Good Business Plan About Great Value Thrift Store

Published: 2021-06-21 23:42:01
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Category: Finance, Business, Planning, Investment

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When starting a business, financing is a significant decision. The types of financing available will largely depend upon of where the company falls in store life cycle. In developing the financial plan for Great Value Thrift Store, the entrepreneurs will be required to start at ground zero in order to develop their concepts into realities (Anonymous, 2010). The goal is to get the store open any way possible and it requires creativity and persistence. It is vital to be open to alternative sources such as angels, customers, family and friends to assist finance the store (Copeland, 2006). Traditional resources such as banks are unlikely to offer financing unless the stores will be willing to sign a loan or they have a net worth such as real estate (Anonymous, 2010).
Great Value Thrift Store will raise start up cost from owners, investor and loan, which amount $150,000 of owners share. At this stage of limited budgets, Great Value Thrift Store will find a closed store that can be renovated to suit the needs on a shoestring budget and concentrate on the necessities. The startup capital will be utilized for legal expenses, store inventory and equipment, packing and other facilities, insurance, rent and promotion among others. The Great Value Thrift Store has estimated the start up cost of $ 150, 000 and the store capital will be $100,000. Therefore, about $50, 000 additional funding will be required and the purpose of the business plan is to secure financing for that amount.
The store will be expected to raise $20,000 from an investor at a time instead of wasting time searching for unrealistic amounts. This will be contributed on a monthly basis to enable smooth running of the business. An investor will be encouraged to participate in the Great Value Thrift Store’s capital and could be provided a portion of 25.00 percent of the $100,000 company capital. The capital generated by investor will be used to purchase store equipment and cover part of the startup cost. For investing 20,000 in the Great Value Thrift Store capital, the investor would receive a portion of ownership of 25.00 percent, which are $2500 shares of $100 par value. As the investor, he or she will hold between 20 and 50 percent of the voting stock and exercise major influence over the Great Value Thrift Store’s policies. The interest of the company is to offer the best choices to protect the investor’s interest, while keeping the potential growth of the company, the liquidity and the profitability of the future events. The company will require about $5000 per month to take care of short-term obligations.
. The store require to show an obvious amount of success via high sales or increasing trends in same store sales before moving to the second stage of financing the store. The company can complete the funds by approaching banks and investors depending on the goals and objectives (Amar, 2009). In order to get into this level of financing the plan is wise to evaluate the company’s risk tolerance, desire of investors and want to grow. For the remaining $30, 000 additional financing required to cover the start up costs, the Great Value Thrift Store plans to receive a five-year term commercial loan facility, which will achieve the cash flow requirements. The borrowed funds will be utilized exclusively to purchase store equipment, depending on the list that will available to the lending companies. The company project to repay the loan in equal monthly installment over a five-year period. The cash flow will demonstrate the Great Value Thrift Store’s ability to repay the loan. It demonstrates how the company will achieve the interest payment obligations, while keeping liquidity and providing sufficient positive cash flow and adequate cash reserves for unexpected events (Rees-Mogg, 2008).
Banks loans are riskier than investors are, and owners of stores will be required to guarantee repayment. The process is slow because banks generally issue short-term loans one at a time and require portions of cash flow to repay the debt (Weisman, 2007). On the other hand, investors will allow Great Value Thrift Store to grow faster but they will dilute the company’s ownership and could hinder the ability to sell the company.
Great Value Thrift Store can explore other financing methods such as non-bank lenders and venture capitalists among others. These institutions can finance long-term assets with short-term debt. This financing is a very industry-friendly and offers options like equipment leasing, leaseback and securitized lending (Anonymous, 2009). However, the company will be required to pay slightly higher rates than banks. Non-bank lenders will help to finance a higher proportion and it may not require a guarantee. The venture will also help to finance the store to grow faster due to longer terms and higher borrowing.
Therefore, these types of financing will help Great Value Thrift Store to implement its plan by taking care of startup cost and development stage of the company. The detailed business plan of Great Value Thrift Store will attract the investors and financial institutions that will help in financing the plan.
References
Amar, A. (2009). “I turned down the Dragons, now the orders are flooding in.” Evening Standard,27. Retrieved December 3 2010, from ProQuest Newsstand.
Anonymous (2010). How to finance a business. Business Loan, FICO score, Government Small Business Loan. Retrieved November 8, 2013, from http://www.myownbusiness.org/s8/index.html
Anonymous (2010). How to finance a business. Business Loan, FICO score, Government Small Business Loan. Retrieved November 8, 2013, from http://www.myownbusiness.org/s8/index.html
Anonymous (2009). Starting a Business | SBA.gov. Retrieved November 8, 2013, from http://www.sba.gov/smallbusinessplanner/start/financestartup/SERV_LOANPROPOSAL
Copeland, M. (2006). “How to Find Your Angel It takes money to make money. Use these heavenly hints to attract the early-stage funding you need to get your new business off the ground.” Business Journal, 7 (2), 47.
Rees-Mogg, M. (2008). “Nova-Flo: A case study on how Dragons' Den compares with the real world of business angel investment.” Dragons or Angels. Retrieved November 8, 2013, from Entrepreneurship
Weisman, R. (2007). Angels play key role in financing: Smaller companies benefit from the money and hands-on advice. Boston: ProQuest News stand.
References

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