sense these are insecure individuals with low-self esteem whose psyches date back to the time they were children in their families, church and schools where the father, bishop or teacher wielded unnecessarily immense power for subjugation. The attempt to exclude oneself from leadership at all levels of our individual efforts in society is very much a distorting fact in our efforts to criticize those at the apex of our national leadership. Leadership starts with me and you in our local communities, homes, church, offices and even informal groups as friends.
The Oxford dictionary defines leadership as taking responsibility of an entity or other individuals. It is a position where one is charged with making sound decisions because one has been trusted to have sound judgment on behalf of an entity or those he is responsible for. Leadership is not by comfort but by sacrifice. It calls for service above self. It calls for humility of those charged with responsibility to serve above self. Today, Africa is a shameful scar of our modern history. We have betrayed our continent and the future of our children at all levels of our calling. Somalia, Kenya, Cameroon, Angola, Sudan,Chad, Uganda, Zimbabwe and all what happened to the African people?
Visibly there is clash of cultures at play at this stage. Many of our ageing leaders are still stuck in the traditional culture of “rulership” characteristic of a feudalistic system which has its roots in the African traditional family. With the emergence of the internet and digital television, an emerging community of young leaders is questioning some of these traditional beliefs and thus potential for a second continental revolution. In Uganda as the President invites Libyans to invest in an instant coffee plant worth $20m he has already signed another agreement with Indian firm TATA for another plant in Jinja at the same cost. But the same President has just invested $80m (worth 4 plants) in refurbishing state house Entebbe. The same President has just invested interest in a Luxury Gulf Stream 5 Jet worth $40m (2 plants) for his own comfort typical of the traditional African strong man. It is very easy for government functionaries to defend some of these decisions across the continent using jargons such as security of the person of the president but glaringly our leadership limitations as a continent can be traced in the flaws of our traditional culture and our traditional resistance to change.
Some years back my grand mother deep in Luwero explained to us around a fire place that she can’t eat chicken because traditionally women are "not" allowed to eat chicken. Yes, women were not allowed to eat the high protein stuff but greens. She actually argued that in many homes a gizzard being misplaced could spark a storm in a cup of tea. Men were treated like kings and children grew up knowing that a man, as ahead of family was treated with many privileges. Young boys aspired to assume their rightful position in the home by marrying early. While the positive aspects of early marriages could be for genetic continuity as expected by community, the motive for early marriages (family formation) by many could be the power and control that comes along with the position of family head. Traditionally, polygamy was also a source of power and wealth as a large family provided a labor supply for the family head in the number of wives and children.
This family environment, church or school is therefore the breeding ground for dictatorship in Africa. Are leaders at family level instilling the moral fabric that is required of leaders at home? Are fathers role models to their children and family? Are church leaders leading by example or have turned into con-men? Are our professionals leading by example at their work place or more interested in money rather than service of those they supposed to serve? With women emancipation, women have taken leadership roles as family heads and corporate institutions. We need to examine the behavioral pattern of leaders at a broad spectrum in order to understand the economic-political hemorrhage that has hit the face of Africa in the post-independence political regime. Too powerful is the African teacher, church-man, president, traditional leader since he/she has been an absolute source of information while his subordinates remain silent recipients rather than having an interactive dialogue or multilogue. It is now common to hear elites use a phrase “Africa Leaders” with an element of exclusivity both in public conferences and virtual communities on the internet. This African leader disease is hard to identify in oneself but easy to see in others and thus the ease of pointing finguers. “African leaders” is a phrase used to refer to the usual military “strong men” but in actual sense these are insecure individuals with low-self esteem whose psyches date back to the time they were children in their families, church and schools where the father, bishop or teacher wielded unnecessarily immense power for subjugation. The attempt to exclude oneself from leadership at all levels of our individual efforts in society is very much a distorting fact in our efforts to criticize those at the apex of our national leadership. Leadership starts with me and you in our local communities, homes, church, offices and even informal groups as friends.
The Oxford dictionary defines leadership as taking responsibility of an entity or other individuals. It is a position where one is charged with making sound decisions because one has been trusted to have sound judgment on behalf of an entity or those he is responsible for. Leadership is not by comfort but by sacrifice. It calls for service above self. It calls for humility of those charged with responsibility to serve above self. Today, Africa is a shameful scar of our modern history. We have betrayed our continent and the future of our children at all levels of our calling. Somalia, Kenya, Cameroon, Angola, Sudan,Chad, Uganda, Zimbabwe and all what happened to the African people?
