Qusetion: Sharpening Your Communication Skills
You've just been hired as the CFO of a start-up company that is a few months away from launching its first products. Unfortunately, the company is running short of cash and doesn't have enough to pay for initial manufacturing costs. Your boss, Connie Washington, is getting frantic. She has worked for several years to get to this point, and she doesn't want the company to collapse before it even starts selling products. She comes to you, asking for ideas to generate some funds-immediately. Several investors have expressed interest in helping with financing, but Washington doesn't want to surrender any control by using equity financing. She wants to start applying for loans, or even stacks of credit cards, if that's what it takes. However, you don't think piling on debt is a wise idea at this point. The company doesn't have any revenue yet, and there's no guarantee that the new products will be successful. You'd rather share the risk with some equity investors, even if doing so means that Washington will have to give up some of her managerial authority. Draft a short memo to her, explaining why you think equity financing is a better option at this stage (make up any details you need)
Building Your Team Skills
You and your team are going to build an operating expense budget worksheet for a neighborhood Domino's Pizza franchise. Begin by brainstorming a list of expenses that are typical of a franchise delivery restaurant. One way to do so is to think about the company's process-from making the pizza to delivering it. List the types of expenses and then group your list into categories such as delivery, marketing, manufacturing, financing, and so on. Leave the budget dollar amounts blank. Finally, develop a list of capital investments your company will make over the next three to five years. Compare your budget worksheets to those of the other teams in your class. Which operating and capital expenses did other teams have that your team didn't? Which expenses did your team have that other teams didn't? Did all the teams categorize the expenses in a similar manner?
Developing Your Research Skills
Choose a recent article from a business journal or newspaper (print or online editions) that discusses the financing arrangements or strategies of a particular company.
1. What form of financing did the company choose? Does the article indicate why the company selected this form of financing?
2. Who provided the financing for the company? Was this arrangement considered unusual, or was it routine?
3. What does the company intend to do with the arranged financing-purchase equipment or other assets, finance a construction project, finance growth and expansion, or do something else?