Sources of Business Finance

Short-Term Methods

Sources of finance (e.g. banks, investors or suppliers) are ways that businesses can raise money to fund their operations and growth. Methods of finance are the ways that a source can offer finance. Some short-term methods of finance are:

Trade credit

Trade credit describes when firms pay suppliers at a later date. It involves buying something now and paying for it later.

Hire purchases

This is when a business buys something and instead of paying for it upfront pays for it in instalments.
- E.g. when PSG bought Kylian Mbappe from Monaco, they didn’t pay the whole amount at the time and instead completed the purchase in different stages.
- E.g. If a company bought machinery worth £1,000, a hire purchase scheme may allow them to pay £100 a month for 10 months rather than pay £1,000 up front.

Overdraft

This is when a bank lets a business spend more money than the amount of cash that they have in their current account.

Long-Term Methods of Finance

Businesses can use the capital (money) to initially start up, to fund new investments for growth or to support a business if it is struggling. Some long-term methods of finance are:

Retained profit

This is profit that the business has effectively saved whilst it has been operating.
Retained profit is a cheap source of finance because a business does not have to pay any interest.
Retained profit is limited, so a business can only spend profits that have been saved. It may not be enough to fund large long-term projects.

Personal savings

This is personal money that is invested by the owner of a company.
- It is most relevant for start-up companies, in which the entrepreneur has saved up to fund their business venture.
- A downside is that it can be very risky for an entrepreneur to put a significant amount of their personal savings into a business.

Venture capital

In venture capital, experienced business people with access to large amounts of capital offer investment for a portion of the company in return.
A downside to this is that the entrepreneur may lose some control of the business decisions.
Some venture capitalists encourage the businesses that they invest in to take a lot of risks, which can be good or very bad for the business.

Bank loans or mortgages

Bank loans and mortgages are very important for many businesses. A business borrows money from a bank and then pays interest on the money borrowed.
It is often harder for new businesses to get bank loans because banks see them as riskier.

Crowdfunding

Crowdfunding is often done over the internet. It involves encouraging investors (usually individuals) to put in small amounts of money into a specific business or venture.
The Oculus VR headset was initially crowdfunded by individuals who pledged (put in) $2.4m in 30 days.

1Exploring Business

2Marketing Campaigns

2.1Marketing

2.1.1Setting Marketing Objectives

2.1.2Customer Needs

2.1.3The Market

2.1.4Competition & The Market

2.1.5Consumer Behaviour

2.1.6Market Research

2.1.7Forms of Market Research

2.1.8Market Segmentation

2.1.9Cultural & Social Factors in Marketing

2.1.10Promotional Decisions 3

2.1.11Pricing Strategies

2.2Marketing Mix

2.2.1Marketing Mix

2.2.2Product Life Cycle

2.2.3Pricing Decisions & Price Skimming

2.2.4Pricing Decisions & Price Penetration

2.2.5Promotional Decisions

2.2.6Promotional Decisions 2

2.2.7Promotional Decisions 3

2.2.8Market Mapping

3Business Finance

3.1Sources of Finance

3.1.1Internal Finance

3.1.2External Finance

3.1.3External Finance 2

3.1.4Sources of Business Finance

3.2Financial Planning

3.2.1Revenue

3.2.2Costs

3.2.3Cash & Cash Flow

3.2.4Cash & Cash Flow 2

3.2.5Break-Even Analysis

3.2.6Profits

3.3Financial Statements

3.3.1Balance Sheets

3.3.2Income Statements

3.3.3Liquidity

4International Business

4.1Globalisation

4.1.1Growing Economies

4.1.2Specialisation & Trade

4.2International Business

4.2.1Internationalisation

4.2.2International Trade

4.2.3MNCS

4.2.4Conditions that Prompt Trade

4.2.5Assessment of a Country

4.3International Economic Environment

4.3.1Globalisation

4.3.2Factors Contributing to Globalisation

4.3.3Protectionism

4.3.4The EU & the WTO

4.3.5Trading Blocs

4.4Factors Affecting International Business

4.4.1Global Competitiveness

4.4.2Ethics of Global Business

4.4.3Controlling MNCs

4.4.4Cultural & Social Factors in Marketing

5Principles of Management

5.1Management & Leadership

5.1.1Managers

5.1.2Management Theories

5.1.3Managing Organisational Culture

5.1.4Management Style

5.2Theories of Motivation

5.2.1Motivating & Engaging Employees

5.2.2Taylor's Theory

5.2.3Mayo's Theory

5.2.4Maslow's Theory

5.2.5Herzberg's Theory

5.3Managing Change

5.3.1Change

5.3.2Key Factors in Change

5.3.3Scenario Planning

5.3.4Managing Change

5.3.5Managing Strategic Implementation

6Business Decision Making

6.1Business Principles & Practices

6.1.1Influences in External Environments

6.1.2Product Decisions

6.1.3Competitive Environment

6.1.4Corporate Strategy

6.1.5Quantitative Sales Forecasting

6.1.6Legislation

6.2Quality Management

6.2.1Importance of Quality

6.2.2Measuring Quality

6.2.3Total Quality Management

6.2.4Evaluating TQM

6.3Human Resources

6.3.1Contracts

6.3.2Recruitment

6.3.3Training a Workforce

6.4Documents & Business Decisions

6.4.1Sales Forecasts

6.4.2Managing Strategic Implementation

6.4.3Problems with Strategy

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