What I may already know: • It is important for a business to plan its finances. • A business has many financial needs.
Learning Intentions
In this chapter, I will learn: • The different financial needs of a business. • The short-term, medium-term and long-term finance options available to a business. • How crowdfunding works.
Key Words: Finance
Capital expenditure Current expenditure Asset
Retained earnings Grant Ordinary share capital Sale and leaseback
Crowdfunding Investor
WHY DOES A BUSINESS NEED FINANCE? Money that is available to a business is called finance.
A business that is starting up will have large set-up costs and little or no money coming in as it is not yet selling anything. It will need finance to pay for premises, equipment and machinery. It will also need money to cover day-to-day running costs (such as paying suppliers and wages) until it starts making money.
A business that is established and has money coming in for day-to-day operations may need finance to expand. For example, it may want to begin selling abroad, buy new technology or develop a new product.
