P5 - Investigate the sources of finance for a specific enterprise opportunity.
P6 - Investigate the support available for setting up a specific enterprise.
M3 - Assess the competition and external factors to be considered in setting up a specific enterprise In locality.
Finance – The process of managing money or the ways in which funds of value are attained
or distributed, which in business is throughout a business.
The potential enterprise I have decided to open is a restaurant called “Variety Cuisine”. The
business will be based on the service of different types of food with a large variety of
cultural dishes all over the world. The restaurant would be located in Wood Green which
would be ideal as it is a very popular destination for multiple purposes such as shopping,
dining, leisure etc. The restaurant will be open 7 days a week; 11am – 11pm on Mondays-
Fridays and 12am-6pm on Sundays.
Internal sources of finance that could be attained to develop the business could be multiple
things such as first of all, my personal savings. The advantage of this is that the income is
purely from me, meaning there is no drawback or restriction. On the contrary, a
disadvantage is that an investment from savings tend to be used only once as it takes a
great amount of time to store a significant amount worthy of being put into something such
as a business. The second internal source of finance could be family funding. This is the
contribution of money from those directly related to you in order to further help invest in
and develop the enterprise. An advantage of this source of finance is that it does not come
out of any of your own finance, but from other individuals which means that there are no
drawbacks to your personal gain as well as no economic losses. The only potential negative
aspect to this is it is a favour done for you when the individuals are not actually obligated to
do so putting you in debt in them but more in a social aspect.
This corresponds with my first external source of finance which is a loan from the bank. This
is the withdrawal of a specific amount of money lent to you temporarily as you are required
to pay it back within a designated amount of time. This could be seen as a disadvantage of a
loan but is to be expected, although it could be proven further disadvantageous due to
cases of interest, where the amount you must repay increases the longer the repayment
takes. However, the advantage to this is that it allows you to successfully find a starting
source of finance, especially if your options are minimal. It can also be accessed quickly
meaning if you have to resort to this at a sudden notice, it should be no problem. The
second source of external finance is the process of trade credit. Trade credit is viewed as an
essential tool for financing growth. It’s the credit extended to you by suppliers who let you
purchase at the moment of time and pay at a later date. Any time you take delivery of
materials, equipment or other valuables without paying cash on the spot, you are
using trade credit. This is very beneficial as the very items you are attaining may be
unaffordable at the moment but help to develop the enterprise significantly without
spending anything at all. This potentially brings the business to a progressive start resulting
in a good amount of profit, allowing you to pay it back successfully.
Reference list:
https://www.oceanfinance.co.uk/landing/personal-loan.asp?
plsrc=ppcsearch_&965550936&337001015434&gclid=Cj0KCQiAxNnfBRDwARIsAJlH29B_KXp9vJlK1aO1D02jSvJuo_9jGXYJ5c
e_fZ5NzLQ_cZ7BL9NOGP4aAlX-EALw_wcB
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