MLI506 Financial Strategies for Growth Assignment Sample

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Introduction - Key Insights into MLI506 Financial Strategies for Growth Assignment

Financial strategy refers to developing plans for attaining short and long term financial needs. These strategies help create a company’s vision and support the overall success of the business entity. Paulo wants to set up a soccer training program but is facing issues selecting the optimum business structure and finance sources. This report includes information regarding all the potential business structures and various financial sources to Paulo. It also highlights the benefits and limitations of each option to suggest the best choice. Students seeking expert assistance in such topics can rely on the Best Assignment Writing Help In UK, especially for assignments related to MLI506 Financial Strategies for Growth, to secure high-quality support and top grades.

Main Body - In-Depth Analysis of Finance Sources and Business Structures in MLI506 Financial Strategies for Growth

The main body explores key concepts of MLI506 Financial Strategies for Growth, detailing various funding sources and business structures. It evaluates their strengths and weaknesses to guide effective financial planning. This analysis helps students understand how to apply strategic finance principles for sustainable growth and success in real-world business scenarios.

Different types of available finance sources

A financial source refers to the various provisions through which organization’s fund requirement could be fulfilled. There are large numbers of sources that could be opted by Paulo for fulfilling the financial need for establishing soccer training program which are as follows:

Venture capitalist: This is the type of funding in which investors provide financial assistance to the firm that are having high growth prospect in the near future (Barauskaite and Streimikiene, 2021). This also involve towards providing technology assistance and managerial experience to the start-ups.

Crowdfunding: This is another method of raising fund which includes collecting money from the large number of people through online platform. This could be raised through various sources that include reward based crowd funding, peer to peer lending, profit sharing lending and hybrid model.

Personal saving: Under this, Paulo could use his own savings and retail earning for fulfilling the finance need to set-up training program for the children.

Grants: The Small grant program in UK provides the National lottery funding to each organization that promotes sports within the country (Different sources of finance, 2023). Through this Paulo could raise fund which amount to £300 to £1500.

Bank: This is another source of finance in which fund could be raised by taking loan form bank or any other financial institution.

Strengths and weaknesses of each financial source

The various benefits and limitation of the above mentioned financial sources are as follows:

Process to decide best source

Paulo should choose multiple sources of finance that includes the personal saving, bank loan and grant to raise fund for establishing the training program. For selecting the above sources, below mentioned process has been followed:

Determining the cost of fund: For identifying the best source, the cost of raising funds has been evaluated that helps in determining the efficiency of each source. In the venture capitalist, the cost of fund is 2% of annual profit which needs to be paid by Paulo. Such additional cost need not be paid in any other financial sources.

Determining liability: In this step, interest liability and obligation are evaluated that assists in identifying the impact of fund on the firm’s financial position (Longhurst et al, 2020). It has identified that bank loan creates interest liability of the business entity.

Identifying repayment duration: After this, the repayment date of the funds is also evaluated with the motive to evaluate the viability of the sources. It has been determined that fixed repayment date is provided in VC and crowd funding whereas others does not have fixed duration.

Estimating Dilution of power: This step includes identifying the dilution of control and ownership by the business entity. Venture capitalist generally owns 25% -30% firm’s equity that results in the dilution of control and ownership of the business entity.

Finial selection: Under this stage, decision regarding the sources of finances has been taken.

Different business structure

Business structure implies for the legal framework of the business entity that influences and impacts on day to day operation of the business. The three most common type of business structure are as follows:

Sole proprietorship: This is business structure in which an organization is owned, controlled and managed by a single individual. There is no distinction between the business owner and the company; it can be operating without any licence requirement.

Partnership: This is another legal structure in which more than two individual come together for carrying out business operation at a predetermined profit-sharing ratio (Different business structure, 2024). In this business structure, partners share the work, losses and all the responsibility.

Company: It is the business structure in which the business entity acts as the artificial person and it is formed by the group of individuals. It is the organization that has incorporated due to previous law or establish under the company’s Act.

