Finding financial angels, seeking venture capitalists and going public round out the remaining equity choices. The question of which equity sources might be most appropriate to your situation is beyond the scope of this book. (Raising Capital, by Andrew Sherman, another book in Kiplinger’s Business Management Library, would be a good source for information on this issue.) Rather, I intend simply to alert you to the equity-expansion issue you will have to deal with in considering any growth beyond the sustainable. This turns attention to the question of the cost of equity relative to the cost of capital. While I won’t be covering that topic directly, I will discuss some elements of equity and capital cost in the context of valuing the business in Chapter 14.

It should be clear that senior management needs to focus continually on seeking out new options—the kind that can per-manently escalate sustainable growth to higher levels of equilibrium. A closely related responsibility is to keep actual growth rates pushing right up to the sustainable targets. And here everyone in the company must keep that process by getting more mileage out of every dollar of both assets and expense, while at the same time creating more value in both real and perceived terms for your customers. An understanding of cash-flow dynamics and reasonable mastery of cash-driver language will help make these objectives realistic.

Taken From : Cash Rules