Table of Contents
Start-up needs
My Transport and Logistics Company will provide courier service to our clients. Therefore, the company will require vast amount of initial capital to start. This will enable the company to meet its financial obligation before it takes off the ground. In most cases, the financial needs normally provide working capital for the company. It tremendously helps the company to be able to meet fixed and recurrent expenses. It includes, overcoming fuel cost, paying the workforce, paying licenses and saving some amount in case of future uncertainty. Also, my company will also require a specialist whose work will be to understand and predict future company needs. This will help my company to be able to take advantage of business expansion opportunities which is a long term plan for my business.
Transport and Logistics Company will involve Trucks that transport goods for our clients. Therefore, the company will require an ample space for parking our trucks and a special warehouse for storing cargo. This will provide efficiency when offering transport services for products like frozen foods, hazardous material (hazmat), general groceries, cereal products and others. The space for parking and warehouse should cover a large area of about 200m by 200m.The area should be away from busy town with good feeder roads for timely delivery of cargos. These area should be fenced all round with a wall and secured with an electric fence. In addition, the entry and exit points should be well secured with a guard and CCTV surveillance machine. Tight security will guarantee safety of the cargos for our clients and the company staff.
Our main supplier for trucks will be Mitsubishi Company. They have a long history of producing quality trucks and Lorries. Besides that, they are also very cheap compared with their competitors like Mercedes Benz. Therefore, establishing a long term partnership with them will be very significant for our company progress. Long term partnership will involve my company acquiring the trucks on credit then paying for them fully after a specific period of time. It will be very fundamental
Business financing
Obtaining the precious capital for financing the bank is usually very hard to find. Continuous effort to look for funding is necessary in most cases. When the sources of funding for the company are scarce, it can look outside and be able to locate entities that can fund its projects. The best funding of a business can be found from:
- Friends and family members:
On various occasions, some business can be lucky to find good friends and relatives that can get their company off the ground. Friends and Family are the most lenient investors to your company. This is because they usually don’t have payback period and high interest. Therefore, in my business, close allies can help me from getting my transport company off the ground.
- Bank loans:
Banks normally provide short and long-term loans. These loans act as finances to finance all asset needs which normally include working capital, real estate and equipment. It has to be noted that the banks normally require assurance of repayment that is fundamental before you can be able to secure a loan (Baker, & Martin, 2011). On that note, my collateral will be in form of personal assets and agreements that establishes financial relationship.
- Local and state economic development organization:
Development groups can be able to finance businesses at low interest rates. For instance, if you need $100,000, the development entity can lend you the amount with a fixed interest rate of 4% without seeking equity sharers or warrants. Because of the law interest rate, it is very easy for the start up business to pay back the loan. Approaching local and state development organization can improve financial capacity for my company.
- Credit supply
Suppliers can empower a business by continuous supply of materials even without sufficient money to pay for them at the moment. Therefore in this way, your financier’s do not determine your growth. You can as well grow your business by your suppliers through credit buying.
Financial ratios
Financial ratios in this regard can aid in assessing the performance of the business. It also provides alternative measures in improving the company performance by examining financial structure of the company. In this context, one way of analyzing the financial health of the company is achieved by closely looking at the financial Ratios. These financial ratios include:
Profitability ratios: This normally helps in evaluating financial viability of the business. This can be done through determining Net profit margin. It measures how much the company earns usually after tax relative to its sales. When the profit margin ratios are higher than its competitors it means that the business is more efficient, flexible thus it can take on new opportunities (Bodi & Kane, 2005).
By analyzing the operating margin of the company, it can assist me to determine the ability to expand business through the additional debt or other investment.
Return on Asset Ratios: this can be able to tell my company how it is utilizing essential company resources. The return on asset ratios can be determined by dividing net profit before taxes by the total assets (Kieso, & Weygandt, 2001). The numbers normally vary widely across various industries. When the firm has a high ROA, it means that they require minimal hard assets to operate. Capital intensive firms tend to have a low return on asset.
- Baker, H. K., & Martin, G. S. (2011). Capital structure & corporate financing decisions: Theory, evidence, and practice. Hoboken, NJ: John Wiley & Sons.
- Bodie, Z., & Kane, A. (2005). Cost accounting (6th ed.). Boston, Mass.: McGraw-Hill Irwin.
- Kieso, D., & Weygandt, J. (2001). Intermediate accounting (10th ed.). New York: Wiley.