A flying start - Question A
- Created by: Chiangy14
- Created on: 21-04-15 10:43
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- Investigate the possible sources of finance available to an entrepreneur planning a
business start-up that requires a large capital investment. (10 Marks)
- Internal sources of finance
- Savings
- Could use her inheretence of £675,000
- In addiation she has also been earning £50,000 per year salary as a pilot
- Less moeny is needed to be borrowed which helps her out during the quieter winter months
- Avoids giving away too much equity allowing sheena to meet her objective to be as indepeddent as possible
- Could use her inheretence of £675,000
- Profits
- Share issues
- Interest from savings and investments
- Friends and Family
- An agreed amount of funds to borrow from a family member
- Father cannot afford to lend her the entire start up capital
- No interest rate
- Means that there is another investor taking over key decisions
- More flexible about paying back the loan
- The only drawback is that she wants to be fully independent
- An agreed amount of funds to borrow from a family member
- Savings
- External sources of finance
- Grants
- Shares
- It is a private limited company so she can issues new shares
- Selling shares privetly to frineds or family could gain them the other 52% of capital
- Her father knows peopl that are willing to buy shares in the company
- If she sells all 52% of her shares to an invester she loses total control and may be forced into decision that she doesnt like
- Her father knows peopl that are willing to buy shares in the company
- Selling shares privetly to frineds or family could gain them the other 52% of capital
- It is a private limited company so she can issues new shares
- Venture Capatlists
- May be willing to invest in her business
- Given her exeperience in piloting and her business plan and location
- Her father might contact some of his wealthy business contacts
- Risk that selling her shares means she loses control of her business
- Her father might contact some of his wealthy business contacts
- Given her exeperience in piloting and her business plan and location
- May be willing to invest in her business
- Government Incentives
- Loans and mortages
- Bank loan
- An agreed amount borrowed from the bank and repaid with an agreed interest fee added
- This means that she can still keep control of her business
- Would create a drain on finances and lead to extra costs
- Would be a problem because of the month they start they wont receive very much income to start with
- Would create a drain on finances and lead to extra costs
- With low interest rates in the UK there is a potential to borrow form the bank
- This means that she can still keep control of her business
- An agreed amount borrowed from the bank and repaid with an agreed interest fee added
- Bank loan
- Internal sources of finance
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