Provides capital for start up

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The aim of my assignment is to find out whether there is a wide enough market to open a newsagents in Timperley, Manchester. I will carry out research in Timperley. I will do background information on the area and carry out a survey of the area. I will do research in finding out a suitable location for a shop that is possible to buy/rent. I will need to research the price of stock, the selling price of the stock and the demand for that product.

In Timperley there are already a newsagents, so I will have to be competitive or pick a location away from the existing newagents. I will analyse the information from my research and evaluate whether it will be a good location for a newsagents to be opened. I will then calculate the break-even point and estimate the monthly profit/loss.

Research Location I have found a shop on Wood Lane shops that has recently closed due to exhilaration of their lease; this shop used to be a newsagent and is located near two schools. Housing surrounds it, so the amount of customers will be a lot.

Ownership The type of ownership for my business will be a partnership. This is the most obvious choice as there will be two people involved. My business partner and me. A partnership can have between two and twenty partners. So I could expand further if needed. The ratio of ownership will be 60:40, me owning 60% and my business partner owning 40%. This means we will share business profit/loss to this ratio.

The problem is that it is unlimited liability, meaning if we go bankrupt then we will loose out private possessions. The only source of income is bank loans and internal income. Alternatively I could make it a public limited company (plc.) which has a bigger source of income, but this means less profit and less control. This will be a long-term aim for my company. A bank loan will be initially available to the business. This provides a lump sum that is repayable with monthly instalments, which would make setting up easier in the first two years.

A fixed interest rate will be supplied making the repayments more costly in the long-term, but provides capital for start up costs and will help with the initial losses. HSBC would offer a loan of 8,000 at 11.9% APR over a period of 36 months at 265.33 a month. Total repayment would be 9,551.88 meaning a long-term loss of 1,551.88. This is quite substantial, but allows for the business to be able to set up and market adequately. Security would have to be provided against the stock, so a security camera will need to be setup.

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