Friday 6 December 2013

Finance and support for a SMALL business

10/10 Key term test - Sources of finance and support for a small start up business

  1. Owners fund - This is finance based on the owners personal savings and money
  2. Bank loan - medium term.  This needs to be applied for and repaid with interest in equal payments depending on the size of the loan.  This could be 12-60 months but could be requested in full at any stage if you miss a payment.
  3. Overdraft - short term loan - This is the bank giving you permission to withdraw more money from a current account than is deposited e,g if you have £100 in the account and a £500 overdraft you can withdraw up to six hundred pound from this account.
  4. Mortgage - long term loan usually used to pay for buildings, land or factories.  This property or land is always used as security for the loan.  If you cant repay the loan the bank or building society will repossess your property or land and sell it to pay the debt
  5. Trade credit - short term - this is a short term agreement when suppliers allow you 30, 60 or 90 days to pay for your materials that you have ordered to make your products and may be used to start a business
  6. Grants - This is finance that does not need to be repaid.  The government usually creates incentives to start up a business in parts of the country where unemployment is high.  The grant is designed to help with the start up costs in the hope that the company will grow and employ many workers 
  7. Family and friends - Some cultures do not wish to borrow money or repay it with interest.  Instead family members will lend the money and in return take a share of the business and its profits.
  8. Hire purchase - This is a method of buying something and paying for it in installments over a period of time.  This type of finance is usually used for purchasing vehicles such as cars or vans and does not require a lump sum to have the vehicle which otherwise may cost £20-40k.  A deposit of £4k and a monthly rental of £250 may be enough
  9. Retained profits - This is profits made by the business and kept on one side from previous years trading by the business.  If a business is in its first year it will not have any of this finance.  It is a cheap method of finance as the loan does not incur interest charges and may be better put to use by investing it into more materials or equipment.  It does need to work harder than sitting in a bank account accruing interest at 2-4%
  10. Venture capital - venture capital is finance from a private investor.  This could be a company or a successful entrepreneur who is interested in being a business angel in other companies.  The dragons den is a good example of these types on investors as they often lend a sum of money for a share of the business and its profits but only if they like the business idea 
The AQA Exam board requires you to ......

I've decided to use today to secure your FINANCE knowledge for PAPER !

Learning Outcome
By the end of this session you should know what is meant by:

  1. The SOURCES OF FINANCE for a new business pages 52-56 core text
  2. The SOURCES OF ADVICE and help for a new business pages 57-58
  3. The KEY FINANCIAL TERMS used in a new business pages 60-64
  4. how to calculate a businesses PROFIT & LOSS
First Task
Decide how you will underpin your knowledge for today's lesson - by doing so you are building your learning power.  You may choose to use a traditional text book as there is nothing wrong with that if your an auditory learner.  You might like to use the e-resources if your a visual learner or you might like to get a team of people together and collaborate your preparation and planning to create your best 9 mark article in the big task below if your a kinesthetic learner

Resources available 24/7
  • DoingBusinesswithMrT 
  • AQA Business Studies core text or the e-resources that you have now started using online by clicking the link below:
Second task - Paper 1 Revision
Testing your own knowledge. So you think your a Finance expert do you:

Homework - Revise like mad...

Using the e-resources and the blog www.doing revise for the REAL Paper 1 RESIT 10th January 1012

You can now identify what you don't know based on your summer exam result and your current performance in the last TWO mocks !

  • I will put all the KEY TERM TESTS on a separate page with the revision resources before Friday

  • I will also post refresher lessons and worksheets for you to do over the holiday to cover the topics we have not refreshed on.

  • Mr Coakley has also posted you an e-test based on a case study so that you can win itune vouchers

Good luck and Enjoy
Happy Wednesday and make me proud !
Mr T

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