You may remember that in Post 2, you shared about the Common Share category. A common share can have two benefits: an annual dividend and an increase in share value. So do investors who want to buy shares want more annual return on investment? Or do you want more of the original stock price increase?
Entrepreneur 3
A third businessman has started a medium-sized business with shareholders. The problem with this small businessman is that he wants to expand his business but does not want to take any more shares. It is true that his business has been in a position to make a good profit for shareholders for three years, but he is in a position to make a profit for his business and only make more profit if he invests more money in the business. The shareholder is also worried that the shareholders will be willing to add more shares if they call for more shares, but the number of shares will be reduced.
So looking back at the three years that paid dividends to shareholders, we can see that all the monthly net profit from the operation of the business is divided proportionally according to the number of shareholders. This is also a barrier to business value growth.
What’s better for shareholders than the regular dividend and stock price increase is that the stock price is rising sharply than when you first bought the stock. The billionaires who became rich through the stock business also came to life as billionaires because of the increase in share value, not because of dividends.
The fact that stocks are traded on a stock exchange also means that the stock is traded on a stock exchange. However, the earnings per share of a share also contributes to the value of the stock.
In Myanmar, investors are divided into two major companies, and investors and management alike are trying to increase the company’s value in line with international standards. However, in SME-level businesses, shareholders and managers tend to prefer a regular monthly dividend.
Investors at the SME level prefer to get their money back quickly, and the business owner tends to share all the net profit to maximize profits for shareholders. This means that the business has been operating at this stage for many years without having to reinvest the money to grow and expand the business.
As an entrepreneur, there is a way to expand your business without reducing your shareholding. This means that existing shareholders are required to redistribute the required number of shares to further expand their business in proportion to their holdings. For example, suppose A, B, C, D, and E own 20% of the business. If you need another 100 lakhs, you can add another 20 lakhs equally. If so, the shareholding in everyone’s business will remain the same.
But in practice, it is difficult for all to agree on asking shareholders to add proportionately to their assets. There are people who can add it and it is not convenient to add it.
Therefore, if a new external shareholder is called in, the existing shareholders will not lose the amount of money they have contributed, but their assets in the business will decrease. For example, if the above A, B, C, D, E ask F, G, H, I, J to add 20 lakhs to expand the business, the business will increase by 100 lakhs, but 10 of them will have only 10% ownership per business.
Next time, if the additional 100 lakhs do not get a good return, the old shareholders will have to reduce their dividends for the new shareholders.
Keep in mind that you can’t call for as many shares as you want, you can only call for the value of your business. Therefore, those who want to buy shares need to inquire about the value of the business and the amount of the subscription.
Sometimes you just have to be more discriminating with the help you render toward other people. You need to know why he sold almost all of his shares. He sold all his shares and the business remained in the hands of the shareholders. If no one knows how to do it, the business will fail. The resigned business owner gained both money and experience, so it was easy to start another business.
Another way to increase the value of a business is to divide the net profit first, rather than allocating all the net profit to the business, and then first divide the amount by agreeing to a shareholder agreement.
MTSH, for example, made a profit of 4,000 kyats per share last year. However, only 2,000 kyats per share was distributed as dividend and the remaining 2,000 was reinvested in the business. By doing so, you will be able to reap the benefits of this investment next year.
There are also companies that put everything back into the business without making a profit dividend at all. For example, Apple Inc. The benefit of this is faster business expansion.
In short, the shareholders should work together to increase the value of the business by agreeing to a fair share of the business’s shareholding without further distribution of all profits. More Get Quotes Here…
#guide4you #guide4younet #guide4you #guide4youvlogs #guide4youtips #Follow us! #Like us! #Share us! #Enjoy us!
Thanks for reading us! See ya, Next Days! Bye for now!
