Good Example Of Essay On Suitable Locations For The New Hotel

Type of paper: Essay

Topic: Business, Finance, Banking, Organization, Money, Hotels, Venture Capital, Customers

Pages: 8

Words: 2200

Published: 2020/12/20

Business Location and Sources of Finance

The operations of virtually all the businesses, the new Wivenhoe Hotel to be opened not an exception, are centralized within the set-up of the businesses' locations. Where to locate the hotel is a critical decision since this will have a significant impact on the business' prospects and progress.
On the other hand, after a business has kicked off, it grows to expand its scope of operations and the overall business time-to-time undertakings. Such expansion calls for a raised demand of finance to facilitate the whole process. For instance, Wivenhoe House Hotel's plan of expanding calls on the business to scrutinize the potentially available sources of finance it can exploit.
This research paper, therefore, is divided into two major sections. The first part looks into suitable locations for the new Wivenhoe Hotel in Central London. The second section give insights of the appropriate sources of finance that the Wivenhoe can explore to enable it execute its plan of expansion.

Choosing where to locate a hotel is an essential decision that is of great significance to the success of the business. For one to be able to choose an appropriate location precise planning and research is needed. The aspects of planning and research are fundamental in choosing a location because it enables the understanding of the targeted customers, the scoping competition from other hotels, staying in budget and more so having an informed understanding of the state laws and taxes (Nandan, 2013: 231).
The location for the hotel will be determined by the needs and wants of the business. Many businesses would go for a certain location because it provides exposure to its targeted category of customers. On the other hand, the location picked should be consistent with the image the business would want to keep. Acknowledging who you are as an organization and how the business would prefer the market to perceive it is an essential part of the business. The location choice can affect the brand image of an organization thus influence the audience, clients and prospects attitudes, and the public believe of the business from a visual perspective. In other words the location plays a major role in brand image building where the establishment of a unique mix brand of trust, optimism, confidence, leadership, balance, strength and dependability portrays an environment of professionalism and expertise to the customers.
The hotel should be located where there is local labor market with appropriate skilled are easily available. Various businesses rely highly on the highly skilled workforce. On the contrary, there are other organizations that require cheap and unskilled labor that makes them look for a location that is surrounded by people willing to accept low wages. The location of the hotel should be in a way that the available potential employee within the area can easily commute to and fro, from their workplace without being inconvenienced. Their safety is paramount to the organization.
However, competition is important for any business to excel. According to the argument raised by Reynolds, Williams, & Savage (2000: 302), the location of the hotel should considered the competing businesses around not the complementing ones because competition helps an organization to identify their strengths and weaknesses. The organization cannot be in a position to know all their weaknesses and strength until their competitor points it out. It also assists in narrowing a little focus and concentration on what one is good at and their competitor is not. However, the competition is not only for the good of the business but also good for the customers. This creates opportunity for the customers to pick and choose who gives them attention, time and value for their money. A competing environment or location automatically pushes an organization out of a comfort zone because of the quest to serve better. This helps the organization to strive to beat the competitor records. Competition is good and healthy for any business because it helps in identifying the potential threats to the business where learning from other competitors what works for them and what does not work for them (Longnecker, 2010: 71). This enables an organization to decipher what plans and strategies or services would work for them too.
Additionally, the location should allow plan for future growth. The business might be anticipating further growth and development thus the location should be able to provide the extra space for expansion of the business just in case the need arises. There is no business or organization that would be comfortable with the average performance, an average profit, and average customers among other factors, but they always give room and space for growth and development.
Proximity to suppliers is so important when choosing a location for a hotel because the distance covered between the two, the organization, and the suppliers can be burdensome to a point of increasing the cost production. The closer the supplier to the organization the lower the cost of production. The organization should be located in a position where the suppliers can easily reach them at short period.
The location should be secure and free from crime. Security and safety are important to both the employees in the organization and the organization itself. The employees should feel safe in and around the organization. Safety comes along with responsibility, the organization should take responsibility of ensuring that its environs is safe to its employees by ensuring that the location is crime free and if not they should take an initiative to curb crime. In order to allow its workers and customers to feel safe and confident to reach them (Nandan, 2013: 239).
When choosing a location for a hotel land availability is important. Land has increasingly become a scarce resource more so in the urban locations leading to raised rent price. In this case, the hotel should be located in a place that is easily accessible to its customers (Longnecker, 2010: 56-59). By ensuring that the transport system is effective in both areas within the organization and the roads leading to the organization. The hotel is also supposed to be located where there is access to excellent information technology links.
Every organization needs power supply to run their services and products; the hotel would require a place that has the power supply all the time due the services and products it offers to its customers. Power is essential in any organization. Power helps in so many ways an organization such as lighting, printing, running of machines and functioning of electrically driven equipment.
Government incentives is another important factor when choosing a location for a hotel. This is because it reduces the cost of locating in some areas (Reynolds, Williams & Savage, 2000: 97). The business location can tell whether the organization qualifies for a government economic business programs like state specific small business loans and other financial incentives. Apart from determining what the organization can afford one requires to consider a number of factors such as hidden costs, taxes, and minimum wage. The organization's management needs to know the importance of law and regulation imposed on business in a certain location before securing the place.

