1. An important managerial responsibility is obtaining finance. All managers will need to bid for funds. Examples; An important managerial responsibility is obtaining finance. All managers will need to bid for funds. Examples; A course manager in a school or college will need funds to manage a course A course manager in a school or college will need funds to manage a course A production manager in a factory will need to bid buy new machinery, equipment and to purchase stocks of raw material A production manager in a factory will need to bid buy new machinery, equipment and to purchase stocks of raw material

2. Raising Money Office series 2 episode 5 Office series 2 episode 5

3. Money Task If you needed money how would you raise it for the following; If you needed money how would you raise it for the following; The cinema The cinema Trainers Trainers School Trip School Trip Can of Coke Can of Coke A Car A Car

4. Internal Sources of Finance Raising money within the business Raising money within the business Example, retained profits (operating profit minus (corporation tax + dividends)) Example, retained profits (operating profit minus (corporation tax + dividends)) Working Capital (money in bank, ST debtors) Working Capital (money in bank, ST debtors) Selling off fixed assets Selling off fixed assets

5. External sources of finance Available from; Individuals Individuals Organisations providing venture capital Organisations providing venture capital Banks and other financial institutions Banks and other financial institutions Suppliers Suppliers government government

6. Deciding on what types of finance to draw from, you need to consider The length of time for which they need the finance The length of time for which they need the finance The cost of raising the finance in one way rather than another The cost of raising the finance in one way rather than another

7. Owners Capital Raised from individual owners of the business Raised from individual owners of the business Generally the capital that is used at the start of a business Generally the capital that is used at the start of a business Shareholders Shareholders Consideration of dividend Consideration of dividend

8. Dragons Den Watch this clip and decide which party would be happier with the result of the decision Watch this clip and decide which party would be happier with the result of the decision

9. Venture Capital Venture capital companies provide funds for equity Venture capital companies provide funds for equity Quick and cheap way to raise funds Quick and cheap way to raise funds May lose control of the business May lose control of the business

10. Borrowing Bank loans Bank loans Debentures Debentures Bank overdrafts Bank overdrafts Hire purchase Hire purchase Leasing Leasing Mortgages Mortgages Suppliers Suppliers Factoring Factoring Government loans Government loans

11. Borrowing Task Fill out the grid provided Fill out the grid provided

12. ST vs LT sources of finance Long-term finance Long-term finance E.g. to purchase other businesses or buildings E.g. to purchase other businesses or buildings Medium-term finance Medium-term finance E.g. to update machinery, equipment, fittings, motor vehicles E.g. to update machinery, equipment, fittings, motor vehicles Short-term finance Short-term finance E.g. to buy new stocks, to pay wages etc E.g. to buy new stocks, to pay wages etc

13. ST vs LT sources of finance Match finance required to the time period Match finance required to the time period ST - debtors or factoring ST - debtors or factoring MT – loan MT – loan LT – mortgage, increase shareholding LT – mortgage, increase shareholding

14. You are the financial manager of an organisation that is opening a petrol station on a new city by-pass. Match the organisations financial needs with the possible sources of finance available Needs Needs Land and buildings £500,000 Land and buildings £500,000 Shop fittings £50,000 Shop fittings £50,000 Petrol pumps £100,000 Petrol pumps £100,000 Stocks of petrol and retail items £75,000 Stocks of petrol and retail items £75,000 Computer terminal £75,000 Computer terminal £75,000 First few weeks wages £8,000 First few weeks wages £8,000 Possible sources of finance Possible sources of finance Hire purchase or leasing Bank loan for two years Commercial mortgage Bank overdraft Trade credit Owners capital £100,000

15. Type of ownership and business decisions Different finance is used by different organisations Different finance is used by different organisations Some find it easier then others to raise finance Some find it easier then others to raise finance Example sole trader verses PLC Example sole trader verses PLC