FINANCE

Topics: Balance sheet, Generally Accepted Accounting Principles, Financial ratios Pages: 29 (7623 words) Published: April 17, 2015


1.1 You have been asked to identify a range of sources of finance available to Fort Sport Ltd. These can include raising funds through a combination of finance areas. Please identify at least three sources.

Fort Sport Ltd is a small private company who began trading in April 2013. The company supplies fitness products online to the public and specialising in mid range sporting goods and equipment. In 2014, it wishes to increase its activity in the market and as such need to identify a variety of options for finance.

As a manager of the Fort Ltd I have to consider the available options to finance our company to be able to reach our goals to expand our activities and increase income generated by new products, and new marketing projects.

I have to identify at least 3 possible sources of financing for our company. Here, I need to make a note that there is a company called “The Bannatyne Group” and they would be interested to invest into Fort Sports Ltd, however we also need to do research and analysis to explore the costs in such an investment, and also focus on market research regarding internet related businesses that is expected to grow throughout in the UK and also world wide.

If all these above mentioned points could meet and satisfy both sides the decision can be made for an agreement of an investment by The Bannatyne Group that is based on facts by our research.

As our company the Fort Sport Ltd is a small company it identifies as SME or Small or Medium Enterprise. Therefore, our finance opportunities are limited to the options for SME’s. However, there are still many available financing options to small and medium businesses.

SME in definition
Just to clarify what is an SME I point out that a company with less than 500 employees that will be described as SME.

Other definitions for small businesses:
- Micro enterprises: those with between one and nine employees - Small enterprises: those with ten to 99 employees
- Medium enterprises: those with 100-499 employees

There are two type of funding’s available for business:
-Short term finances
-Long term finances

It depends on how big is the business and so will be decided what finance source will be used, for a small business its different than for a large corporation.

Short-term finances typically finance available for less than year: -Bank overdraft
-Bank loans (Short term)
-Loans from family and friends
-Trade credits
-Leasing of assets (short or medium term)

Long-term finances typically finance available for more than a year: -Bank borrowings for long term
-Secured bank loan on the property or shared capitals
-Mortgages on the property
-Grants and loans from other organizations or government
-Venture capital

Finance sources available for Fort Sport Ltd according to my research as lining manager:

- Option Number 1.
The Blue Chip Investments
There is an option to get investment from larger companies, especially with the time of new advanced technologies. The hope for a larger profit income is more certain due to some real success-stories from the last few years, thanks to the constantly growing possibilities over the Internet. Although, the bulk of their investment portfolio is in large steady companies known as ‘blue chips’, they often invest in SMEs in order to provide a more balanced range of investments, which have potential for higher growth. But this option I only recommend to the executives if we have a larger future plan for example a new online sale project that expands to abroad globally. It is require serious planning and a reliable strategy with calculated financial growth.

- Option Number 2.
Small Loans, Bank Loans, Private Loans, Family Loans
Based on the numbers seen below I consider our company rather small and therefore I would also keep more simple financing options that might be available for Fort Sport Ltd such as Bank Loans and Private or Family Loans. To take...

References: http://en.wikipedia.org/wiki/Venture_capital/
Financial dictionary (2009) “Financial Planning” [online] available from http://financial-dictionary.thefreedictionary.com/Financial+planning/
Findarticles (2009) [online] available from
http://findarticles.com/p/articles/mi_m3495/is_10_48/ai_109136178/
Block, Stanley B, and Hirt, Geoffrey A. Foundations of Financial Management. New York: McGraw-Hill, 2005.
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