No business is instantaneously successful. There are multiple obstacles referred to as barriers all owners and managers have to overcome. There are three primary groups of barriers for every business out there.
Capital has several different definitions when used in a business context. The most common definition is the amount invested in a business or an asset. It is viewed in the equity section of the balance sheet that quantifies the amount invested by owners/stockholders in a business operation.
The shareholder agreement lays out the rules of the relationship between the shareholders of a company. Most often the agreement is poorly written because the legal team fails to understand the business aspect of each of the respective sections. One of these sections is referred to as the Article of Capitalization or commonly called the Capitalization Clause.
The one single term mostly equated to capitalism is ‘Stock’. When a business is incorporated, stock is the core medium of exchange for the investment. The company issues a certificate referred to as stock in exchange for the investment – most often cash. This is the one true form of pure risk. Most other forms of investments generally have some form of collateral, credit, or cash flow to substantiate the investment.