Sources of finance

The process of raising money for the launching of a new business venture has usually been a challenging issue for the entrepreneurs. The capital market fall and rise with the overall economic conditions, stock market, and investors fortunes. According to Dlabay (2007: 382), these troughs and swells in the availability of capital make the process of searching for financing be seen as a wild roller coaster ride.
The financing of the Wivenhoe House Hotel is the most vital aspect of its business especially in the context of meeting its expansion financial requirement. Getting the right source of financing make a healthy business all times with positive cash flows and consequently a profitable venture.
Nowadays the process of attracting capital for starting or expanding a business remains a challenging one. A good number of entrepreneurs, particularly those in fewer trendy industries or those just staring off, face difficulty in searching for outside sources of financing. Various banks shy away from giving loans to start-ups, while the venture capitalists are becoming more risk-averse, making a shift of their investments far from start-up businesses to more established ventures. Similarly, private investors are cautious, making the public stock offering to remain a viable alternative for mainly the promising companies with indisputable track records and fast- growth futures (Dransfield, 2004: 311). The consequence of this is a credit crunch for those entrepreneurs in search of small to moderate amount of capital for start-up purposes and expansion.
Despite all these challenges experienced by businesses looking for capital for a specific purpose, there are numerous sources of finance that Wivenhoe House Hotel has to explore in order to meet its expansion plan as this research paper highlights.
Issue of shares
The first way the Wivenhoe House Hotel can introduce funds to its corporate business is to issue more shares. This is usually a welcome addition to business funds and being also essential in giving additional strength to the business' balance sheet. However, the Wivenhoe business needs to consider where the finance is sourced from in order to subscribe for the new shares. If the initial proprietors of the business wish to subscribe for the shares, then he is likely to borrow some money. The shareholders in this position are usually at the limit of the funds they are eligible to borrow. Thus, it might be necessary to have those shares bought by a third party. This would mean a loss of either influence or control on the running process of the business (Bendrey, Hussey, West, Hussey & Bendrey, 2001: 87). It should be noted that an issue of shares in such a context may be a tough decision to be made by the business.
Venture capital
The business can approach venture capital houses for finance, but this would mean an issue of new shares. The main advantage of going to such institutions for finance is the amount of capital they are capable of introducing into the business. The British Private Equity and Venture Capital Association and offers important free publications on such crucial aspects of financing. Due to the size of their business, one can expect them to want sit on the Board of the business being financed. Apart from that they, avail their business expertise that helps in strengthening your business, even though this is inevitable but it comes with additional pressure for profits and growth.
On a smaller scale, there has been an introduction of varied tax efficient schemes by the government in order to enable the entrepreneurs to invest in growing businesses. The currently available schemes include the Seed Enterprise Investment (SEIS), Venture Capital Trusts (VCT) and the Enterprise Investment Scheme (EIS) (Dransfield, 2004: 54-56). For example, the SEIS scheme is structured in order to help small, early-stage businesses to increase their equity finance by provision of a varied scope of tax reliefs to the individual investors purchasing new shares in those companies. The SEIS scheme complements the EIS that offers tax reliefs to investors of higher-risk businesses.
Bank loans and overdrafts
The very first option Wivenhoe House Hotel would explore is to try obtaining the finance from its bank. Banks tend to be active and helpful in this market and seek out those businesses to lend money. Towards the provision of finance to businesses, banks in some scenarios prefer to give an overdraft or extends your limit instead of making a formal loan. Overdrafts are a flexible form of finance that can be settled easily by a business with a healthy income. In the course of the period the business finances the overdraft and an investment opportunity arises, then the business could look to extend the options on the overdraft facility to enable it finances the project.
