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Planning a New Business Venture | Report

   

Added on  2020-06-05

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Planning a newBusiness Venture

Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1b) Analysis of sources of finance...........................................................................................2c) Legal considerations relevant to planning a business venture..........................................3d) Analysis of market conditions............................................................................................3TASK 2............................................................................................................................................4Business Planning...................................................................................................................4TASK 3............................................................................................................................................8Pitching Investor.....................................................................................................................8CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................10

INTRODUCTIONBusiness is defined as organised efforts of group of individuals which are directed toachieve the shared goals. The individuals are aimed to attain a specific level of profit fororganisation to sustain its operations in market for a longer period of time. A business utilisessuitable enterprise strategy along with suitable offering to ensure that their operations are carriedout for a longer period of time (Atherton, 2012). This report takes into consideration developinga new business venture of a Coffee shop named as Coffee Culture. The report focuses onconducting a research which analyses benefits, drawbacks and sources of finance which can beavailed by this venture. The development of vision, mission and aim of this venture will be takeninto consideration along with emphasizing on offering and planning forecasts. TASK 1An entrepreneur before starting a new venture can takes into consideration the type ofbusiness that he is willing to form. There are variety of approaches through which a newbusiness venture can be planned. Some of them are as follows:Sole Proprietorship: This is the most common style through which a business isintroduced in the market. This venture is owned and managed by a single individual. Anindividual running a business is fully accountable for manner in which operations are carried out(Chwolka and Raith, 2012). The benefits of venturing through sole proprietorship is that aperson does not have to go through legal formalities. Main limitation of this type of venture isthat an individual will not be able to raise all capital by himself which is required to make adifference in the market. Most importantly, losses incurred by business will be borne byproprietorship himself. Partnership: This is another means through which a business can be initiated. Thisapproach of raising funds is comparatively better than one as it involves number of people whoare responsible for carrying out operations. The profits and losses by business will be shared in adefined ratio. The limited partners in partnership are not liable to extent that general partners.The major drawbacks of this business is that before formulating a decision, it is essential to carryan interest of all before making a decision. Corporation: It is another approach through which a business can be launched on a largescale. This new business is made up of shareholders who possess a mentioned level of business.The potential it carries that is equips a business with adequate finances which help in carrying1

out its operations. In case of losses, it is borne by all the shareholders of enterprise rather thanentrepreneur himself. The drawbacks to this measure is that it involves a lot of paperwork whichis to be filled in secretary office and corporation needs to pay heavy taxes. The shareholders areresponsible for formulating decision which can be taken on the basis of profits rather thandevelopment of business. b) Analysis of sources of financeFinance constitutes as the most important resource to an organisation. To start a newventure, a developer can take assistance from variety of sources which are helpful in building anideal business (Ciabuschi, Perna and Snehota, 2012). Some of the major sources of finance are:Personal sources: These refers to the financial capital which is to be utilised by anindividual in starting up of a business. The personal savings of an individual are employed inrunning a business or the business planner can take help from friends and family in raising funds.This is the most risk oriented manner of gathering adequate finance for venture. If the venturefails in achieving its targets and objectives, it can lead to bankruptcy of an individual. Internal sources: These are another sources of funds which can be utilised by a business.The employment of retained earnings and shareholder's funds are the two major sources to raisefinance for the new business venture. This source is applied by individual who wish to retaintheir control over business operations that wishes to retain control over the business. Theshareholders are awarded with dividends in return of the shares which have been owned by them.External sources: This is the most crucial source of raising funds for the new venture. Aundertaking can take assistance from banks in terms of loans to raise funds for business. Themajor drawback to this approach is that loans and repayment to banks have become a headachewhen business is not incurring sufficient revenue. Outside investors have sometimes become helpful in raising funds for business. It is anapproach through which share capital for an organisation (Hiatt and Sine, 2014). It is helpful inraising funds for business for a longer period of time.Business Angels is the main source of funding for a new venture. Any business whocarries a business potential will be supported by the angel investor and provided with funds tocarry out of operations. Venture capitalists are professional investors who take over control onthe business. The minimum investment which can be received through venture capital can bearound 1 million euros. 2

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