Relating Of Finance Available For Marc Day And SwapgameCom - Essay Example

Relating Of Finance Available For Marc Day And Swapgame.Com Abstract This study was to it provides essential information, support and services that would offer advice and guidance relating to sources of finance available for both new and existing businesses. It was requested by Marc Day, the founder of SwapGame.com Limited, an internet-situated, games-letting payment service in 2008. This investigation was carried out by a consultant of Business Link, which is a government’s online resource offering advice, information and guidance service to businesses. The main finding was that, when starting a business the initial response was positive but private investors, and venture capital companies, needed to see extra experienced management in the company, thus not willing to help. However, when a business has established itself and had a recommendable repute they would be helpful. Introduction Background SwapGame is famed for being the first company in the UK to offer video game rental online, as well as give customers the prospect, to retain the games they hire for low pre-played price. It is currently also the pioneer company, to offer online trade-in service, offering gamers with a suitable means to trade in their unwanted games for instant credit, to reduce the price they pay for fresh games. Throughout the UK, Swap Game service has evolved in the past six, and still aspires to offer the unlimited best worth gaming, and service to its customers (Day, 2012, 1). Conversely, Business Link is an online resource for businesses and is government owned. It holds vital information, support and services for people’s businesses both larger and smaller ones, established and starting ones. It involves useful online paraphernalia such as calculators and best practical case studies and also broad support (www.businesslink.gov.uk, 2012, 1). Literature review Sources of finance There are several sources that Swap Game can use to raise funds for its starting up as well as its expansion. These sources can be either internal or external. Internal sources surface from retained profits while external sources are obtained from other outside sources. These sources include banks, owner’s savings, hire purchase, leasing and mortgaging when starting, in 2008, and the other forms such trade credits and sale and leaseback as well as grants for expansion, in 2010. Internal sources of finance The sources identified for 2008, are appropriate and easily achievable, as the funds such as savings come from the owner, and a viable business plan can earn the business loans from the banks, to start up. Others such as debt collection and sale of assets are also suitable means to raise funds to begin the swap game business. For expansion, in 2010 the sources identified are appropriate since they will need an established company so as to consider them for loans and funding. This includes companies such as Spong, game and eurogamer.net, who are partners and funders of SwapGame. Businesses need funds in order to operate. In some cases, the business cannot raise the required funds to satisfy it needs. It is crucial for businesses to have different sources, for raising income (Newman, 2010, 146). The advantage of using the internal sources of income is that, the business will be debt free, and will save money by avoiding the payment of interest required when external sources are used. Internal sources, however, are not readily available for the users, and in most cases, the funds raised internally are inadequate for the intended purpose. Internal sources also limit the business ion that the funds raised are not large amounts, which can satisfy the adequately cater for the business needs. In the case where internal finances are not sufficient, the business needs to employ external bodies to ensure that they rise the finances required (Barrow, 2011, 234). External sources of finance One way through which a business can raise finances externally is through the use of issuance of shares held by the company. The selling of the shares raises capital that is needed by the business. This process is advantageous since it also does not go into debt, and it raises capital using its resources. However, the process requires a company to fulfill certain requirements that may bar some businesses from using this source to raise finances. The process might also be unsuccessful if the business is unable to attract investors to purchase the shares. The business also losses some of its autonomy since it will be controlled partly by shareholders through the purchase of the shares (Barclay and Glasglow, 2008, 123). The business can also acquire loans from banks. This is a reliable method of raising finances since the banks have readily available finances to loan out to business. This, however, has its shortcomings in that high interest rates are charged for the loans given. The process is also disadvantageous, in that there are numerous requirements that require to be fulfilled at the banks request, for a business to be legible for the loans, hence locking out some businesses. There are cases where a