Business Studies - AQA - GCSE - Sources of Finance

Josh Anderson
Mind Map by , created almost 4 years ago

GCSE Business studies Mind Map on Business Studies - AQA - GCSE - Sources of Finance, created by Josh Anderson on 11/27/2015.

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Josh Anderson
Created by Josh Anderson almost 4 years ago
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1 Personal Capital
1.1 Own money
1.1.1 Advantages
1.1.1.1 Flexible
1.1.1.2 Potential to raise large amounts
1.1.2 Disadvantages
1.1.2.1 Shareholders expect a return
2 Retained profit
2.1 Profit from previous months from business
2.1.1 Disadvantages
2.1.1.1 Could be spent elsewhere
2.1.1.2 Profit is lost if business fails
2.1.2 Advantages
2.1.2.1 No interest rates
3 Loan
3.1 Receiving money to pay back later for an increased price (Due to interest)
3.1.1 Disadvantages
3.1.1.1 High interest rates
3.1.1.2 Possible repossession
3.1.2 Advantages
3.1.2.1 Repayments can be spread out to ease pressure
3.1.2.2 Fairly flexible
4 Mortgage
4.1 A company takes the title of the debtor's property in exchange for finance
4.1.1 Disadvantages
4.1.1.1 Company can sell the building to repay the loan
4.1.1.2 High interest rates
4.1.2 Advantages
4.1.2.1 Loan
5 Overdraft
5.1 When the balance in the bank goes beneath zero but the user of the account can carry on spending, as long as they pay it back (with interest) afterwards
5.1.1 Disadvantages
5.1.1.1 High interest rates
5.1.1.2 Risk of losing possessions if not repaid
5.1.2 Advantages
5.1.2.1 No late payment penalties
5.1.2.2 Less paperwork
5.1.2.3 Flexible (when you need it)
6 Leasing
6.1 "Renting" the assets that are needed, small regular payments rather than one lump sum, never actually owning.
6.1.1 Disadvantages
6.1.1.1 Cannot sell the asset
6.1.1.2 Do not own it
6.1.2 Advantages
6.1.2.1 Repairs done by leasing company
6.1.2.2 Usually up to date equipment
7 Factoring
7.1 Selling accounts to a third-party funding source to raise capital
7.1.1 Disadvantages
7.1.1.1 Reduces allowances for other borrowing
7.1.1.2 Restrict funding
7.1.2 Advantages
7.1.2.1 Prices usually low
7.1.2.2 Smoothens cashflow
7.1.2.3 Immediate
8 Hire purchase
8.1 Buying whilst using it, paying is smaller regular payments rather than one lump sum
9 Venture capital
9.1 Investors money (for a percentage of the business)
10 Share issues
10.1 Selling shares to new shareholders
11 Grant
11.1 Government funding
11.1.1 Advantages
11.1.1.1 Don't have to pay back
11.1.2 Disadvantages
11.1.2.1 Feel like a slave to the government
12 Gifts
12.1 From friends and family
13 Sale of assets
13.1 Selling belongings (business/personal)
14 Trade credit
14.1 Use it now, buy it later
14.1.1 Advantages
14.1.1.1 No cash necessary immediately
14.1.1.2 Induces more sales over time
14.1.2 Disadvantages
14.1.2.1 High costs afterwards
14.1.2.2 Chance of debt
15 Credit Card
15.1 Set balance on the card each month, anything spent must be paid back
16 Debenture
16.1 Long-term loan
17 Selling stock
17.1 Selling the produce from the business

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