Successful Funding

Successful funding requires self-discipline.  It is singularly the most important attribute needed to achieve any type of personal excellence, athletic excellence, virtuosity in the arts, or otherwise outstanding performance.

What Is Self-Discipline?

It is the ability to control one’s impulses, emotions, desires and behavior. It is being able to turn down immediate pleasure and instant gratification in favor of gaining the long-term satisfaction and fulfillment from achieving higher and more meaningful goals.

To possess it is to be able to make the decisions, take the actions, and execute your game plan regardless of the obstacles, discomfort, or difficulties, that may come your way.

Certainly, being disciplined does not mean living a limiting or a restrictive lifestyle. Nor, does not mean giving up everything you enjoy, or, to relinquish fun and relaxation. It does mean learning how to focus your mind and energies on your goals and persevere until they are accomplished. It also means cultivating a mindset whereby you are ruled by your deliberate choices rather than by your emotions, bad habits, or the sway of others. Self-discipline allows you to reach your goals in a reasonable time frame and to live a more orderly and satisfying life.

Critical thinking is the mental process of analyzing or evaluating information. ‘To reason’ is the capacity for rational thought, or to think logically.

Once you have established a solid foundation or a healthy self-concept, it is important to be able to think critically, or to reason.

Everyone thinks; however, much of our thinking is reactive, biased, uninformed and often prejudiced. More often than not, it is also haphazard and undisciplined.

How Does This Apply To Project Funding?

Corporate finance is the area of finance dealing with the sources of funding and the capital structure of corporations and the actions that managers take to increase the value of the firm to the shareholders, as well as the tools and analysis used to allocate financial resources.

Achieving the goals of corporate finance requires that any corporate investment be financed appropriately.  The sources of financing are, generically, capital self-generated by the firm and capital from external funders, obtained by issuing new debt and equity (and hybrid-or convertible securities). As above, since both hurdle rate and cash flows (and hence the riskiness of the firm) will be affected, the financing mix will impact the valuation of the firm.

Debt Finance

Corporations may rely on borrowed funds as sources of investment to sustain ongoing business operations or to fund future growth. Debt comes in several forms, such as through bank loans, notes payable, or bonds issued to the public. Bonds require the corporations to make regular interest payments on the borrowed capital until the debt reaches its maturity date, therein the firm must pay back the obligation in full. Debt payments can also be made in the form of sinking fund provisions, whereby the corporation pays annual installments of the borrowed debt above regular interest charges. Corporations that issue callable bonds are entitled to pay back the obligation in full whenever the company feels it is in their best interest to pay off the debt payments. If interest expenses cannot be made by the corporation through cash payments, the firm may also use collateral assets as a form of repaying their debt obligations (or through the process of liquidation).

Equity Finance

Corporations can alternatively sell shares of the company to investors to raise capital. Investors, or shareholders, expect that there will be an upward trend in value of the company (or appreciate in value) over time to make their investment a profitable purchase. Shareholder value is increased when corporations invest equity capital and other funds into projects (or investments) that earn a positive rate of return for the owners. Investors prefer to buy shares of stock into companies that will consistently earn a positive rate of return on capital in the future, thus increasing the market value of the stock of that corporation. Shareholder value may also be increased when corporations payout excess cash surplus (funds from retained earnings that are not needed for business) in the form of dividends.

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