Finance in Hospitality Management
Finance in Hospitality Management
Course: HND in Hospitality Management Module Tutor: Student:
1.1 What are the main sources of finance to a business? Classify them according to short-term and long-term categories Financing is needed to start a business and ramp it up to profitability. There are several sources to consider when looking for start-up financing. But first you need to consider how much money you need and when you will need it. The financial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive, requiring large amounts of capital. Retail businesses usually require less capital. One situation that give entrepreneurs sleepless nights seem to be the issue of raising funds for their business. Sometimes, an entrepreneur may have viable business ideas, expansion plans and other projects that will increase the profitability of his/her business but lack of fund becomes a major setback for him/her. Having said enough, let’s see what are those mainly sources available for us: Personal Savings: the first place to look for money is your own savings or equity. Personal resources can include profit-sharing or early retirement funds, real estate equity loans, or cash value insurance policies. Life insurance policies - A standard feature of many life insurance policies is the owner’s ability to borrow against the cash value of the policy. This does not include term insurance because it has no cash value. The money can be used for business needs. Home equity loans - A home equity loan is a loan backed by the value of the equity in your home. If your
Course: HND in Hospitality Management Module Tutor: Student:
1.1 What are the main sources of finance to a business? Classify them according to short-term and long-term categories Financing is needed to start a business and ramp it up to profitability. There are several sources to consider when looking for start-up financing. But first you need to consider how much money you need and when you will need it. The financial needs of a business will vary according to the type and size of the business. For example, processing businesses are usually capital intensive, requiring large amounts of capital. Retail businesses usually require less capital. One situation that give entrepreneurs sleepless nights seem to be the issue of raising funds for their business. Sometimes, an entrepreneur may have viable business ideas, expansion plans and other projects that will increase the profitability of his/her business but lack of fund becomes a major setback for him/her. Having said enough, let’s see what are those mainly sources available for us: Personal Savings: the first place to look for money is your own savings or equity. Personal resources can include profit-sharing or early retirement funds, real estate equity loans, or cash value insurance policies. Life insurance policies - A standard feature of many life insurance policies is the owner’s ability to borrow against the cash value of the policy. This does not include term insurance because it has no cash value. The money can be used for business needs. Home equity loans - A home equity loan is a loan backed by the value of the equity in your home. If your