business can be allowed to withdraw more than it deposits. This enables the business to acquire the much-needed income to satisfy its needs (Great Britain, 2011, 2). Businesses can also secure funding using mortgage loans. The loans can be given when a business uses the real properties as collateral. Since payment of mortgage is spread in installment, the business will use the property until it completes repaying, and own the asset. This is, however, dangerous in that the company risks losing their property if they fail to pay the loan. The company also faces high Interest rates attracted by the loans. Hire purchase is also another method that can be used by the business to raise funds. This is because it will make it possible for clients who cannot afford the goods at once to pay in installments. This method also comes with the requirement of the customer to pay interest, which is added income for the business. Leasing is also a viable way for rising funding for the business. This is because some equipment might be too expensive to purchase. The business might opt to lease this equipment saving tons in the process. This also saves the company the expenditure of maintaining the equipment used in the process (Groppelli & Nikbakht, 2006, 75). This is advantageous as it enables businesses to apply modern equipment immediately. Furthermore, payment is manageable as it is spread over time, which is beneficial for budgeting. However, this is disadvantageous due to its expensiveness as extra costs are incurred and the assets still remain the property of the leasing company. The sale of equipment and leaseback also raises some income for the business. This is because this will be through the finances raised from these actions. The sale of old equipment and leasing back equipment that has already been used realizes some income for the business. This is, however, disadvantageous since the company may have a shortage of equipment in the process. Trade credit is also another way through which a business can raise finances. In this process, a country can purchase items on credit, use them, and pay the credit accrued later. This will enable the business to raise funds through the sale of the goods and use them money to pay the creditors while at the same time realizing a profit. Venture capital is offered to a high-risk business, which has the qualities to have high potential, is funded by investors. The businesses funded are mostly start-ups. This is essential since most starting businesses do not have access to capital (Great Britain: H.M. Treasury, 2011, 122). Debt factoring also enables businesses to raise funds through the sale of the businesses invoices to third parties. This enables the business to raise additional income that will enable the business to satisfy its needs. A business may also use grants offered by different bodies to fund themselves. This is, however, not easy since the grants are not easily accessible for businesses. This is because the grants are not a guaranteed source of income since some businesses may be preferred over others. Importance of Financial Planning It is deemed that financial planning is the spinal column of a victorious business given that if a firm is administered without it, the firm will misplace its financial hold. Immediately, the firm runs with a concrete financial road plan it is guaranteed that the firm will be capable of directing a meritorious act, and training to create payroll or in the dominion of accounts billed. By identifying the profit of the previous year 2010, they were able to increase their purchases in 2011, consequently resulting in increased profits to £24, 056. Well, in contrast, even the mainly leading firm might fall in the event of making payroll. Consequently, the financial plan could be exceptionally obliging for SwapGame.com proprietors to endure the unpleasant instances, and stand out during the fruitful times. There are a number of vital points the SwapGame.com should critically watch, particularly when it is managing the accomplishment of the monetary field in their commerce. First off, the business ought to ever have encountered retreat and what the proprietor does in managing the setback is the answer that distinguishes them from other firms that fail. A high-quality and appropriate financial plan is practical to face meticulous circumstance like when SwapGame.com ought to deal with exceptional debt and increasing cost (Groppelli & Nikbakht, 2006, 72). So to foresee the state in advance, the business should organize the financial plan in advance. The financial accomplishment of a firm is settled on when it determines the goal and trails the play of a key function. The Trading Profit And Loss Accounts (TPNL) of 2010 for SwapGame.com were integral for estimation of the next years finances. For instance, the closing stock of 2010, which was the opening stock of 2011 helped in estimating purchases to be made for the subsequent year. SwapGame.com incurred more costs in the year 2011 as compared to the previous financial year. This is due to the increase in sales from £146, 000 in 2010 to £185,000 in 2011. Case study When establishing packaged software