Pure Bliss Spa & Salon is currently lacking adequate resources such as equipment, which are needed to complete the daily operations within the business. Due to this issue, the level of productivity is low. The Spa is in need of two (2) Massage and Facial Tables and two (2) Pedicure Chairs. Sources of finance that are available to the business that can be used to obtain these equipments are: Retained Profits, Bank Overdraft, Government Grant, Bank Loan, Venture Capital, Personal Saving, Credit Union and Building Society.
1 Retained Profit: Retained profit is the profit kept in the firm rather than paid out to shareholders as a dividend (Beta.tutor2u.net, 2015).
2 Bank Overdraft: Bank Overdraft is where we have drawn cheque on our bank …show more content…
o Funding your growth through retained earnings can be a powerful strategy for some businesses. However, funding expansion from retained earnings also has disadvantages. For one thing, it's slow. You run the risk of missing business opportunities while you build up the necessary funds (Small Business-Chron.com, 2015)
o The Bank Loan could be used to obtain the equipments needed and also to expand the business. However, if the due date for interest payment is not made more interest is added
o For a Bank Overdraft you can draw on money when unexpected expenses arrive (or expected income doesn’t) However, interest rate can be higher than other means of credit, so overdraft should only be used for short term small business financing (Mozo.com.au, 2015).
The most suitable source of finance to obtain the required equipments needed by the Spa would be a Bank Loan. The Business chooses this because it is a more reliable source of finance and it can be accessed quickly. The reasons for this are provided by (Beta.tutor2u.net,
1 Retained Profit: Retained profit is the profit kept in the firm rather than paid out to shareholders as a dividend (Beta.tutor2u.net, 2015).
2 Bank Overdraft: Bank Overdraft is where we have drawn cheque on our bank …show more content…
o Funding your growth through retained earnings can be a powerful strategy for some businesses. However, funding expansion from retained earnings also has disadvantages. For one thing, it's slow. You run the risk of missing business opportunities while you build up the necessary funds (Small Business-Chron.com, 2015)
o The Bank Loan could be used to obtain the equipments needed and also to expand the business. However, if the due date for interest payment is not made more interest is added
o For a Bank Overdraft you can draw on money when unexpected expenses arrive (or expected income doesn’t) However, interest rate can be higher than other means of credit, so overdraft should only be used for short term small business financing (Mozo.com.au, 2015).
The most suitable source of finance to obtain the required equipments needed by the Spa would be a Bank Loan. The Business chooses this because it is a more reliable source of finance and it can be accessed quickly. The reasons for this are provided by (Beta.tutor2u.net,