Business Plan: Hotel
Debt financing refers to any money that I would borrow for my startup business to operate. The money received from debt financing must be paid back to the lender at an interest. In my case, I have decided to take a loan from the bank since their interest rates and repayment periods are convenient for a starting business (Yu 2009). However, the loan that I would receive from the bank would not be sufficient for the smooth running of the business. Therefore, I have also decided to get equity financing by allowing people to invest their money into the business in exchange for ownership. From my assessments and research, I have realized equity financing is very important for new businesses especially in raising capital or offsetting loans and other existing debts. Therefore, I have decided to relinquish 65% of the business to shareholding (Longenecker 2006).
The loan that I will secure will be used stocking the hotel with the daily food requirements. I reached this decision since I would require the money received from the loan to be capable of producing profit for the hotel as well as the money for its repayment. As for the money that I would receive from equity financing, which will be from my family members, would be used to buy equipments required for accommodation in the hotel such as furniture. I will also use part of the money to buy a van that I would use for delivering food and beverages to customers’ homes and ferrying stuffs from the market.
The staff salaries and bills would majorly come from the sales, however, since the business is just starting up, I expect little from the sales and will therefore use part of the equity finance for settling the bills.
Reference:
Yu L., (2009), The International Hospitality Business: Management and Operations revised edition. London: Routledge.
Longenecker G. J., (2006), Small Business Management with Infotrac: An Entrepreneurial Emphasis: Volume 1 of Small Business Management: An Entrepreneurial Emphasis, Small Business Management: An Entrepreneurial Emphasis, 13 edition. Stamford, Connecticut: Cengage Learning.
