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You have chosen to set up a News Agency in Southall. You will be selling newspapers, magazines, as well as confectionary, stationary, occasional cards etc. The name of your business is 'Rattan's News Agency'.

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Introduction

To: News Agent From: Renu Rattan Re: Setting up a News Agency - Task 1 You have chosen to set up a News Agency in Southall. You will be selling newspapers, magazines, as well as confectionary, stationary, occasional cards etc. The name of your business is 'Rattan's News Agency'. 1.1 - Fixed Costs These costs are ones that remain the same, even when demand and sales levels change. You will have the following fixed costs: 1.1.1 Property/Rent - This is the cost to buy or hire the property you wish to sell your products at. This is a fixed cost, as the price of rent will remain the same no matter how much you sell, as it is not affected. This will be about �500 - �1000 a month (depending on where the property is situated), you will only need a small property. 1.1.2 Till/Account Books - You will need these to keep a track of sales and money (expenses and revenues). The price you will pay to buy or hire these will remain the same no matter whether sales increase or not, meaning it is a fixed cost. These will probably cost about �110 to buy, or to hire about �10 a month, you will only need one book and one small till to start off with. 1.1.3 Insurance - Money kept aside for if an accident (like a fire) takes place in which case you will be covered and can claim money back to help you. This is a fixed cost because insurance fees do not change even if sales do. You will normally have to pay about �200 a month. I would suggest you get a standard plan that covers fires, burglaries etc. 1.1.4 Counter - This will be needed to hold your till and to help serve your customers. It is fixed as you will only pay one price when you buy or rent it. ...read more.

Middle

This is a form of free credit that suppliers offer to businesses to help improve the flow of money for up to three months. However if money is paid late suppliers may not be willing to supply goods in the future, or may insist on cash in advance, in which case you could end up in debt. This would give you a bad credit reference, and may risk the chance of you being offered trade credit in the future, as most places only offer them provided that there is a suitable reference with previous money. But if you use them suitably, they could work to your advantage, as you may not need to take out as much money, and have time to make money to pay for the goods at a later date. Trade Credit can be paid back in instalments, or a lump sum, depending on the supplier, and is often interest free, so you wouldn't have to borrow �30000, but could settle with �25000 and pay the trade credit once you start to sell the goods. Bookers Cash and Carry, supply most of the stock a news agent would need and offer trade credit for up to 3 months, interest free. 2.1.3 Leasing - provides a form of medium-term credit. The business will be able to rent most of their fixed costs, such as the fridge, so instead of paying something like �1500, you could pay �75 a month. Same with property, instead of having to pay something like �25000 for property, you can rent for about �500 a month. However you may get into a situation where it may have been better to buy something as oppose to renting it as you may find yourself in debt with someone, or if it gets damaged, you may have to pay the whole price. But renting things is good to use when you start up, as it gives you a lot of spare money, in which you can invest back into the business, ...read more.

Conclusion

However loans are available from 1-7 years, with interest rates that vary (1 year having a cheaper rate than 7 years). If you take a look at fig. 1, there is a list of loans available for �25000 for five years, which would be a suitable amount for you to borrow, and over a suitable amount of time. Looking at fig.2 I have selected the loans I think are most appropriate, I have not selected the other loans that are listed in Fig 1 as they are unsecured loans, like the Lombard Direct and Loan One in which case if you fall into debt you will have to claim bankruptcy, whereas the ones I have selected do ask for security which even though you may lose personal possessions, you will not need to claim bankruptcy. I also picked those that offer protection, which again protects you from bankruptcy, but also reduces the chance of you losing personal possessions. I also picked those that offer business advice (samples of the web pages talk about the advice given I have shown in my research). By looking and taking all the possible loans into consideration, I suggest you go with the Natwest Personal Loan, I have a booklet in the research which shows the figures more closely, showing the charge with protection, however the information in the booklet only goes up to �15 000, so I have also printed off pages from the website showing the information you require. I chose Natwest over the other possible loans, as even though they all offer business advice and protection plans, by looking at the research I can see that Natwest even though it has a higher rate, its protection plan was cheaper than others (13.9% APRin comparison to Lloyds TSB 15.9% APR), and also the quality of the business advice was much better, whereas most of these banks just give you advice on finance, Natwest look into helping your business personally, they help you devise a business plan as well as help in controlling your finance. Renu Rattan Business Studies Coursework ...read more.

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