Where are you going to source your finance? Two types of finance ◦ Internal ◦ External.
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Transcript of Where are you going to source your finance? Two types of finance ◦ Internal ◦ External.
Finance Plan
Where are you going to source your finance?
Two types of finance◦ Internal ◦ External
Sources of finance
Own resources – savings, redundancy money
Borrowing from friends and/or family◦ Think about whether or not they may want a part
of the business in return◦ Retained Profits once the business is up and
running and successful
Internal
Start-up loans or grants - Usually don’t have to pay back the grants but are specifically meant to initiate the business
Bank loans – repayable with interest sometimes set and sometimes negotiable
Bank overdrafts – not free money but in the short term can be the cheapest option, but the amount of overdraft will be down to negotiation with the bank.
Budgeting – describe Start up budgets and working capital, describe the different types of budgeting, from the master budget (looks at the business overall) to the operational budget (looks at the performance of different departments).
External
Break-even formula – discuss and explain◦ Fixed costs/(selling price-variable costs)
Margin of safety (MOS=actual sales in units – BEP in units)
Explain the limitations of Break-Even
Break-even forecasts
Balance Sheet
Project a balance sheet
Project a profit and loss account