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Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 6 A - 2021
Question 6 A
Read the information supplied and answer the questions which follow. Gym Culture Dan used a bank loan to finance the setting up of a gym near a local university in... show full transcript
Worked Solution & Example Answer:Read the information supplied and answer the questions which follow - Leaving Cert Business - Question 6 A - 2021
Step 1
What is a niche market?
Answer
A niche market is a small specialized segment of a larger market for a product or service. It focuses on a specific audience that is not served by major suppliers. In the context of Gym Culture:
- Dan's gym offers buggy bootcamp classes designed specifically for parents with newborns, which is a unique offering not widely available.
- Additionally, Gym Culture runs specialized classes aimed at individuals preparing for significant life events, such as weddings. These classes cater specifically to the needs of this demographic.
Step 2
Outline the factors Dan's bank would consider before granting a loan application.
Answer
Several key factors would be considered by the bank:
-
Creditworthiness: The bank will assess Dan's credit history and previous loan repayment records. A strong repayment history will positively affect his loan application.
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Ability/Capacity to Repay the Loan/Business Plan: Dan will need to present a comprehensive business plan. This plan should outline his operational strategies and expected profit trends, encompassing aspects like profitability and liquidity.
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Amount/Purpose of the Loan/Time Period for the Loan: The bank will evaluate the size of the loan request. Larger loans pose greater risks for the bank in case of default. Understanding the purpose of the loan—whether it's for expansion or operating capital—is crucial.
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Availability of Security: The bank will require collateral to secure the loan. In case of default, the bank should have a means to recover its investment, such as premises or other valuable assets.
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Level of Own Investment/Grants: The bank may also consider the amount of personal investment Dan is putting into the business as well as any grants or external funding sources.