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Finance 2.3 GCSE Business Studies Sources of Finance • An important part of expanding a small business into a larger one is finding the necessary finance to pay for it. • As a business grows, more sources of finance become available than start-up businesses. Finance is needed for.. • New property, such as offices, shops or factories • Machinery equipment and vehicles • Recruiting and training new employees • Advertising campaigns/Marketing Campaign • Raw materials • Developing new goods and services • Introducing new methods of production • To pay for the purchase of a whole new business - takeover • Capital Expenditure • Revenue Expenditure Borrowing Money Time Possible frame usage Short term Under 1 year Working capital Medium term 1-5 years Capital expenditure (vehicles, refurbishments etc) Long term Over 5 years Major capital expenditure (buildings, lands etc) Finance • Finance is an essential part of the success of any business • Expanding a business needs capital just as much as a start-up business Sources of Finance • Retained profit • Selling unwanted assets • New share issue • Loan • Mortgage • Venture Capital For each one, explain what it means and write one advantage and one disadvantage. What does the source of finance depend on?
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