Visibly there is clash of cultures at play at this stage. Many of our ageing leaders are still stuck in the traditional culture of “rulership” characteristic of a feudalistic system which has its roots in the African traditional family. With the emergence of the internet and digital television, an emerging community of young leaders is questioning some of these traditional beliefs and thus potential for a second continental revolution. In Uganda as the President invites Libyans to invest in an instant coffee plant worth $20m he has already signed another agreement with Indian firm TATA for another plant in Jinja at the same cost. But the same President has just invested $80m (worth 4 plants) in refurbishing state house Entebbe. The same President has just invested interest in a Luxury Gulf Stream 5 Jet worth $40m (2 plants) for his own comfort typical of the traditional African strong man. It is very easy for government functionaries to defend some of these decisions across the continent using jargons such as security of the person of the president but glaringly our leadership limitations as a continent can be traced in the flaws of our traditional culture and our traditional resistance to change.
Why President Museveni Must run Uganda like Corporate Executive!
Many times Ugandans have humbly asked government to remain frugal in public expenditure? The media and civil society have advised government against public wastage. While government has a spokesperson, the practice to communicate back to the public has been from the usual suspects albeit unconvincingly. My opinion today is premised on the cardinal principle that public accountability is an obligation of leadership and cannot be dismissed as mere irritation from oppositionists. I have watched His Excellence the President making passionate appeals to the International business community to come and invest in Uganda. The government has liberalized the economy spurring competition in particular sectors of the economy with the right national policy mix. The economic reforms have made basic goods available on the market and improved productivity. Peace has been ushered into most parts of the country except northern Uganda and Karamoja. In 22 years of his uninterrupted leadership the balance sheet certainly needs very serious scrutiny if were to move to another level.
While the President seems to know what strategic actions to take in improving the economy, his body language is very confusing. 80% of Ugandans are rural based and engaged in agriculture. Coffee which has remained Uganda’s principle export earner at the rate of 21% certainly needs public intervention as a cash crop. And yes, almost a year ago the government signed an agreement with Indian TATA firm to establish an instant coffee plant worth $20m in Jinja. The Indian firm has so far been cautious for some reasons unknown to the public thus decelerating the creation of 150 direct jobs thus impeding the trickle down effect. Our good government has also recently crafted in the Libyans for another plant in Namanve with a capital investment estimated at $25m. Mt.Elgon Coffee also plans to build a coffee roasting plant in Tororo for export to its subsidiary in Denmark. The combined investment of these three projects, if they are established at all, is estimated to add value to 20% of our national coffee produce bringing in a total of $2bn a year into the national economy and create almost 1200 jobs for Ugandans.
While these ventures are very juicy in economic terms, the implementation has serious political disincentives just like many others that have disappeared in thin air. It is hard to comprehend why government has not initiated these projects on its own based on their well researched and documented potential in revamping the coffee sector. The TATA project meant for Jinja, a year since the agreement was signed has not taken off yet. The Libyans may also take their time to implement the Namanve project or walk away just like Nile AES power did on Bujagali and other “too-good-to-be” true investors. Remember these kind of projects have the potential to unsettle established actors in the coffee supply chain who are making a kill in the global coffee market at the disadvantage of my grand mother deep in Luwero. The potential for established corporations such as Nescafe to sabotage private investors in such ventures is so high that government cannot ignore economic or industrial espionage in these projects. Uganda being an agro-based economy rightly needs to invest in agro-processing and this seems to be a well understood concept by the political establishment. The question is why rely on the good will of private investors despite the public resources that are squandered on toy-projects with no visible trickledown effect in the economy?
22 years is a long time for one to assume this government has a strong vision on strategic public intervention in the economy like many other smart governments are doing around the world. A private investor whether from India or Europe will do his research before putting his money into this economy. He will look at the taxation regime, the state of the existing public infrastructure that will support his business, cost of establishing business, cost of labor and the entire policy framework. It is a known fact, while the president is begging investors to come and invest in the economy, civil and public servants are engaged in massive abuse of public resources with impunity. The government structure is simply an enormous political octopus eating away all the economic benefits. While the president is begging investors to come and fix his economy, he is approving public expenditures that are indefensible and shocking even to his long-time supporters. The purchase of a brand new luxury Gulf Stream 5 presidential jet at a cost of $45m comes at a time when parliament has just bought 4-wheel drive cars for legislators 98% who have failed to account for the Constituency Development Fund. $45m for the jet alone would put up the two plants in Jinja and Namanve and bring in the net worth we are looking for from private investors. The government could eventually partially privatize these corporations to the private sector to bring the much needed technical managerial resource in such corporations.