Strengths and weaknesses of each business structure

Following are various benefits and limitation of the above mentioned business structure:

Process to decide best structure

According to the Paulo’s situation, sole proprietorship is the best and optimum legal structure that should be adopted by the Paulo. Following is the process that has been used to decide the legal structure for training program:

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Analyses of the liability: At the first step, the total liability of the owners has been evaluated for identifying the risk in business structure (Phadermrod, Crowder and Wills, 2019). It has been determined that liabilities of partners are unlimited under sole proprietorship and partnership whereas there is limited labiality in the company’s structure.

Determining control: In this stage, owner’s power in decision making has been evaluated. Under sole proprietorship, decision could be taken faster and there is no dilution of the power.

Evaluating profit: In sole proprietorship structure, all the profits are provided to owner whereas in other structure profit needs to be shared with the others members.

Capital access: This step involves determining the capital needs and access of the company. There is an effective access to capital as in sole proprietor business as Paulo will be able to get the bank loan and government grants.

Identifying Legal requirement: There is limited number of legal rules and regulation in sole trader structure that reduces the firm’s legal obligations. Large number of regulations needs to be followed while forming company.

Selecting structure: This is the last step which involves selecting the best structure.

Recommendations

• Paulo should select bank loan, personal saving and government grant as the sources of finance. After going through all the stages, it has identified that venture capitalists include dilution of firm‘s control and cost associated with the aspects related to fund raising. Moreover, crowd-funding did not ensure that finance needs could be fulfilled that result in not opting both these financial sources (Sadeghi, 2019). Bank loan provides flexibility of loan repayment and personal saving and grants does not include repayment.
• Sole proprietorship structure should be selected as it ensures effective access to capital and provides control over business operation.

Conclusion

By summing up the report on MLI506 Financial Strategies for Growth, it has been articulated that venture capitalists, crowdfunding, bank loans, and personal savings are various sources of finance that a business entity can use to meet its financial requirements. Sole trader, company, and partnership are crucial types of business structures. Paulo should opt for the sole trader structure, which helps in taking quick decisions and supports gaining high profits. Personal savings and bank loans should be used to finance the operation of the training program.

References

Books and Journals

• Barauskaite, G. and Streimikiene, D., 2021. Corporate social responsibility and financial performance of companies: The puzzle of concepts, definitions and assessment methods. Corporate Social Responsibility and Environmental Management, 28(1), pp.278-287.
• Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R. and Sabattin, J., 2020. Conceptual framework for the strategic management: a literature review—descriptive. Journal of engineering, 2020(1), p.6253013.
• Ipsen, C., van Veldhoven, M., Kirchner, K. and Hansen, J.P., 2021. Six key advantages and disadvantages of working from home in Europe during COVID-19. International journal of environmental research and public health, 18(4), p.1826.
• Longhurst, G.J., Stone, D.M., Dulohery, K., Scully, D., Campbell, T. and Smith, C.F., 2020. Strength, weakness, opportunity, threat (SWOT) analysis of the adaptations to anatomical education in the United Kingdom and Republic of Ireland in response to the Covid‐19 pandemic. Anatomical sciences education, 13(3), pp.301-311.
• Namugenyi, C., Nimmagadda, S.L. and Reiners, T., 2019. Design of a SWOT analysis model and its evaluation in diverse digital business ecosystem contexts. Procedia Computer Science, 159, pp.1145-1154.
• Phadermrod, B., Crowder, R.M. and Wills, G.B., 2019. Importance-performance analysis based SWOT analysis. International journal of information management, 44, pp.194-203.
• Sadeghi, M., 2019. A shift from classroom to distance learning: Advantages and limitations. International Journal of Research in English Education, 4(1), pp.80-88.

Online

• Different sources of finance. 2023. Online. Available through: < https://byjus.com/commerce/sources-of-business-finance/ >
• Different business structure. 2024. Online. Available through: < https://www.sba.gov/business-guide/launch-your-business/choose-business-structure>