Studied by 1 person
3 ways one can internally raise finance
sale of assets
owner’s capital
retained profit
why is finance raised
expansion
business start-up
items of expenditure: revenue expenditure or capital expenditure
to repay debts
to buy stock
define capital expenditure
items that may be reused so last longer such a vehicles, cutting machines and factories
define revenue expenditure
goods/ services that can only be used once or used in the short term. this includes: wages, raw materials, and fuel.
define owner’s capital
money available within the business or generated by the business
example: personal savings,
definition of a business plan
a documented plan for the development of a business, giving details such as th products to be made, resources needed amd forecasts such as costs, revenues and cash flow
contents of a business plan
executive summary
elevator pitch
the business and its objectives
the business opportunity
owner’s background
the market
personnel
premises and equipment
costing and finance
financial forecasts
SWOT analysis
executive summary definition
overveiw of the business start up that describes the business oppertunity to be exploited,marketing, sales strategy, operations and finance
elevator pitch
2 minutes talk introducing the business
the business and its objectives
includes:
name of business
legal structure
objectives and aims
trading address
business opportunity
a clear explanation of what the business sells whether its a product or service
owner’s background
an introduction to the owners of the business which include their skills and characteristics required to run a business. investors use this to find out if the entrepeneur has the skills required to be succesfull
the market
describe the size and potential of the market including how the business will advertise
personelle
identifies and states the number of employees and the skills that they need
premises and equipment
what capital expenditure is required to run the business
costing and finnce
working out how much running the business will cost
financial forecasts
a forecast of how and when the start up will break even
SWOT analysis
S-strengths
W-weaknesses
O-opportunities
T-threats
why is a business plan important
to make owners have an objective and critical outlook on the business
provide a strategy for the development of the business
provide an action plan that identifies key tasks that must be undertaken and goals met
to prove to lenders that the owners is SMART
what is internal finance
money generated by the business or the current owners
owners capital
money privided by the owners in the business
advantages of owner’s capital
quick and convenient doesn't require borrowing money no interest payments to make
Doesn’t have to be repaid
No interest is payable
disadvantages of owner’s capital
the owner might not have enough savings or may need the cash for personal use once the money is gone, it's gone
There is a limit to the amount an owner can invest
advanatages of ratained profit
Doesn’t have to be repaid
No interest is payable
disadvantages of retained profit
Not available to a new business
Business may not make enough profit to plough back
advantages sales of assets
Good way to raise finance from an asset that is no longer needed
disadvantages of sale of assets
Some businesses are unlikely to have surplus assets to sell
Can be a slow method of raising finance
capital expenditure
spending on business resources that can be used repeatedly over a period of time
internal finance
money generated by the business or its owners
retained profit
profit after tax that is put back into the business
revenue expenditure
spending on business resources that have already been consumed or will be shortly
sale and leaseback
the practice of selling assets such as property or machinery and leasing them back from the buyer
Note 
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