Unit1-Finance Flashcards
Why does need businesses need to raise finance?
To purchase a range of items that are essential if it’s able to start trading
What sources of finance are available for new businesses (4)
Government grants Selling shares Owner's fund Overdraft Bank loan loans from family and friends
Typically how will and an entrepreneur need to spend moneyin order to start a business
Renting or buying a building Advertising the business Stock of raw materials Vehicles Equipment and machinery
What is an owners find?
It is money put into a business space owners all Owner
What is an advantage using owners fund ?
The business does not have to pay any interest on it
What is a bank loan and when would it be given ?
A bank loan involves a bank giving a business with a good business idea a a large sum of money in return for the business agreeing to repay the amount in instalments over the next few
What are the disadvantages of having a bank loan?
The business will also be charged interest on the loan this is an extra payment the borrower has to make to the bank and allows the bank to make a profit on it
What is a mortgage?
Mortgages or loans from banks and building societies that are used to buy land and buildings such as offices and shops
What will happen if the business fails to make repayments on the mortgage?
The bank or building society also the building on land to the game its money
What is an overdraft?
And overdrafts gives Entriken now and businesses the right to Borrow variable amounts of money up to an agreed limit
What is the disadvantages of having an overdraft?
becomes a disadvantages in new businesses the bank may not agree to grant a new business an overdraft if it does save the rate of interest will be high making this an expensive sources of finance
What is the advantage of having a loan from family and friends
Because it’s easy to arrange and often the money will be level free of interest payment
What are the disadvantages of borrowing loans from family and friends
Family and find my not be able to lend a enough money on may need to have it returned sadly even the business short of finance
What advice and guidance will banks give to business ?
- helps with writing business plan
- trade online
- how to find suitable building
Where can entrepreneurs go to recieve help for advice
Accountants
Solicitors
What is a source of finance ?
Bank loans
Banks will only give entrepreneurs money if they have a good business idea
Owners fund ?
Money put into a business by its owner
What is a morgage ?
Are loans from banks and building societies that are used to buy land and building such as offices and shop
What is the key financial terms ?
Price
Sales
Revenue
Costs
What is the importance of price ?
Price is the Amount a business askes a customer to pay for a single shop
How will the entrepreneur guide price by?
The price set by other similar business
How much it costs to produce the good or service that the business sells
What is revenue?
Is the income that a firm receives from Selling it’s goods or services
How do you work out revenue?
Revenue = selling price x sales of the no. Of product sold
How do you work out the total cost?
Total cost= fix costs +variable cost
