Essay
Unit 2 - P4
- Course
- Institution
describe sources of internal and external finance for a selected business
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Thomas and Jeremy need to consider multiple options to understand where they shouldconsider investing their 15,000 to start their business. A food truck that has a permit, sig-
nage, inventory, appliances and transport included would cost around $24,250 in total to
purchase, with their owners saving of 15,000 they still would require funds for the $10,000
they would need to purchase the truck. Thomas and Jeremy need to cover multiple costs
in order to fully support their Asian food truck.
Firstly purchasing a larger 4 Wheel Drive and a trailer would already cost the two $15000.
Instead of using their savings on transport, they should use their savings on smaller re-
sources such as; uniforms, permits and menus etc. With all their small investments they
will need to pay an estimate of $9,250. The remaining $5,750 would be kept for a contin-
gency plan. A contingency plan is useful to have money reserved in case of a possible set-
back in their business and to create a safety net in case of future debt and bankruptcy.
Thomas and Jerry, for the rest of the costs (Transport and Food/Catering Trailer), would
need to inquire about different financial services that could benefit them. A useful option
for their 4 Wheel Drive, would be acquiring a hire purchase. A hire purchase requires you
to pay a 25% as a downpayment first and slowly with a payment plan developed by the
bank. It would also be recommended for Thomas and Jeremy to withdraw a bank loan of
$5000 for the food truck, this will allow Thomas and Jeremy to borrow money from the
bank for a certain period of time, in order to purchase the truck.
Overall after taking a loan and hire purchase, Thomas and Jeremy would have a total of
$24,250 (excluding interest) and a safety net of $5,750 which would allow the Asian food
truck sufficient funds to start. If Thomas and Jeremy start to have possible problems with
cash flow, and more money is going out then in, it would be recommended that they will
take out an overdraft, that would give them a temporary short-term payment aid to with-
draw money that they don’t have.
Overall running a food truck that has a permit, signage, inventory, appliances and trans-
port will allow the process of finding suppliers etc. much easier as they have already been
chosen. It allows Thomas and Jeremy more time to develop relationships with the supplier
and find manageable ways to which they can purchase their inventory at a good price that
is sustainable for the company.
Food Truck Startup Costs Estimated First Month Costs Estimated Second Month
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