HND BUSINESS

Managing Financial Resources and Decisions

Managing Financial Resources and Decisions

Introduction

Everyone has an ambition in their lives and individual struggles for pursing it and creates their names. In the same way, I have also an ambition to run my own Mexican Restaurant that will not only offer healthy food to eat but also at reasonable prices. The initial investment will be £110,000. My core focus will be on minimizing the investment cost.

Description of the Business

Starting a restaurant business is not an easy task, as there are number of restaurants that have been opened and these restaurants compete with each other incredibly. I decided to run Mexican food restaurant which will add a different dishes of food to the traditional foods menu and it will cater superior quality food. The restaurant business is notoriously tough as it requires huge number of operations in it to be carried out. Initially I will open a restaurant on rent. In the restaurant, I will do investments or preliminary expenses in the following areas;

Approximate costs

Item of expenditure

Cost

Spending on specialist equipment:

£35000

Spending on general business equipment:

£20000

Spending on office fittings:

£6330

Spending on security measures:

£5610

Spending on signs:

£6760

Spending on staff facilities and their salaries:

£10000

Spending on vehicles:

£33800

Other costs:

£21000

Total expenditure:

£138,500



The total Investments will be £150,000 approximately as it will cover the other costs which may include the certification cost and getting license for running. The Working capital will be the stocks needed by the business e.g. Raw Materials, Allowance for amounts that will be owed by customers once sale of Mexican restaurant begins and the Growth and development (e.g. extra investment in capacity). The possible sources of finance available to a business are;

Personal Finance

Family and Friends Financial Support

Banks (Business Overdrafts, Term Loans)

Government grants and financial supports (www.grantfinder.co.uk)

Loans from Business supporting organizations

Business Angels sources of Finance (www.businessangelnetwork.co.uk/national-business-angels-network)

Prince's Charities

Community Development Finance Association (CDFA - www.findingfinance.org.uk/)

Business Financing Institutions (www.businessfinanceforyou.co.uk)

These are the sources of finance that are available for running Mexican restaurant.

Sources of finances and control of the Business

Sources of finance influence the business operations to a great extent. It is very convenient to acquire the funds but once the business does not operate as per planning the influence and the pressure of acquired resources increase to an alarming state. The cost of funds and their burden incredibly disturb the business operations (Cole, R. A., & Wolken, J. D. (1995), p: 81)

Fundamentally, business may acquire funds either from debt financing or equity financing. The cost of equity financing is dividend payments which mean less retained earnings. If a business goes for the option of debt financing the cost of debt financing will be interest payment which means less operating income and high leverage. Therefore, the control of the business will go into the hand of creditors. The correct mix of the financial structure will be beneficial for the business. When start up businesses is initiated, the absolute financial structure will result the success of the business. Advantages and disadvantages of the different sources of finance

Personal Savings and Assets

Personal savings and other assets are a ...