Reference no: EM133333664

CASE SCENARIO - FINANCE / RAISING CAPITAL

In today's uncertain times, it is a challenge for small business to access finances from banks.

Jane and Jack have a long-standing tour company business based in Queensland. Due to COVID19, they lost a lot of revenue. Prior to COVID19, the business was running at a profit though after March 2020, they suffered a loss and previous lenders wouldn't advance further sums, while creditors were becoming impatient for payments. They believed there was a way forward, if only the immediate pressure could be relieved.

After negotiating with their bank manager, they secured a loan for $100,000 that could get them through the year. Importantly, it allowed them to consolidate the existing debts, and drastically reduced stress levels.

They also restructured the business; along with the injection of cash it has improved the outlook for Jane and Jack's company, providing borders remained open during the key holiday periods. They have a clear model, and a clear budget. As the focus in now on the future, rather than the calls from creditors, it has been great to see sales exceeding targets for the last months.

QUESTIONS

1. Discuss alternative types of funding and strategies that Jane and Jack could have explored. What should Jane and Jack look for when considering alternative finance?

2. COVID19 has impacted many businesses negatively due to borders closing and cities being in 'lock-down'. Though 2022 is a new year and now there are new variants with still the possibility of border shutdowns and COVID19's impact on business, Jane and Jack are know they need to re-visit their 2021 contingency plans to ensure their cash flow will not be interrupted. Discuss the various contingency possibilities they can have in 2022 so they do not have to seek alternative finance.