The president needs to run the country in a more corporate way. Wikipedia defines corporate governance as the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. It also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance tries to reduce or eliminate the principle-agent-problem. It is therefore not enough for the president to assume that over-loaded ($$$$) investors will just come here and dump money in the economy!!!!! As a corporate executive he will have to lead by example to build Uganda’s economic foundation for equitable development for the benefit of all stakeholders.
While the President seems to know what strategic actions to take in improving the economy, his body language is very confusing. 80% of Ugandans are rural based and engaged in agriculture. Coffee which has remained Uganda’s principle export earner at the rate of 21% certainly needs public intervention as a cash crop. And yes, almost a year ago the government signed an agreement with Indian TATA firm to establish an instant coffee plant worth $20m in Jinja. The Indian firm has so far been cautious for some reasons unknown to the public thus decelerating the creation of 150 direct jobs thus impeding the trickle down effect. Our good government has also recently crafted in the Libyans for another plant in Namanve with a capital investment estimated at $25m. Mt.Elgon Coffee also plans to build a coffee roasting plant in Tororo for export to its subsidiary in Denmark. The combined investment of these three projects, if they are established at all, is estimated to add value to 20% of our national coffee produce bringing in a total of $2bn a year into the national economy and create almost 1200 jobs for Ugandans.
While these ventures are very juicy in economic terms, the implementation has serious political disincentives just like many others that have disappeared in thin air. It is hard to comprehend why government has not initiated these projects on its own based on their well researched and documented potential in revamping the coffee sector. The TATA project meant for Jinja, a year since the agreement was signed has not taken off yet. The Libyans may also take their time to implement the Namanve project or walk away just like Nile AES power did on Bujagali and other “too-good-to-be” true investors. Remember these kind of projects have the potential to unsettle established actors in the coffee supply chain who are making a kill in the global coffee market at the disadvantage of my grand mother deep in Luwero. The potential for established corporations such as Nescafe to sabotage private investors in such ventures is so high that government cannot ignore economic or industrial espionage in these projects. Uganda being an agro-based economy rightly needs to invest in agro-processing and this seems to be a well understood concept by the political establishment. The question is why rely on the good will of private investors despite the public resources that are squandered on toy-projects with no visible trickledown effect in the economy?
22 years is a long time for one to assume this government has a strong vision on strategic public intervention in the economy like many other smart governments are doing around the world. A private investor whether from India or Europe will do his research before putting his money into this economy. He will look at the taxation regime, the state of the existing public infrastructure that will support his business, cost of establishing business, cost of labor and the entire policy framework. It is a known fact, while the president is begging investors to come and invest in the economy, civil and public servants are engaged in massive abuse of public resources with impunity. The government structure is simply an enormous political octopus eating away all the economic benefits. While the president is begging investors to come and fix his economy, he is approving public expenditures that are indefensible and shocking even to his long-time supporters. The purchase of a brand new luxury Gulf Stream 5 presidential jet at a cost of $45m comes at a time when parliament has just bought 4-wheel drive cars for legislators 98% who have failed to account for the Constituency Development Fund. $45m for the jet alone would put up the two plants in Jinja and Namanve and bring in the net worth we are looking for from private investors. The government could eventually partially privatize these corporations to the private sector to bring the much needed technical managerial resource in such corporations.
The president needs to run the country in a more corporate way. Wikipedia defines corporate governance as the set of processes, customs, policies, laws and institutions affecting the way a corporation is directed, administered or controlled. It also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders, management and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large. Corporate governance tries to reduce or eliminate the principle-agent-problem. It is therefore not enough for the president to assume that over-loaded ($$$$) investors will just come here and dump money in the economy!!!!! As a corporate executive he will have to lead by example to build Uganda’s economic foundation for equitable development for the benefit of all stakeholders.
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