Notesale: Turn your study into money

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Ashleigh Still
Factsheet 1- P4

Unit 2: Business Resources
Magda King

Sources of Finance
Internal
Owner’s Savings are used to start or expand a business as banks may not be willing to take
the risk of offering them a loan
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Joseph Hepworth begun his company
that later developed into Next in 1864, and would’ve used some of his own savings to start
up the company
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This is so that they can increase their profits as the owners can decide how much goes into
the business to make improvements to the business and then how much they keep
themselves, as a form of wage
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Some other businesses such as charities cannot use their profits
in this way as they earn donations, which are not profits so the money isn’t theirs to keep
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Interest is then payable
from Next, based on the potential risk of the loan
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Next will use loans from the bank in order to
fund any investments they need to make when they don’t have the funds
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Hire purchase is where resources, such as equipment, are used by a business whilst they
are being paid for directly to a finance company
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Next will use hire purchase for any machinery
they may use, for example to produce their clothing and homeware
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Leasing is that a business makes use of resources and then must pay back each month to
use them
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Next can use leasing, again for machinery and equipment in
order to benefit their production and this can overall benefit the company as they can
continue to increase profits
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The company then collects the debts and they take a percentage
cut for this service
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Small businesses issue shares when they move from being a sole trader/partnership to
become limited (Ltd
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Limited companies are then able to sell shares on the stock
exchange if they become PLC – Public Limited Companies
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Sometimes large PLC’s will have a new share issue as well when they
want to invest in a large project or improvements and these are also floated on the stock
exchange
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This means that
members of the public can buy shares of Next and can earn dividends based on what the
company makes throughout the year
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When Joseph Hepworth created Next, he may have
looked to family and friends to invest in the company to boost profits, and would then give
them something in return i
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shares or money back from the company with interest
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A grant is money that is given to a business that does not have to be paid back
and the amount of that money will depend on where it’s coming from
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Next could potentially apply for a grant from the EU, National
or Local Government, in order to give them money for improvements to the company, as well
as investments in any assets
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