Sources of Finance for a Business Start-Up
For this task I will be considering the sources of finance I will need for my company.
Why might a business require finance?
A business may require finance because they can either:
• Be setting up a new business and they do not have enough money to start up.
• They may need new equipment to help make the business expand and make more profit.
• Or they may even want to replace old machinery.
• They may want to move there store to a better location that might benefit there company more.
• Or they may want to take over another company.
Additional finance can help a company keep trading while it is waiting for it payments for its last sales. It allows a business to meet ongoing costs of operation or help them to expand.
Sources of finance can be put into two categories Internal and External. Internal finance is money that comes from inside of a business or any profit that you have made from your business and external is money that you get from outside of the business. For internal finance you can retain profit, reduce stock levels or sell you old assets but for external finance you have more choices you can borrow money from family or friends to help you out, you can get a grant from the princes trust but this will only happen if you have a good idea for what you need the money for and you can get a loan from the bank. The difference between a loan and a grant is a loan you don’t have to pay back but a grant you do because it is from the bank. There are other types of finance:
• Loans
• Overdraft
• Trade credit
• Factoring
• Lease
• Hire purchase
• Grants
• Mortgage
• Share issue
• Taking a new partner
• Debenture
The most appropriate source of finance for my business is:
Grant- a grant is given to you by the Prince’s Trust. You will only receive this if they think you have a good ides for a business. Grants are similar to loans but grants are better because you don’t have to pay back. This source of finance is good for any business simply for the fact you don’t have to pay back. The drawbacks of getting a grant are very minimal it could even be non-existent. One complaint may be the long application progress how ever it will no longer be an issue when you are rewarded with free money.
can expand through marketing ideas and ways the company can save money by not stocking up on as
will have to make sure that they get enough profit to be able to open
...nments by adding new equipment to satisfy and bring in that part of their client base.
• The franchisees would have to raise approximately $750,000 of outside financing to fund the venture
They are getting money from their parents and do not have any savings plan put into place.
More new products need to be introduced and research needs to be done to find out which products will be most popular and profitable.
money to put food on the table one day and the next day they might not have any
they shop. This in turn allows them to purchase more which directly helps the business.
This is a point that rings very true. Store development is important, but there are other key features that need to be considered for continued growth
There is a range of criteria relevant for a decision of financing a new venture. To construct my list for the evaluation of a new company as an opportunity I have selected to refer to t...
decided to start up a shop would need finance at first to just buy the
Borrow long-term loans from local banks – These are a common way of financing major purchases of an organization. An advantage is that it is directly linked to an organizations operating capacity. Another advantage of long-term loans from local banks is that it enables a firm engage in large projects. Although its disadvantage is that the banks charge high interest rates.
Five advantages for owning your own business are: 1) The owner receives all profits, meaning that all earnings go to the sole proprietor, or the owner, and isn’t shared with anyone else. The profit is not split among partners, or split among a corporation. So when you own your own business, you’re the first and only one that receives all earnings and profit. So if a person has a successful firm, he/she is the first to reap the success and rewards. 2) Another advantage of owning your own business is that you’re your own boss. You can set your own hours, decide what you want to do with the company, no manager to answer to. Basically, you’re in charge of everything. The owner solely makes all decisions. Or in other words, you’re running the show. 3) An additional advantage is that a sole proprietorship can be easily organized. It’s easy to start your own business. First of all, it costs very little money to start your own business. As a sole proprietor, you have minimal legal requirements. The owner doesn’t have to establish a separate legal entity. All that is needed is to register the company with the state and apply for an occupational license and any additional licenses required for the state. ...
As we start our business, and even our business moves along, we will constantly need to concern ourselves with financing our business. Financing concerns begin with the start-up costs and then continue with business expansion and new product development. When we look for outside financing, one of the first things the investor will want to see is our business plan. Private investor, banks or any other lending institution will want to see how our plan on running our business, what our expense and revenue projections are whether or not our plans for the future are attainable with the business we have created. All of this can be answered by a well-written and thorough business plan.
..., the company is either generating insufficient margin to cover the high-service level or it is unable to deliver them at an acceptable cost.