No any new venture could come to a realization without funding. The same thing applies when a new venture wants to survive; without funding, it is hopeless. Funding is the most important thing when it comes to the realization of a new venture. Without funding, how a business is going to run? This is the reason why funding is sacredly important for an entrepreneur to start up a new venture. How are they going to get the funding? and where are they going to get the funding from? are basically the questions they may asked. Le CruiseTM as a new business venture also needs to think carefully and consider the appropriate funding. There is a need for grants from the government, as well as the importance of partnerships in building the business. Expansion plan is also one of the critical considerations for a business to grow one step further. Besides, exit strategy also very important to be considered to give the assurance for the stakeholders.
Sources of Funding
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Basically, there are many sources of funding (Kaplan, 2001 and Barringer & Ireland, 2007):
-Sources of Funding-
The suitable sources of funding for Le CruiseTM could be from business angels and through bootstrapping. Business angels are those private investors who invested their own money directly in the start up phase of a new business venture (Kaplan, 2001). Business angels are typically those people who have high income and wealthy, well educated, and also have a success experiences as entrepreneurs. They are also willing to invest for a small amount only. But the thing is that it is hard to find business angels because most of them remain unknown. Usually people will look for business angels through referrals (Barringer & Ireland, 2007). Business angels are always the best option for a new starter / entrepreneur in the early stage of creating a new business venture. For the investments they make, business angels usually want a return in term of equity stake but some of them still prefer to get a seat in as one of board members (Kaplan, 2001). In Le CruiseTM case, a business angel can get as much as 35 percent per year in return for an investment of S$ 1.5 million they make, with the liquidity event of 5 years. As reported by a local newspaper, The Straits Times, Singapore's Minister of State for Trade and Industry, Lee Yi Shyan, point out to the emerging pool of both rich people and innovative organizations in Asia, and that the conventional investors of family, friends and fools can no longer supporting in today's business world (Li, 2010). In Singapore there is Business Angel Networks, South East Asia (BANSEA) who promote development of the community of business angels in Asia (Leong, 2006). Furthermore, Singaporean business angels tend to invest more often in the retail and hospitality industries (Singapore Angel Investors, 2009). Business angels are the very first option that will come out when it comes to funding matter (Singh, 2007). Singh (2007) argues that 'every penny is counted, so it is important to treat every dollar you raise as your own'. The other source of funding is through bootstrapping. It is a way of starting a business with a little funding by avoiding external financing to get the things done (Gianforte and Gibson, 2005). Bootstrapping can be done by buying a used thing instead of getting a new one. As the main asset of Le CruiseTM, the cruise bought from Poland that is going to be use for the operation is used before, so that the company can get it with a lower price. One of the motives people chose bootstrapping over the other sources of funding is because bootstrapping needs lower costs (Landström et al, 2007).
Access to Grants
Singapore Government provides grants to support many sectors of Singapore industry. The company, Le CruiseTM, will be able to apply for the grants as this sector of industry is continuously growing. Le CruiseTM, which runs in Food & Beverages sector, is possible to access these grants below:
Food & Beverages Capability Development Programme (CDP)
This grant launched in March 2007 by SPRING Agency Singapore, with the S$ 12 million allocated funds, for the small and medium enterprises (SMEs) in the Food & Beverages (F&B) sector with 30% - 100% of local shareholding. This grant aimed to encourage the growth of new and original F&B concepts, products and processes essential to Singapore's mission to become a culinary center in the region, and also to develop the capabilities of small and medium enterprises (SMEs) in the F&B sector which will increase the levels of efficiency and services. The grants are used for the innovation projects which engage developing new and innovative food packaging, one-of-a-kind restaurants and world-class food concepts. Up to 70% of the qualifying costsÂ for enterprise-level projects (Singapore Government, 2007).
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Local Enterprise and Association Development (LEAD)
This grant launched in November 2005 by SPRING Agency Singapore supported by International Enterprise (IE) Singapore and Restaurant Association of Singapore. With the aim to give fund and assists the industry associations who lead to board on projects which will give significant benefits for the industry as a whole. As much as S$50 million has been allocated to support the projects lead by industry associations. The fund can be used to develop well-trained workforce. Moreover, Restaurant Association of Singapore has built the Singapore Culinary Institute which will develop training programs for F&B sector. This will also help to elevate the image of the F&B industry and attract more people to enter the industry. The grant aimed to increase the capabilities of F&B businesses by strengthening the business and management capabilities with the usage of IT, branding, franchising and internationalization (Singapore Government, 2005).