A number of businesses acknowledge the advantage associated with fixed term loan. The regular payments that are to be made on the loan make cash flow budgeting and forecasting more certain. A term loan creates a commitment by the bank in the business of the entity for the entire term of the loan. The bank can call in an overdraft, but if only you fail in making payments on your loan is when the bank can take the loan away from you.
Savings and friends
When looking for finances for expansion of the business, a part from utilizing the monies the business has as savings, there is also an avenue of exploring the options of seeking it from the friends and relatives (Bendrey et al., 2001: 247). The tendency of approaching friends and relatives to help in financing the venture is a highly widespread practice. Showing them the business expansion plan and giving them time to think over it is very crucial for an appropriate decision-making. If the relatives and friends decide to invest in the venture, then put the terms of any form of agreement in writing.
Retained earnings and drawings
In general, the well-being of a business entity is in connection with the cash flow of the enterprise. When a proprietor would want more liquidity, then it is inevitable that he re-examines the amount of money they withdraw from the business for their personal use. In undertaking this re-examination, additional funds that the business earns can be retained for the future use.
Angel Investors
Angel investors are businesses and individuals that are interested in providing help to small businesses survive and grow. Their objective ranges beyond a mere focus on the economic returns. The Angels can be interested in the economic development of a particular geographical area where they are located.
Hire Purchase (HP)
This method is used in financing the purchase of equipment. The Wivenhoe House Hotel would buy equipment, but the payments for the capital and interest are spread over a stipulated period.
Factorizing would provide the business with finance against all the invoices that its customers have not paid yet. Usually, a business entity can receive up to 85% of the value of the invoice just immediately and the balance value (less costs) when the customer shall have paid (Dlabay, 2007: 304).
This method is used for financing equipment the business do not need to own. This is usually for the vehicle finance. The equipment is rented instead of being owned, and the rental payments are spread over the years. For the case of contract hire, there can also be the option to fix maintenance costs within the agreement stipulated.
Making the right choice in deciding on the location in which the Wivenhoe House Hotel plans to open a hotel in Central London is a fundamental aspect of the business' success. Therefore, it requires precise research and planning to enable informed decision making over a comprehensively considered location.
Every business require finance to establish and run its operations. No business functions without an adequate amount of funds for undertaking its various activities. Within the general context of business, funds are required for the running of the day-to-day operations (working capital requirement), purchase of fixed assets (fixed capital requirement), and for undertaking expansion and growth plans in a business organization. It is therefore very necessary that the business entity looks for efficient sources of finance to facilitate the operations and various undertakings of the business.
Bendrey, M., Hussey, R., West, C., Hussey, J., & Bendrey, M., 2001. Accounting and finance in business. London, Continuum.
Dransfield, R., 2004. Business for foundation degrees and higher awards. Oxford, Heinemann.
Dlabay, L. R., & Burrow, J., 2007. Business finance. Mason, Ohio: South Western.
Longenecker, J. G., 2010. Small business management: launching & growing entrepreneurial ventures. Australia, South-Western Cengage Learning.
Nandan, H., 2013. Fundamentals of entrepreneurship. Prentice-Hall Of India Pv.
Reynolds, W., Williams, A. J., & Savage, W., 2000. Your own business: a practical guide to success. South Melbourne, Nelson Thomson Learning.

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