Intro to Finance

Starting a new business
Expanding the business (growth)
Resolving cash flow problems (working capital)
Addressing a huge order that needs to be made (over trading)
Handling situations where a customer has refused to pay for goods already delivered
Capital expenditure (e.g., buildings)
Revenue expenditure (e.g., wages, rent)
Covering costs such as premises, market research, product design, equipment & machinery, stock, and promotion

Need for Finance: Start-up businesses require finance to cover various expenses.
Premises: Purchase or rent of premises.
Market Research: Conducting market research to understand the target market.
Product Design: Designing the product or service.
Equipment & Machinery: Purchasing necessary equipment and machinery.
Stock: Procuring stock for sale.
Promotion: Advertising and promoting the business.
Challenges: New businesses often face challenges.
Low Revenue: Limited customers result in low revenue.
Payment Terms: Suppliers may demand upfront cash payments.
Working Capital: Many start-ups spend too much on $fixed assets$ and not enough on working capital.

Definition: Finance available for the day-to-day running of the business (e.g., paying wages, suppliers).

Cost Assessment: How much will it cost to get from the business idea to opening the doors on the first day of trading?
Running Costs: How much will the running costs be once the business is operating normally?
Revenue Expectation: How much revenue can you expect from the customers you serve?
Finance Needs: How much finance will the business need, and where should it come from?

Complexity: The complexity of the business makes it harder to predict costs and revenues.
Budgeting Systems: Need to use budgeting systems.
Sources of Finance: The available sources of finance may be different.
Amounts Required: The amounts of finance required may be considerably higher.

Internal Finance: Finance obtained from within the business itself.
External Finance: Finance obtained from sources outside and separate from the business.
Short-Term Finance: Finance used to support day-to-day operations.
Long-Term Finance: Finance that is normally available for more than a year, usually used to purchase long-term fixed assets, expand the business, or takeover another business.