Lecture notes
Btec business level 3 Unit 2 P4
- Module
- Unit 2 - Working in business
- Institution
- OCR
this is the P4 of unit 2 will help you acheive the pass 4 in unit 2 however please do not copy this
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BTEC Level 3 National Business Unit 2 Business resourcesTask 4 Sources of finance (P4)
Task 3
Read the case study below and then complete the activity that follows.
Josef and Miriam run a small profitable business making high-quality ice cream on their farm in the
Yorkshire Dales. Their ice cream is currently sold in several farm shops and village stores in the local
area. Josef and Miriam have recently stopped supplying to one chain of stores as they have £2,000
worth of unpaid invoices. They have decided to set up a separate division of the business to sell ice
cream from carts in parks and at outdoor events. They have invested £15,000 of their own savings to
set up a website advertising their products and services, and have also bought a trailer and two carts.
However, before they can start operating they still have to:
1. convert an existing barn into extra storage space
2. acquire a van
3. install additional industrial freezers
4. recruit a manager
5. buy additional equipment
6. increase the stock of raw materials.
For each of the six activities listed previously, use the table below to recommend and justify a suitable source of
finance.
Activity Source of finance Justification
1. Loans from a bank, this is where the bank I have chosen loan because loan is the only
Convert gives you money keeping in mind of your way that the Josef and Miriam can get the
an existing savings and your income to start the money from to covert the barn so it is the
barn into business so that a loan is where you will best idea because the business have not
extra get the money and with the money that the started yet so that they will have to get the
storage bank provided Josef and Miriam can money arrangement so that a loan would
space convert their existing barn into storage be best idea. However an overdraft would
space. not be a suitable thing to use because it is
a short term loan and will only allow a
limited amount of the money so that an
overdraft is not a good idea.
2. Hire purchase or leasing, is when the Hire purchasing is a good idea for Josef and
Acquire a monthly payments are made for use of the Miriam because this will give them the
van van that they might need so that a hire chance of using and deliver goods in less
purchase will give them a chance of hiring time however if they have not got enough
the van however the van is not owned by money then this will give them the time to
the business however the van will be make more profit and pay for the hiring.
owned by the business until the final However this will be then owned by them
payment are done. so that they will have to pay for given
period and then this will have to stop
paying it as it will be then their van.
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