1.3 Putting a Business Idea into Practice

• What are the financial aims of a business

  • Survival
  • Profit
  • Sales
  • Increased Market share
  • Financial security
• Non-Financial Business objectives

  Personal satisfaction, independence, control, challenge, social objectives
• Short term sources of finance

  Overdraft, trade credit
• What is Cash Flow

  • Cash Flow is the movement of money into and out of a business over a period of time.
• Examples of Cash Inflows (receipts)

  Revenue, loans
• what are cash inflows

  Money going into a business
• What are cash outflows

  Money going out of the business
• Example of cash outflows

  overheads, wages, loan repayments
• What is the importance of Cash Flow

  Ensures business has enough cash to operate
• Aims and objectives are tailored to the particular business. The main reasons that aims and objectives differ between businesses are that businesses operate in different sectors, and business operations vary in size and scale.
• The importance of cash to a business

  prevent business failure, pay suppliers, overheads and employees