FINANCE IN HOSPITALITY INDUSTRY

Finance in hospitality industry



Finance in hospitality industry

Introduction

In today's competitive environment, business seeks to outperform in order to get success in competition. However, business's financial performance is also important. It gives over view of the business in term of profitability, stability and control. It gives in depth overview of the business to the stakeholder or owner of the business to take better decision for success of the business.

In business, finances are required to run business especially when business plans to expand or acquire something big they require extra finance to meet their requirement. However, in sole trading business is difficult to acquire as there are limited resource for financing as compared with public limited company. In this paper various sources of finances are discussed that a sole trader can attain for its business. In addition to this there are various other aspects of finance is discussed in the paper.

Task 1 - Sources of finance and costs

Business requires finance for its operations. For a sole trader limited sources of finances are available. Among business strategies borrowing money of financing is an important and a positive approach for business decisions. By doing this company can speed up its growth, support seasonal financial slowdowns, and invest in the business opportunities which strengthens the business in the future. In addition to this, a strong financial strategy supports the business towards success and a weak financial strategy hinders the corporate strategies and may result in failure of business strategies (Fields, 2011, p. 223).

Now a day business and economic environment around the globe is dynamic. The business and global economic environment is constantly changing. Therefore, the strategies for business's financial decision should be dynamic.

Financing the business

Among business strategies borrowing money of financing is an important and a positive approach for business decisions. By doing this company can speed up its growth, support seasonal financial slowdowns, and invest in the business opportunities which strengthens the business in the future. In addition to this, a strong financial strategy supports the business towards success and a weak financial strategy hinders the corporate strategies and may result in failure of business strategies (Fields, 2011, p. 223).

In any business, the management teams responsible who are responsible for a different company activities such as marketing, technology, human resources, and operations is not directly related to financial communities of business.

In financing options, the major factors that may affect the financing can be its cost, maturity, restrictions and conditions, collateral and payment schedules. There are two major categories of financing; debt financing and equity financing. In the case of sole trader equity financing is not an option of financing business therefore debt financing will be discussed.

Debt financing

Debt financing is adopted by a company for it short term or long term borrowings. Short term borrowing refers to the loans or financing options with a period of one year or less. Short term debt is used to maintain the current needs of cash for the ...