Starter task  What do you think are the most popular sources of finance for entrepreneurs starting up a business? Beauchamps High School

Answers:  Personal savings - 60%  Business loan from a bank - 10%  Personal credit cards – 10%  Personal assets (other than savings) – 7%  Personal home equity loan – 5%]  Loan from family and friends – 2%  Business loan from the government – 0.7%  Government guaranteed bank loan – 0.7%  Grant – 0.4% Beauchamps High School

GCSE Business Studies Obtaining Finance Beauchamps High School

Will be able to evaluate sources of finance dependant of business needs Evaluation ~ GCSE Grade A* Will be able to propose sources of finance for a business Synthesis ~ GCSE Grade A Will be able to analyse the suitability of the source of finance Analysis ~ GCSE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCSE Grade C Will be able to explain the different sources of finance available Comprehension ~ GCSE Grade D Will be able to recall the different sources of finance available Knowledge ~ GCSE Grade E

Obtaining Finance Beauchamps High School

Which sources of finance would be available to a business just setting up? Beauchamps High School Source of Finance Which of these would need to be paid back in the short term (less than one year) and which would be longer term?

Sources of Finance advice  financevid.shtml Beauchamps High School

Short Term Finance Beauchamps High School Theory Notes Sources of money for businesses that may have to be repaid within a year

Short Term Finance  Bank Overdraft – borrowing money from a bank by drawing more money than in account (interest is charged)  Trade Credit – suppliers give a period of time before they have to be paid (typically 30 days)  Factoring – business receives cash immediately for the invoices is has issued from a factor, e.g. a bank, rather than waiting 30 days Beauchamps High School Theory Notes

Long Term Finance Beauchamps High School Theory Notes Sources of money for businesses that are borrowed or invested typically for more than a year

Long Term Finance  Share Capital – monetary value of a company which belongs to shareholders  Venture Capitalist – professional investors who are willing to put money into a new company  Loans – borrowing a sum of money which has to be repaid with interest (1-5 years) Beauchamps High School Theory Notes

Long Term Finance  Retained Profit – profit which is kept back in the business and is reinvested  Leasing – renting equipment or premises  Grants – sum of money from the government which doesn’t have to be repaid Beauchamps High School Theory Notes

Against the Clock

Task Beauchamps High School

Task  Read the following scenarios and complete the table on the most suitable source(s) of finance for each scenario. For many, there is more than one source of finance available so be prepared to justify your answer.  Scenario 1: New Property  Mark Jennings is a plumber who has been working from home for the last 2 years. He would like to buy a property with plenty storage and office space.  Scenario 2: New Computer Network  Hinton Ltd specialises in producing designer t-shirts and has decided to up grade the current computer network within her offices in Manchester. She estimates that the cost of a new computer network will be £ and would like to upgrade this system every 3 years.  Scenario 3: Starting up a new Fruit and Vegetable shop  Mike Randall has just been made redundant from a major high retailer. He has received a redundancy payment of £ and would like to set up an organic fruit and vegetable shop in Didsbury. Beauchamps High School

Recall the different sources of finance available Explain the different sources of finance available Demonstrate understanding by using examples/cases Analyse the suitability of the source of finance Propose sources of finance for a business Evaluate sources of finance dependant of business needs Can you…..

Will be able to evaluate sources of finance dependant of business needs Evaluation ~ GCSE Grade A* Will be able to propose sources of finance for a business Synthesis ~ GCSE Grade A Will be able to analyse the suitability of the source of finance Analysis ~ GCSE Grade B Will be able to demonstrate understanding by using examples/cases Application ~ GCSE Grade C Will be able to explain the different sources of finance available Comprehension ~ GCSE Grade D Will be able to recall the different sources of finance available Knowledge ~ GCSE Grade E