Top of FormBottom of Form| In this report we are going to help Mr T Jones to start his fast food restaurant in Manchester. Mr T. Wants to start a franchise restaurant Wimpy and needs help with the financial resources and planning part. Step one, there are different souses of finance and it’s divided into internal and external finance, money that comes from within a company and the opposite any way in which company raises financing other than using its own money. (See page 4). We are now going to go thru different options of finance for Mr T franchise.|
1.1 Range of sources of finance for different businesses.
Here are most common sources of business financing for small or large businesses. * assets /”love money”
* banks/credit unions,
* government assistance
* business partners/strategic alliances
* venture capital ”angel investors”
* “going public” , PLC
Assets/ ”love money”
Top of FormBottom of Form| It is essential for a start-up business to have personal savings, assets in order to finance the business and make it work. However in most cases it’s rare for start-up businesses to have enough personal savings to completely finance the whole business. In order to have chance to borrow money from the bank you need to have some amount of savings and bankers tend to see the amount of personal savings you are willing to put in to your business as an indicator of a business owner’s commitment to the business.
”Love Money” is just as it sound, money from family and friend who support your business. Money is provided as a loan or as a gift, either way’s there should be agreement document between bout parts that includes record of everything that has been said.|
Banks /credit unions
One of the most common sources of financing that is used by business owners is banks, credit unions and other financial institutions. Before loaning any money out most financial institutions will require a business to make a detailed business plan which usually consist of financial statement for the business including proposals if the business is just starting up which can include personal statement of net worth, discussion on industry and target market etc. Before lending any money out financial institutions will consider the level of risk your company represent. The important part which lenders pay particular attention to are: * cash flow and profitability * management capability
* working capital
* level of debt
* personal net worth of the business owner
* historical trend and ratios
Government assistance is available for business owners in form of grant and loans which are mostly targeted at specific industries or ares. There are strict criteria which must be met by the business in order to obtain government financing. Some examples of government agencies and organizations in UK Such grants and loans from government can be very valuable source of financing.
Business partners/strategic alliances
Top of FormBottom of Form| Some businesses enter into partnership or alliances with other business owners to obtain financing. Both parties involved are the ones to organize the partnership and these can include formal partnership, joint ventures or joint ownership. It is crucial for both parts to decide issues such as sharing of profits, control, decision making and responsibilities before entering into partnership. |
Top of FormBottom of Form| Venture capitalists also called”Angels” are individuals with capital to invest into businesses which have potential to strong growth. Often enough angels are willing to invest in smaller businesses with growth potential. ”Angels” are usually very beneficial to businesses because...