Customer-Centric Initiative (CCI)
The grant launched in June 2007, to encourage businesses in the industry to increase their service quality. It is a part of the F&B Capability Development Programme (CDP).
The initiators are the SPRING Agency Singapore and also National Trade Union Congress (NTUC). There are many supporter companies, such as Singapore Workforce Development Agency, Singapore Tourism Board, Singapore National Employers Federation, and also the Restaurant Association of Singapore. The aims of this grant are basically to improve service quality, customer experience, and also the satisfaction of customer. All r
egistered F&B businesses are welcome to this grant, especially companies who need a Singapore Service Class certification. Up to 70% of the qualifying costs located for this program (Singapore Government, 2007).
The company has an expansion plan which is going to Indonesia, specifically to Batam Island. The expansion plan is expected to come to its realization in the next 3 years. The considerations here are because Batam located near Singapore, which is the main hub of the business, so it is easier to control the operation. In addition, Batam is one of Indonesia's areas which are rich and famous for its seafood. So, it is possible for the business to operate there. People can find seafood restaurants, stalls, even street vendors at every corner, which is why Batam Island has been considered as the ultimate seafood heaven for some tourists (Batam Island Restaurants, 2010).
The other consideration is due to Indonesia's Rupiah currency, which is cheaper than Singapore's Dollar; the operating costs in Batam will be lower. With the strategic location, Batam Island offers cheap land labor, and low building costs (About Batam, 2009). For the pricing matter, the company will offer below Singapore price for local people, but still the company will make money from the pricing strategy. So, for its expansion plan, Batam Island is the best choice to enter.
As explained in the business model, the company builds networks with several overseas companies which also provide the same dinner cruise service, for example: Tristar Floating Restaurant Co., Ltd. in Thailand, Watertours in Hong Kong, and also with Danga Cruise 8 in Johor Bahru, Malaysia. The partnerships are also with the suppliers where the company gets the seafood from including the other ingredients, and also the fuel used for the cruise.
The partnerships will continue grow as long as the company expand its business. For example, with the expansion plan to another country, the company may consider to partner with local company to operate its business. Le CruiseTM has an expansion plan to Batam Island Indonesia which is expected to come to a realization in the next 3 years. With this new place, the company should seek for new partnership with local company to provide the seafood, and the other ingredients, and also the fuel. For the seafood supplier, the company may partner with Nagoya Fish Centre Batam. While for the fuel, the company may consider partnership with PT. Pertamina.
There are various exit strategy can be considered for a business. For example, merger, end of the term (termination), sale or purchase of assets, consolidation, takeovers, dissolution by shareholders, dissolution by creditors, and dissolution by board of directors. Merger happens when two company's boards agree to fuse one business unit into the other, and so the company that is integrated into the other ceases to exist.
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End of the term or termination is typically triggered when a specific period of time has over and done or a particular event realized. The event could also be a combination of factors such as certain profits achieved, market share gained, products developed, agreement attained with customer, or many other possibilities. Sale or purchase of assets happens when the assets of a joint venture are sold to another company or to individuals. Consolidation is basically similar to merger, when two or more existing organizations unite and form a new organization, but the original corporations cease to exist as the new corporation acquires the assets, rights, benefits, obligations, and liabilities of the original corporations. Takeovers happen if the stock of the joint venture is publicly traded; it is possible that the corporation could be taken over by an individual, a group of individuals, another corporation, or just about any other legal entity that decides to target your corporation. Takeovers can be advantageous to the existing shareholders, especially if the investors looking to take control are willing to pay a premium for the stock. Dissolution by shareholders can be done any time by any shareholder, especially if the shareholders cannot reach an agreement on anything or hopelessly deadlocked on a particularly critical organizational issue. Dissolution by creditors can be done by petition to the court to dissolve the corporation, especially if it is determined that the corporation is insolvent. Dissolution by the board of directors can be a resolution from the board of directors; however, it has to be approved by the stockholders (Wallace, 2004).
For Le CruiseTM, the appropriate exit strategy is takeovers, because the funding source is basically from business angels. As mentioned above, takeovers can be advantageous for the shareholders, especially when the investors are looking to take control and willing to pay a premium for the stock offered.
No any new venture could come to a realization without funding. The same thing applies when a new venture wants to survive. As the source of funding, business angels are the very first option that will come out when it comes to funding matter. Besides, the company has an expansion plan which is going to Indonesia, specifically to Batam Island. And the partnerships will continue grow as long as the company expand its business. The appropriate exit strategy is takeovers, because the funding source is basically from business angels. It is advantageous for the stakeholders especially when the investors are looking to take control and willing to pay a premium for the stock offered.