IGCSE Business: 5.1 Business Finance: Needs and Sources

Exam technique [playlist]
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Timestamps

0:00 - intro
0:13 - The Need for Business Finance
1:25 - Retained Profit
1:58 - Sale of Assets
2:30 - Personal Savings
2:57 - Sale of Shares
3:34 - Bank Loans
4:34 - Selling Debentures
5:31 - Hire Purchase
5:58 - Leasing
6:18 - Debt Factoring
7:01 - Trade Credit
7:27 - Micro Finance
7:52 - Crowd Funding
8:27 - Purpose & Time Period
8:51 - Amount needed
9:18 - Legal Form and Size
9:42 - Control
10:02 - Risk & Gearing
10:42 - Solved Exam Questions

In this video, I explore the essential aspects of business finance needs. First, I discuss the necessity of startup capital, which is crucial for purchasing vital assets and commencing operations. Without this initial funding, businesses cannot begin trading. Next, I highlight the importance of capital for expansion, allowing businesses to acquire more machinery and open additional locations. Working capital is also critical; it covers daily expenses like wages and rent, and insufficient working capital can jeopardize operations.
I then delve into various sources of finance. Retained profits are a key internal source, providing instant funds without repayment. Selling assets can free up capital but may take time. Personal savings offer another option with no interest, although they may be limited.
External sources include issuing shares, which can quickly raise funds but dilute control, and bank loans, which require repayment with interest. I also touch on debt factoring, trade credit, microfinance, and crowdfunding as alternative financing methods.
Finally, I outline factors influencing financial choices, such as purpose, amount needed, legal structure, control, and risk. Understanding these elements is vital for making informed financial decisions in business.

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