,MNE3701 Assignment 3 (COMPLETE ANSWERS)
Semester 2 2024 - DUE 27 September 2024 ; 100%
TRUSTED Complete, trusted solutions and explanations.
Having acquired sufficient knowledge and skills on financial
management for small business, you must demonstrate practical
competencies in constructing financial statements and in
conducting feasible financial forecasting. As a new entrepreneur
understanding financial management and accounting, forms an
integral part of running your small business. In addition, you
should also be able to forecast the financial outcomes that could
result from your decision. The projections of business’s profits,
its assets and financial requirements, and its cash flows are
essential in determining whether your business is economically
viable. Having acquired sufficient knowledge and skills on
entrepreneurship and small business management, you must
demonstrate practical competencies in financing the financial or
capital needs of your business, building customer relationships,
developing the product and managing the supply chain of your
the business. Think of any business you would like to start and
answer the following questions: QUESTION 1 With reference to
practical examples, critically discuss how you would finance
your business. Motivate why you choose specific ways of
financing over others. (10)
Financing Your Small Business: A Critical Discussion
When starting a new business, selecting the right financing
options is crucial for ensuring adequate capital while managing
, financial risk. Below is a critical discussion of various methods
of financing for a small business, including practical examples
and motivations for choosing specific options.
1. Self-Financing
Definition: Self-financing, or bootstrapping, involves using
personal savings or assets to fund the business.
Example: A new café owner might use personal savings to
cover initial costs like equipment, rent, and inventory.
Advantages:
• Control: Full ownership and control over the business.
• No Debt: Avoids incurring debt or giving away equity.
Disadvantages:
• Limited Capital: The amount of available funds might be
insufficient for significant expansion.
• Personal Risk: Risks personal financial stability.
Motivation: Self-financing is ideal for businesses that require a
modest amount of start-up capital and where the entrepreneur
has substantial personal savings. It’s a good option if you want
to retain full control and avoid interest costs or equity dilution.
2. Bank Loans
Definition: Obtaining a loan from a bank or financial institution.
Example: A tech startup might secure a bank loan to finance
software development and marketing campaigns.
