Organizational Financial Planning At Ogbenka Adeogun Univers

organizational Financial Plangbenga Adeogununiversity Of Phoenixfin5

Organizational Financial Plan Gbenga Adeogun University of Phoenix FIN/571 Carol Sommers April 11, 2023 Organizational Financial Plan Gelian Restaurant is a concept for a business that will result in the opening of a restaurant in the neighborhood that serves classic cuisine as well as organic and healthy food. The Gelian Restaurant will be a collaboration of two families. The company plans to serve between 150 and 200 customers daily, serving breakfast, lunch, and an early dinner. The average startup cost is predicted to be between $ and $, with 30% of that amount going toward one-time expenses like the security deposit required for a lease, business licenses and other permits, signage and advertising, legal fees, furniture, kitchen, and cooking equipment, tables, renovation and customization, and tableware, ordering and payment hardware and software, and accessibility for people with disabilities.

Conversely, recurrent, and ongoing expenses like employee pay and benefits, utilities, insurance and permit costs, food and beverage charges, marketing, and many more will also be worked out throughout the initial year of operation. Funding as a Business Necessity Several factors necessitate finance for businesses. For example, an existing business may require additional funding for marketing and expansion, whereas a new business will require funding for all necessary tasks, including variable and fixed costs. Similar to the case of Gelian Restaurant, money is required to lease a space, acquire business permits and other licenses, renovate and improve the property, hire staff, and purchase raw materials.

On the contrary, without finance, a business plan cannot commence. Less funding makes cost-cutting imperative and might occasionally conflict with the initial business concept. Funding Sources and Requirements to Access Them The type of financial sources that may be accessible to finance the idea depends on the type of business. Although the Gelian Restaurant is a partnership, the two partners' savings are the primary funding source. As long as a partner is a legitimate organization member, there is no set criterion to access their contribution.

The company can also get finance from stock, venture capital, angel investors, and commercial lines of credit. Banks favor backing established businesses over new ventures. The two partners must provide collateral that the lender will utilize to guarantee the partnership's eligibility for a commercial bank loan. The bank will compare the value of the collateral to the amount that the two partners will be requesting. The soundness of the business idea is a key prerequisite for angel investors.

Angel investors will not hesitate to contribute their funds to the realization of the project if it has enormous promise in exchange for equity or convertible debt (Crick & Crick, 2018). In terms of venture capital, the partnership's readiness to adopt management advice from the venture capitalists is also a need, as is the concept's viability. The Associated Risks of Each Funding Source Each of the aforementioned funding options has benefits and drawbacks. Business loans can be a great resource for funding a company and fostering its expansion after the original startup stage. However, the facility has high-interest rates.

It can be dangerous, particularly if it is utilized to finance activities that have no direct connection to generating profits ("Small business cost of capital," n.d.). For instance, expenses related to leasing real estate, purchasing depreciable assets, or remodeling have no direct impact on sales. If a bank loan finances them, there is a higher chance of default. Bank loans and venture funding can occasionally be overbearing. The Selected Funding Sources Other financing options, including self-funding and angel investors, are low-risk and may be acceptable for Gelian Restaurant.

Angels are low-risk investors because they will invest without hesitation if they are convinced of a concept. Companies frequently rely on specialists for objective assessments of an idea's viability. On the contrary, they frequently separate themselves from management-level decision-making, allowing for autonomy. Self-funding also affords such independence. The sole objective of the firm is to generate profits for its shareholders.

Cost of Capital for Funding Sources Cost of capital refers to the cost of obtaining the financing for a business idea. The business has settled on two main funding sources for its short-term financing. These include self-funding and angel investors accredited by the Securities Exchange Commission (SEC) (Corporate Finance Institute 2020). The business will still rely on angel investors for its long-term funding. There is no cost attached to self-funding.

However, the cost associated with angel investors is discussed in three main ways: providing a loan that is later converted into an equity position, allocating stock, then deferring dividend payment, and lastly, getting an equity position directly (Sage US. n.d). Year Year 1 Year 2 Year 3 Year 4 Year 5 Capital Provided $250, 000 $250, 000 $250, 000 $150, 000 $150, 000 APRs 10% 10% 15% 15% 15% Cost of capital $40, 000 $40, 000 $40, 000 $40, 000 $40, 000 References Crick, J. M., & Crick, D. (2018). Angel investors’ predictive and control funding criteria. Journal of Research in Marketing and Entrepreneurship.

References

• Crick, J. M., & Crick, D. (2018). Angel investors’ predictive and control funding criteria. Journal of Research in Marketing and Entrepreneurship.
• Corporate Finance Institute. (2020, April 28). Angel investor - Learn about sources of angel investments. Corporate Finance Institute.
• Sage US. (n.d). How much does it cost to open a restaurant checklist | Small business cost of capital. The Balance Small Business.
• The small business cost of capital. (n.d). The Balance Small Business.
• Additional scholarly sources on entrepreneurial finance, startup funding strategies, and risk analysis in venture capital.
• Jones, M. (2019). Financial Management for Small Businesses. Routledge.
• Osterberg, P. (2020). Venture Capital and Private Equity: A Review of Literature. Business & Economics Journal.
• Kim, B. (2017). Entrepreneurial Finance: Strategy, Valuation, and Deal Structure. Wiley.
• Gompers, P., & Lerner, J. (2001). The Venture Capital Revolution. Journal of Economic Perspectives.
• Evans, D. S., & Jovanovic, B. (1989). An Estimated Model of Entrepreneurial Choice Under Liquidity Constraints. Journal of Political Economy.