Long-term finance

• What do businesses need to consider for funding?

  How to fund activities and cover costs
• What are some costs businesses need to cover?

  Equipment, stock, and paying bills
• What is personal savings in business finance?

  • Money saved by an entrepreneur
  • No interest charges applied
• What is venture capital?

  Money invested for a share of profits
• What does a venture capitalist want in return for their investment?

  A return on investment and input in management
• What is share capital?

  Money raised by offering shares to the public
• What rights do shareholders have when they buy shares?

  Part ownership and voting rights
• What are the disadvantages of share capital?

  • Dilutes control for founders
  • Vulnerable to takeover threats
• What are the advantages of share capital?

  • Source of permanent capital
  • No refunds on shares
  • No dividends if profits are low
• What is a bank loan?

  Money lent with interest over time
• What does a fixed interest rate on a bank loan mean?

  Cost of borrowing is known in advance
• What is a credit check?

  Assessment of financial reliability for loans
• What might a bank require to secure a loan?

  Assets against the loan
• What is retained profit?

  Profit reinvested in the business
• What is crowdfunding?

  • Many people invest small amounts online
  • Common platforms: Crowdfunder, GoFundMe, Kickstarter
• What are the advantages of crowdfunding?

  • Acts as market research
  • Provides funding opportunities for startups
• What are the disadvantages of crowdfunding?

  • Business must be interesting
  • Difficult to reach funding targets