Builders Trade Center

Venture capitals, business angels and grants are possible external sources of finance that BTC may wish to consider. Venture capital involves specialist companies investing a minimum of i?? 500,000 in small companies, the advantage to the small company is that such a large amount of funding has been received, however the larger firm would expect to gain some control over the business, and this could mean that the owners of BTC lose control over the business. Another similar sort of financing where business people give advice and invest in small businesses could fund the company for growth is called business angles.

There is a network of business angels who want to invest in small firms. They have the same advantages and disadvantages as venture capital. Grants schemes can provide small firms, like BTC, with some finance. The advantage is that because it is a grant it does not have to be paid back however not every firm can apply for grants and the amount you get is generally low. To receive a grant the company has to go through strict criteria so therefore BTC should not totally rely on grants. BTC could also raise finance by making deals with their suppliers.

They could ask suppliers for a reduction in price of the stock they buy for a short term, as it could lead to an increase in the amount of sales and therefore increasing the demand of the supplier's products. However, the chance of a supplier reducing its price is very unlikely as it could cause conflict among other businesses that use the same supplier. Another way of generating funds is to delay payments to suppliers and creditors. The business will have to agree trade credit terms before hand to achieve this.

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The advantage a business will have is that it does not have to pay its creditors until a later date, and consequently it will have more funds available which it could use for growth; however the credit has to be paid even at a later date which could be a problem if the company has already spent the money. In conclusion, I think, for BTC to be more successful it will have to continue to grow. They have achieved a good rate of growth over the past couple of years and their plans to open up another store does show their ambition to keep growing.

This is a positive step for BTC because a firm needs to keep competing to increase its market share. I think BTC should be aware of the problems they face if they start overtrading. I think BTC should go ahead with the purchase of a new store, because I believe they will be in a better position to talk to suppliers about reducing prices and even discuss longer trade credit. This would mean that they could pass these benefits on to their customers, which would mean that BTC's prices are more competitive and customers could have some credit. This would be a great opportunity for BTC to gain a competitive edge of rivals.

For future growth, BTC should start trading over the internet. By setting up a website, BTC could target potentially the whole of the UK. This would be cheaper and more realistic than setting up stores nationwide. The cost of setting a website and maintaining in very small compared to setting up stores nationwide. To maintain and compete in a highly competitive market where you have large enterprises like B&Q and Wickes, BTC will have to keep diversifying through internal expansion and maintain a competitive edge over its rivals. BTC has done this during its first two years of operating.

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