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1.1 Internal Features, 1.1.2 Sources of Finance, 1.1.5 Entrepreneurship,…
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1.1.2 Sources of Finance
internal funding - Contribution by existing owners into the business,
Retained profit - owners take their share of the profit and then the rest is ploughed back into the business
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Sale of existing assets: any assets not required by the business could be sold, e.g. surplus land
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Running down stock levels to raise cash – this means that businesses do not replace sold stock as quickly (the shelves have less on them)
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Short term finance
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Overdraft
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This finance can be used for everyday expenses, such as, wages
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Long term finance
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Issue of Shares: used to purchase fixed assets, update or expand a business.
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Private limited liability businesses sell shares privately to friends, family or business associates
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1.1.5 Entrepreneurship
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Management Skills
Planning – setting objectives, results based, working to the business plan
Organising – Arranging resources to achieve objectives, delegating
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Disadvantages
Loss of permanent, regular income
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Ownership Structures
Partnership
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DISADVANTAGES
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If business fails, partners will be forced to contribute their personal resources
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Private Limited Company
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ADVANTAGES
All shareholders have limited liability - personal assets owned by the shareholders are not sold off to pay for company debts
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DISADVANTAGES
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Difficult to transfer shares, all shareholders have to agree
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