Business functions

Suitable sources of finance

Instructions

Read the scenarios and choose from the dropdown list the most appropriate source of finance and then give a reason for your decision. Once you have considered all three scenarios you will have the opportunity to print out your notes.

Business finance PDF – Page 1

Scenario 1 – OrganicOne is a private limited company that was established five years ago. It supplies organic ready-made meals to grocery stores in the North of England. It wants to increase its operations by expanding its current factory and open a new distribution unit in the South of England to sell nationwide. It has a healthy bank balance, but has an existing large loan with a bank. It is a family-run business that has developed excellent relations with its suppliers.

Scenario 2 – Karen Hughes is a sole trader who has developed her own small range of toiletries. She manufactures these from a small unit on an industrial estate and sells mainly at markets. She now wishes to expand her business and open a retail store in her local high street. She would like to maintain total control over the decision-making in the business.

Scenario 3 – EnjoySport are a PLC that has been trading on the high streets of the UK for over 20 years. It has over 200 stores nationwide and employs over 1000 people. In recent years sales have dropped and for the last three years have not made a profit. It needs a quick injection of finance to rebrand its business and introduce a new line of stock that it hopes will help to increase sales.

Sources of finance

Scenario 1 – OrganicOne is a private limited company that was established five years ago. It supplies organic ready-made meals to grocery stores in the North of England. It wants to increase its operations by expanding its current factory and open a new distribution unit in the South of England to sell nationwide. It has a healthy bank balance, but has an existing large loan with a bank. It is a family-run business that has developed excellent relations with its suppliers.

Scenario 2 – Karen Hughes is a sole trader who has developed her own small range of toiletries. She manufactures these from a small unit on an industrial estate and sells mainly at markets. She now wishes to expand her business and open a retail store in her local high street. She would like to maintain total control over the decision-making in the business.

Scenario 3 – EnjoySport are a PLC that has been trading on the high streets of the UK for over 20 years. It has over 200 stores nationwide and employs over 1000 people. In recent years sales have dropped and for the last three years have not made a profit. It needs a quick injection of finance to rebrand its business and introduce a new line of stock that it hopes will help to increase sales.