topic 2.3.1

Question 1

What is a business plan?

Answer 1

a written document outlining a companys strategy

Question 2

What is the relevance of a business plan?

Answer 2

helps secure investments

provides a strategic roadmap

helps entrepreneurs identify risks and plan for challanges

helps manage cash flow and financial forecasting

Question 3

What are examples of internal finance?

Answer 3

owners captial

retained profit

sale of assets

Question 4

What do each of the internal finances mean?

Answer 4

owners captial - entrepreneurs invest their own money into the business

retained profit - profits that are reinvested into the business rather than taken as dividends.

sale of assets - selling unneeded business assets

Question 5

What are examples of external finance?

Answer 5

family and friends

bank loans

crowd funding

overdrafts

trade credit

Question 6

What do each of the external finances mean?

Answer 6

family and friends - Private loans or investments from relatives

bank loans - Borrowed money repaid with interest

crowd funding - Raising money from a large number of small investors

overdrafts - Short-term borrowing from a bank

trade credit - Buying goods/services on credit from suppliers

Question 7

What are the different forms of business and their meaning?

Answer 7

sole trader - one person business

Partnership - two or more people run a business together

private limited company - a company owned by shareholders

Question 8

what is public limited company?

Answer 8

Shares are traded on the stock market

Question 9

What is unlimited liability?

Answer 9

A business owner is personally responsible for all debts. If the business cannot pay its debts

Question 10

What is limited liability?

Answer 10

a business owner’s personal assets are protected if the business fails