1. Running Head: HND BUSINESS
Managing Financial Resources and Decisions
[Name of the Writer]
[Name of the Institution]

2. HND Business 2
Managing Financial Resources and Decisions
Introduction
Everyone has an ambition in their lives and individual struggles for pursing it and
creates their names. In the same way, I have also an ambition to run my own
Mexican Restaurant that will not only offer healthy food to eat but also at reasonable
prices. The initial investment will be £110,000. My core focus will be on minimizing
the investment cost.
A description of the business you are considering setting up.
An indication of how much money/investment you would need.
A discussion of the possible sources of finance available to a business
Description of the Business
Starting a restaurant business is not an easy task, as there are number of restaurants
that have been opened and these restaurants compete with each other incredibly. I
decided to run Mexican food restaurant which will add a different dishes of food to the
traditional foods menu and it will cater superior quality food. The restaurant business is
notoriously tough as it requires huge number of operations in it to be carried out. Initially
I will open a restaurant on rent. In the restaurant, I will do investments or preliminary
expenses in the following areas;

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Approximate costs
Item of expenditure Cost
Spending on specialist equipment: £35000
Spending on general business equipment: £20000
Spending on office fittings: £6330
Spending on security measures: £5610
Spending on signs: £6760
Spending on staff facilities and their salaries: £10000
Spending on vehicles: £33800
Other costs: £21000
Total expenditure: £138,500
The total Investments will be £150,000 approximately as it will cover the other costs
which may include the certification cost and getting license for running. The Working
capital will be the stocks needed by the business e.g. Raw Materials, Allowance for
amounts that will be owed by customers once sale of Mexican restaurant begins and
the Growth and development (e.g. extra investment in capacity). The possible sources
of finance available to a business are;
1. Personal Finance
2. Family and Friends Financial Support
3. Banks (Business Overdrafts, Term Loans)
4. Government grants and financial supports (www.grantfinder.co.uk)

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5. Loans from Business supporting organizations
6. Business Angels sources of Finance (www.businessangelnetwork.co.uk/
national-business-angels-network)
7. Prince’s Charities
8. Community Development Finance Association (CDFA -
www.findingfinance.org.uk/)
9. Business Financing Institutions (www.businessfinanceforyou.co.uk)
These are the sources of finance that are available for running Mexican restaurant.
Sources of finances and control of the Business
Sources of finance influence the business operations to a great extent. It is very
convenient to acquire the funds but once the business do not operate as per planning
the influence and the pressure of acquired resources increase to an alarming state. The
cost of funds and their burden incredibly disturb the business operations.
Fundamentally, business may acquire funds either from debt financing or equity
financing. The cost of equity financing is dividend payments which mean less retained
earnings. If a business goes for the option of debt financing the cost of debt financing
will be interest payment which means less operating income and high leverage.
Therefore, the control of the business will go into the hand of creditors. The correct mix
of the financial structure will be beneficial for the business. When start up businesses is
initiated, the absolute financial structure will result the success of the business.

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Advantages and disadvantages of the different sources of
finance
Personal Savings and Assets
Personal savings and other assets are a very great source of capital, because it
will not cost anything. Acquisitions cost are minimum. There will be no interest or
principal payments. The disadvantage of personal investment is that it may get dissolve.
Bank Loans
Bank loans can be another good source of funding for the small business. The
core advantage of borrowing is that it enables us to keep our cash on hand and use it
as operating capital for the down period of the business. If the situation of the business
is not good, bankruptcy can be declared for saving most personal assets. One of the
peak disadvantages to bank loans is that they are very tricky to obtain unless a small
business has a considerable track record or valuable collateral such as real estate. The
disadvantage of acquiring bank loan is interest payment which will increase the
leverage of the company and loan payment will become due unless its full amount is not
paid. Interest rate for bank loans is usually high for the start up business.

