2.1 raising finance
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18 Terms
what is internal finance
own business recources
what are the three sources of internal finance
owners capital
retained profit
sale of assets
what is capital expenditure -
spending that can be used time and time again - fixed assets
what is revenue expenditure
day to day costs - raw materials + wages
what are some external sources of finace
family and friends
banks
peer to peer lending
business angels
crowd funding
other businesses
government
which type of finance is best - what does it depends upon
external vs internal
amount of finance
intrest rates
flexibility
time period
what is limited liability
when shareholders are a separate legal identity from the business
what is unlimited liability
the business has no distinction between the owner and the business
adv and dis - limited liability
personal assets protection
easier to raise finance
less tax
complex to set up
legal requirements
public records
adv + dis - unlimited liability
full control
simple to set up
high risk
difficult to raise finance
what factors influence an appropriate choice of finance for a businesse
short term or long term
legal structure of the business
what is finance appropriate for limited liability companies
loans
share capital
business angels
what is finance appropriate for unlimited liability companies
peronal savins
retained profit
mortgages
crowd funding
bank overdraft
what is a business plan
a key document that outlines and shows how a business operates
why does a business need a business plan
potential investors
enables structured management - SMART objectives
employees aware of business direction
what is a cash flow forecast
inflows and outflows
why does a business use cash flow
avoid the possibility of holding too much cash - oppurtunity cost
avoid liquification
identify cash flow problems
what are the limitations of cash flow
only as good as the data
markets are dynamic - external factors may effect
may overstate business cost - allow for contingencies
Note 
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