that is sold ‘off the- shelf’ on a universal trade, it is necessary to gather needs and chances from diverse market segments and employ this knowledge in the prioritization of needs for the subsequent software release. This paper tenders an industrial instance research where an allocated prioritization course is suggested, scrutinized and assessed (Needle, 2010, 248). The shareholders in the rudiments prioritization course comprise marketing offices dealt out around the globe. A major intention of the issued prioritization is to assemble and emphasize the distinctions and similarities in the obligation priorities of the diverse market sections. The estimation through questionnaires depicts that the decision makers in SwapGame.com, found the procedure to be useful (Johnson and Mclaughlin, 2006, 67). Information requirements of diverse decision makers In current years, the expressions knowledge shift and exchange, proof-based judgment-making and proof-informed business policy, have turned into being commonly utilized, but with modest agreement on their description, how they happen, or can be endorsed. In addition, noteworthy resources and moments are spent in the creation of investigation evidence, which if successfully relocated, could be employed to notify policy and performance decisions, and afterward improve sales and customer relations outcomes (Clarysse et al, 2008, 113). While the course is multifaceted and continuously changing, numerous generalizations relating to information shift and switch could be made. Straight passive schemes employed unaided are reasonably ineffective. Plans that are additionally interactive, and engage personal contact, demonstrate promising consequences, with a multiplicity of intended populations. Participation of decision-makers in the research course has been depicted to be connected with elevated levels of uptake. When the consequences or 'significances' of research outcome are customized to the precise needs of judgment-makers, then recognized uptake is advanced (Robinson, 2009, 90). SwapGame.com has diverse decision makers involved. This is because there are investment partners in the form of Spong, game and eurogamer.net. The performance of SwapGame will be instrumental in the decision taken by these partners. The recent profitable trend evident in the business will mostly likely elicit the partners to consider more investment into the business, since it has proved to be a profitable venture. If otherwise the investors would make the decision of investing elsewhere to avoid losses. Impact of Finance The effect of finance on monetary statements could be simply perceived that it is a financial account that denotes finance is the central basis for, which the statements are made. The SwapGame.com can never do anything devoid of money in a financial statement. It is comparable to the tender of the statement (Wahlen, Baginski and Bradshaw, 2008, 23). The net profit realized in the previous year was instrumental in ensuring that finances for acquiring the purchases of the subsequent year were available. This facilitated the growth of the business, since the additional stock resulted in more profits for that year. This is evident in the indication of the profit increase in the TPNL, whereby there was an increase of £ 10,476 in net profits. Table of contents Abstract Introduction Background Literature review Sources of finance Importance of Financial Planning Case Study Information requirements of diverse decision makers Impact of Finance List of references About Business Link. Business link. Web. Retrieved on 21 May 2012, From, < http://www.businesslink.gov.uk/static/html/detail.html> BARCLAY, L., & GLASGLOW, F. (2008). Small business finance all-in-one for dummies. Chichester, West Sussex, John Wiley & Sons. http://site.ebrary.com/id/10510520. BARROW, C. (2011), Starting a business for dummies. Chichester, West Sussex, John Wiley. CLARYSSE, B., LOCKETT, A., MUSTAR, P., & WRIGHT, M,(2008), Academic entrepreneurship in Europe. Cheltenham [u.a.], Edward Elgar. DAY, M,.About SwapGame. Make your Money go further this Christmas. Swapgame. Web. Retrieved on 21 May 2012, From, < http://www.swapgame.com/about/ > GREAT BRITAIN: H.M. TREASURY. Autumn statement 2011. [S.l.], Stationery Office Ltd. GREAT BRITAIN. (2011), Government assistance to industry: third report of session 2010-11, Vol. 1, Report, together with formal minutes, oral and written evidence. London, Stationery Office. GROPPELLI, A. A., & NIKBAKHT, E, (2006), Finance. Hauppauge, N.Y., Barron's. JOHNSON, C. J., & MCLAUGHLIN, J, (2006), Corporate finance and the securities laws. New York, NY, Aspen Publishers. NEEDLE, D. (2010), Business in context an introduction to business and its environment. Andover, South-Western Cengage Learning. NEWMAN, O. (2007). Online business sourcebook including online, CD-ROM and web products. Munchen, K.G. Saur. ROBINSON, T. R, (2009), International financial statement analysis workbook. Hoboken, N.J., John Wiley & Sons. WAHLEN, J. M., BAGINSKI, S. P., & BRADSHAW, M. T, (2008), Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective. Mason, OH, South-Western Cengage Learning. Read More