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Sources of finance for Mexican Restaurant
For my start up business, I have selected three sources of finances. These are
personal financing, acquiring bank loans and family and friend supports. As the cost of
financing is one of the major factors that hinders the business operations as the control
of the business is mainly affected. Therefore, I have decided to invest my own capital up
to fifty percent, as I have been collecting funds separately for this purpose. The
remaining fifty percent I have divided into two sections of twenty five percent each.
Twenty five percent I will gather by acquiring loan from banks and remaining twenty five
percent will be invested from one of my cousins who will be my partner in this business
opportunity.
Cost of Funds for Mexican Restaurant Business
The loan which I will be acquiring from bank, I will have to pay interest payment
on it. As long as I am a having a partner it will be a cost for me because I will have to
share the twenty percent of the profit with my cousin. My personal investment will also
be invested due to which I will have to face the opportunity cost.
Financial planning
Financial planning is a systematic approach in which financial manager plans for
maximizing the existing financial resources by managing the financial resources and
estimating the capital required. It is about framing the financial policies in relation to
procurement, investments and administration effectively and efficiently to achieve the
financial goals.
The major components include;
1. Financial Resources Management

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2. Application of Financial Tools
3. Setting of Financial goals
Significance of Financial Planning
Financial planning is one of the significant aspects for any of the businesses to
achieve its financial goals. Organizations place tremendous attention towards financial
planning because it gives a route map for attaining the financial objectives and securing
the business sustainability. Financial planning determines the capital requirement for
the business. It elaborates the appropriate capital structure and frames such effective
financial policies so that available resources can be utilized efficiently and effectively.
Financial planning assists in finding out the reasonable balance in between the
inflow and the outflow of the funds. Financial planning assists in making growth and
expansion plans which assist in sustaining the organization. Financial planning assists
in reducing the uncertainties which can become a hindrance for the growth of the
company.

8. HND Business 8
Decision Making in an Organization
Decision making in an organization is very common but the nature of decision
ensures the successfulness in an organization. Successful organization are very
concerned about its decision making approach. The cross functional department and
their contribution in the decision making is exceptionally significant. The upper
management and the middle management these are the two levels of management
which are highly participating in the decision making process.
The information that is needed by the upper and middle management can be
different for instance if the expansion of the organization is being decided either to
invest in the new strategic business unit or not, Information will be required accordingly.
Foe example the financial position of the company will be analyzed, nature of new
strategic Business unit will be analyzed, Viability of the projects will be affirmed etc.
The nature of decision will define the requirement of the information if the
decision is about something big, Management will be requiring the information
accordingly. Generally, Board members, Financial Heads, Marketing Heads, human
resources head and operations management heads are group together for arriving at
any of the decision which will be in favor of the organizations.
Impact of Sources of Finance on Profit and loss Account and Balance
Sheet

9. HND Business 9
The Sources of Finance which I selected for Mexican Restaurant management
are Personal Financing, acquiring of bank loan and the partners assistance. The impact
of acquiring bank loan will create a debt burden for the new start up business as interest
will be paid on these loans along with principle amount in a specified period of time. It
will decrease the profitability of the business due to interest payment. The bank loan will
increase the liabilities of the balance sheet. Personal Investment will strengthen the
financial position of the business as this will be the equity of the business. The another
source of finance is twenty five percent of the cousin’s capital which will again
strengthen the financial position of business but profit will be shared as per agreed
percentage therefore, it will decrease the retained earnings of the business. The bank
loans and the personal investments will give a great start to the business as this amount
will be capitalized by acquiring assets and later on generating the profits.

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Conclusion

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References
Barlow, S. E. and Dietz, W. H. (1998) Obesity evaluation and treatment: Expert
committee recommendations. Pediatrics vol. 102 pp. 222–228, Data retrieved
from http://pediatrics.aappublications.org/content/102/3/e29.full on December 6,
2012
http://www.investopedia.com/terms/f/financial_plan.asp