• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Financial Plans.

Extracts from this document...

Introduction

Cost Amount How Often Start Up/Running Cost Equipment �6000 One Off Payment Start Up Premises �110,000 One Off Deposit and Mortgage Start UP * Deposit �10,000 One Off Start Up * Mortgage �4000 Per Year Running Telephone (Line rental only) �100 Per Year Running Promotion * Leaflets �120 One Off Start Up * Newspaper �18 Per Week Running Shop Fittings �3000 One Off Start Up Materials (Food, Bags etc) �1000 Per Week Start Up and Running Electricity �60 Per Quarter Running Heating �50 Per Quarter Running Rates Wage �200 Per Week Running Worker Wages �311.60 Per Week Running Shop Sign �150 One Off Start Up Posters Signs etc �25 One Off Start Up Financial Plans Start Up Costs The total amount of money capital that must be raised before the company can operate is �18,845. Possible Sources of Capital Advantages Source Disadvantages Large amounts of money may be borrowed if banks thinks loanee will meet repayment schedule. Loan can be repaid in instalments. Bank Loan Only normally offers a short to medium term source of finance. ...read more.

Middle

Selling shares involves a lengthy legal process, which is costly. Shares cannot be advertised for general purchase. Financial information has to be declared to the pub if requested. More money can be raised than if there is one owner. Relatively easy to set up. Workload can be split between partners. Partnership Finding a partner may be difficult and take time. A Deed of Partnership must be created which can take some time to complete. Possible for large sums of money to be received. May not have to pay the money back in a large sum. Small Risk. Investment Investors are difficult to find in small business. Small firms investors are usually a friend or family of the owner and if problems occur relationships between them may suffer. Large responsibility. The method of finance that the business will use to cover set up costs will be a Bank loan. The loan will have to be as long as possible to ensure that enough money is earned to cover the repayments and interest. The reason this source has been chosen is because it allows large amounts of money to be borrowed if the bank is happy with the business plans put forward. ...read more.

Conclusion

The problem with leasing is that over a long period of time it becomes more expensive than buying goods and as the plan of the business are long term this is not suitable. Investment this would an ideal way of raising money however finding people to invest in small or large businesses is very difficult. For small firm investors are usually family or close friends. When investing other people's money there is a huge responsibility. Selling shares is another way for people to invest rather than just giving the business money. Selling shares as a small firm can only be done privately and there is a lengthy and expensive legal process to take before shares can be sold. When shares are sold a share of the profits must go to the shareholders making the overall profit for the business much smaller. Going into partnership is a way of doubling the start up funds available to the original proprietor. However problems that occur with this option are that it can be hard to find someone to go into partnership with and control is split between the owners. Arguments and disagreements about the business may effect is success. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. Explain the purpose of keeping accurate financial records.

    These include: Assets Items which can be described a value which can bring value to a company such as SPA Ltd. Assets can be known as resources belonging to SPA Ltd. * Fixed asset * Current asset Current Assets Current asset is the operating cycle at which assets of SPA Ltd may change within the periods of 12 months.

  2. Interpretation of Financial Statements.

    Ratios are concerned with the relationships between figures in the financial statements, and are simply a way of relating two separate items together to give more meaningful information. For example, if profit is �10m and shareholders' equity is �100m, you have made a 10% profit on their funds.

  1. Ownership and finance for my business. The business I am doing is a clothes ...

    More people are contributing capital so there will be more flexibility in the business. In addition a partner can consult another partner on decisions. Disadvantages: The distribution of profits can cause problems. The deed of partnership sets out who should get what, but if one partner feels another is not doing enough, there can be dissatisfaction.

  2. Tesco financial review

    That means that all the money which is invested into tesco will be paid through by their shareholders. * Company Officers are not personally liable for their actions unless, in most instances, there is a clear and serious breach of their fiduciary duty.

  1. practice of financial accounting

    The table below shows the capital structure and gearing of two public limited companies VT Ultra electronics Rate of return on shareholders equity 10.9% 31.55% gearing 60.2% 77.7% Interest cover 13.6 times 10.3 times *formula in appendix Ultra electronics has a rate of return on shareholders equity of 31.55% compared to VT's 10.9%.

  2. The Legal Eagles

    The main advantage is that you can be flexible. You don't need to discuss with others (e.g. partners and directors) how you are going to run the business. You also have less paperwork. A sole trader is not necessarily a one-person business and may have many employees or branches.

  1. What Really Determine the Payment Methodsin M&A Deals.

    He re-exams the data set which was used by Carleton et al. (1984), and looks into 61 additional transactions obtained from the Federal Trade Commission's merger series for 1978. His enlarged data set covers 106 transactions for manufacturing and mining firms for the period between 1976 and 1978.

  2. Applied Business. Investigating a business Preston Manor High School

    Preston manor is currently doing a campaign on recycling to promote it and encourage students to recycle[5]. Furthermore, the school has put recycling bin all over the school to encourage the students to recycle and make the environment healthier. This activity makes the objective ?Continue to improve the learning environment, site and facilities and eradicate litter? more achievable.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work