Pricing in a very competitive market

Pricing is an important topic faced by all entrepreneurs. There are many factors that affect the price of a product or service. The purpose of pricing is to enable the entrepreneur to gain market share while achieving a target rate of return. Pricing must be high enough to cover the cost of doing business while…

Not all cash is the same!

Cash is the lifeblood of a business. A business owner gets cash from every day activities (operations), financing or investing. Cash flow from operations should be the most significant source of cash in a business. However, a business striving for growth would often get financing to fund this growth. Let us take a look at…

Wealth versus income

The word wealth is often confused with income. Wealth could be of various forms, there is spiritual wealth, material wealth, time wealth, etc. Wealth simply means an abundance of something you find valuable. Some people would rather have more time to pursue personal interest, others like material wealth, while others do not place a lot…

Financial Leverage

Financial leverage is using borrowed funds to increase revenue producing assets. This is done with the hopes that the increased income will be more than the cost of borrowing. Using debt financing allows a business owner to benefit from financial leverage. If a business borrows money at 4% and reinvests it with a return of…

Is your income sustainable?

Sustainable income can be defined as the level of income that is most likely achievable by the business not just today but also future years. It excludes all temporary hikes in income due to non-repeatable events. A better way to evaluate your business is how much of your income is sustainable. Sustainable income is different…