Financial Options
Funding Grayston Cottage will take quite a bit of capital; nevertheless, the money received has to be used wisely. Whenever a business owner is looking to find capital to fund their business it is important to know accordingly how much capital is needed, how the money is planned to be used, and how the money will be paid back (Hodgetts & Kuratko, 2007). The owner of Grayston Cottage plans to finance her restaurant by looking at her personal finances, her personal contacts, and the bank. All three financing options the restaurant’s owner will be using are three great options, with their own pros and cons; nonetheless, she will have a mix of the three which will help to keep her grounded.
In order to finance the restaurant, …show more content…
A line of credit is an informal understanding between the borrower and the bank (Hodgetts& Kuratko, 2007). With this type of financing option, the bank has no legal obligation to provide the borrower with the money. Essentially, a line of credit is a limited, yet specified amount that the borrower can access when needed and then repay immediately or over a pre-specified time period. Similar to most loan types, lines of credit do have interest rates, which take effect the moment the money is borrowed (Simpson, 2013). According to the same National Federation of Independent Businesses study mentioned above, a little over thirty percent of small business owners used banks as a financing source, whereas a little over twenty percent used personal contacts (Hodgetts& Kuratko, 2007). There are both advantages and disadvantage to this financing option. Lines of credit have several disadvantages, including, but limited to, the following: some banks charge month or annual maintenance fees, interest rates and calculations can be complicated and surprisingly expensive, and lines of credit required credit evaluation; so if the restaurant’s owner has poor credit she will have a hard time getting approved (Simpson, 2013). Thinking of pros to this financial option is rather hard; nevertheless, two does come to mind. First, a line of credit does not require the restaurant owner to …show more content…
Financial statements can help business owners to understand their business. By reviewing P&L statement month to month or throughout the years, business owners are able to see what is working for their business and what is not through the changes they may see in their statements.
Through the financial statements provided investors can clearly see that Grayston Cottage has months in which the restaurant had higher sales, employee benefits, and etc. this is due to the fact that the restaurant’s owner is compensating for certain months and seasons wherein more employees and products will be needed. Due to the holidays, such as mother’s day, Valentine’s Day, and national breast cancer month, the figures for February, May, and October will be higher due the fact that the restaurant’s target markets will create a higher turnover rate. Also, the months of March and May will have a relatively higher turnover rate due to the fact that those months have festive/ international holidays that are celebrated. Since Grayston Cottage is an international restaurant during those months the restaurant will capitalize on the festiveness and create traditional Irish and Cinco de Mayo
Funding Grayston Cottage will take quite a bit of capital; nevertheless, the money received has to be used wisely. Whenever a business owner is looking to find capital to fund their business it is important to know accordingly how much capital is needed, how the money is planned to be used, and how the money will be paid back (Hodgetts & Kuratko, 2007). The owner of Grayston Cottage plans to finance her restaurant by looking at her personal finances, her personal contacts, and the bank. All three financing options the restaurant’s owner will be using are three great options, with their own pros and cons; nonetheless, she will have a mix of the three which will help to keep her grounded.
In order to finance the restaurant, …show more content…
A line of credit is an informal understanding between the borrower and the bank (Hodgetts& Kuratko, 2007). With this type of financing option, the bank has no legal obligation to provide the borrower with the money. Essentially, a line of credit is a limited, yet specified amount that the borrower can access when needed and then repay immediately or over a pre-specified time period. Similar to most loan types, lines of credit do have interest rates, which take effect the moment the money is borrowed (Simpson, 2013). According to the same National Federation of Independent Businesses study mentioned above, a little over thirty percent of small business owners used banks as a financing source, whereas a little over twenty percent used personal contacts (Hodgetts& Kuratko, 2007). There are both advantages and disadvantage to this financing option. Lines of credit have several disadvantages, including, but limited to, the following: some banks charge month or annual maintenance fees, interest rates and calculations can be complicated and surprisingly expensive, and lines of credit required credit evaluation; so if the restaurant’s owner has poor credit she will have a hard time getting approved (Simpson, 2013). Thinking of pros to this financial option is rather hard; nevertheless, two does come to mind. First, a line of credit does not require the restaurant owner to …show more content…
Financial statements can help business owners to understand their business. By reviewing P&L statement month to month or throughout the years, business owners are able to see what is working for their business and what is not through the changes they may see in their statements.
Through the financial statements provided investors can clearly see that Grayston Cottage has months in which the restaurant had higher sales, employee benefits, and etc. this is due to the fact that the restaurant’s owner is compensating for certain months and seasons wherein more employees and products will be needed. Due to the holidays, such as mother’s day, Valentine’s Day, and national breast cancer month, the figures for February, May, and October will be higher due the fact that the restaurant’s target markets will create a higher turnover rate. Also, the months of March and May will have a relatively higher turnover rate due to the fact that those months have festive/ international holidays that are celebrated. Since Grayston Cottage is an international restaurant during those months the restaurant will capitalize on the festiveness and create traditional Irish and Cinco de Mayo