Lesson 6 Sources of Finance PDF

Level 3 BTEC Foundation Diploma Business/Law/Finance Unit 3: Personal and Business Finance Lesson 6 – Learning Aim D Break Time – STARTS AT RETURN AT  Ground Rules Do not use your mobile phones unless you have been asked by a teacher Wear your lanyards at all times Learning Outco...

Level 3 BTEC Foundation Diploma Business/Law/Finance Unit 3: Personal and Business Finance Lesson 6 – Learning Aim D Break Time – STARTS AT RETURN AT  Ground Rules Do not use your mobile phones unless you have been asked by a teacher Wear your lanyards at all times Learning Outcomes By the end of this session, you will be able to…..  Explain the features associated with a variety of ‘sources of finance’.  Analyse the benefits and limitations associated with each ‘source of finance’. ACTIVITY Note down as many sources of business finance as you can think of Sources of finance  Sources of finance are the options available to a business when seeking to raise funds to support future business actions  For a start-up business this might be raising sufficient capital to establish the business  For an established business this might be to fund growth or implement a new strategy e.g., relocation  Sources of finance can be:  Internal i.e., from within the business e.g., retained profit  External i.e., from outside of the business e.g., loans External finance External finance is capital raised from outside of the business How to assess the source of finance Be more C.A.A.T C – Cost – how much does it cost to borrow the finance? A – Availability – how much money can be drawn from this source? A – Advice – do you receive any advice when obtaining the finance T – Time – how much time does it take to apply and secure the finance ACTIVITY 4  List the different types or sources of finance that there are.  Which of your sources of finance are Internal and External – make a further list to split them into these categories.  List for all sources of business finance, then for each:  Advantages of each  Disadvantages of each  Short-term source of finance or Long-term source of finance Activity Activity The Big Widget Company can produce 1.5m widgets per day. They employ 300 people in the office and production line. The business is currently owned by the two people that started the business. They have received an order for 2m extra widgets, but to be able to handle with increase in production the company will need to expand. The decision is made to buy the warehouse next door, fit it out with the machinery needed and produce the extra widgets. Which sources of finance are going to be the best way for the Big Widget Company to fund this expansion and why? ACTIVITY Activity COMPLETE SARAH AND JACK'S SOURCES OF FINANCE ACTIVITY ACTIVITY  You decide that you are going to put your business knowledge to practical use by starting your own business.  You decide to print customised T-shirts and hoodies. People can send you a design. You print the design, iron the print onto the number of t-shirts or hoodies they require. After carrying out some research you work out your need the following:  Transfer printer - £1,500  Transfers - £500 per 10,00  Packaging: - £250 per 15,000 bags  Iron - £20  Business Insurance for van - £750  Van - £800  Suggest the best ways for you to finance your business (hint – work out how much money you need and how long you need it for. Also, you can choose more than one option) Learning Outcomes  By the end of this session you will be able to…..  Explainand provide examples of Capital Expenditure and Revenue Expenditure.  Explain the features associated with a variety of ‘sources of finance’.  Analyse the benefits and limitations associated with each ‘source of finance’.