Retest Flashcards
Market Mapping
P-Product Innovation
N-Doesn’t mean there’s demand for that gap
Family and Friends
P-No interest costs
N-Owner looses independence
Peer-to-peer Funding
P- Interest rates lower than back loans
N- Difficult to find the funding
Overdraft
P- quick and easy- funds available immediately
N- debt can increase rapidly
Bank Loans
P- no additional fees
N- assets at risk
Trade Credit
P-Allows the business to potentially sell the products
N-May loose supplier if fail to pay the bill in time
Venture Capital
P-available for businesses which banks have deemed too risky for a bank loan
N-larger percentage often given away to secure investment risk
Share Capital
P-does not cost the business
N-owners share is reduced every time new investment is received
Leasing
P-only pay a small sum, funds can be used for other business needs
N-don’t own the asset, so have to keep paying
Grant
P- does not usually have to pay back any of the money
N- difficult to obtain as many businesses competing
Planning
P- Can gain finance, such as overdraft, to cover short fall.
Can help compare actual revenue, costs, profit, help find solutions and problems.
N- Not always reliable, assumptions
There may be unexpected costs in distribution or production
Break-Even
P- Predicts risk
Potential profitability
N- Only a forecast
Assumes all products made are sold
Increasing Profitability
- Increase the quantity of product sold or increase selling price.
- Decrease fixed costs by cutting management posts
Wide Span of Control
P- Employees will have a greater satisfaction
N-Add stress to manager
Narrow Span of Control
P-Closely supervised
N-Less motivated employees
