Edexcel Business A Level Revision

Business plan - is a document that sets out what the business is, what it does, what it wants to achieve and how it is going to do it. It is normally used as part of an attempt to gain financial backing for the business. All businesses should have a business plan; it is both essential in helping to raise finance and an effective way for a manger to think about the business and how best to move it forward. A business plan informs potential investors or lenders about the business. It is used both internally by the entrepreneur and externally by banks, external investors or those willing to provide grants. It contains useful evidence of the viability of the business and how it will use any finance available. In particular it will show how the business plans to achieve a competitive advantage. An investor will want to know that the business is on a sound financial foundation and that future plans are likely to generate sufficient cash flows to meet debt obligations. The purpose o...

Crowdfunding - raises finance by inviting lots of people to lend small sums of money via web sites listing businesses seeking loans. The business uses the internet to explain how much money is required, how it will be used and the exit strategy stating predicted return on the investment. The investor is only tied into their contribution if the total amount is raised. ADVANTAGES OF CROWDFUDNING Millions of potential funders can be reached all over the world. DISADVANTAGES OF CROWDFUNDING No guarantee that Crowdfunding will raise sufficient finance BEST FOR ...   Unusual ideas and projects that might not attract other forms of finance.

Peer to peer funding -  The practice of an individual lending to other individuals (peers) with whom there is no relationship or contact via specialist websites. Borrowers are given a credit rating. Finance is normally an unsecured personal loan although on some occasions collateral may be offered. Cuts out the use of traditional intermediaries e.g. banks Lending is done online. Lenders decide who they want to lend to then compete to win the lending opportunity in a reverse auction i.e. the lender willing to offer the lowest interest rate wins. The lenders motive is profit. ADVANTAGES OF P2P Gives borrowers access to funds at advantageous rates compared to some other forms of finance. DISADVANTAGES OF P2P Finance is restricted to small amounts and to small established businesses. BEST FOR...   small established businesses so not suitable for big firms or start-ups.