Influences on finance decisions - Sources of finance - Higher Business management Revision - BBC Bitesize (2024)

FAQs

What is crowdfunding BBC bitesize? ›

Crowdfunding involves a large number of people investing small amounts of money in a business, usually online. Commonly used crowdfunding websites include Crowdfunder, GoFundMe and Kickstarter. Advantages of crowdfunding include: It acts as a form of market research.

Debentures are loans given to the business by individuals. Interest.

Retained profit is profit that has been made by the business in previous years that is then reinvested back into the company. Advantages.

Retained earnings are an easy source of financing

Hence, when your business keeps its retained profits, it builds a safety net by providing liquidity for low revenue situations. During any emergency condition, your business would have funds to keep operations on and make basic payments.

Crowdfunding is a way of raising money to finance projects and businesses through the collective effort of friends, family, customers, individual investors, and others.

A bank overdraft is a facility that will allow you to withdraw more money from your account than is available. A bank overdraft is a short term source of finance.

A source or sources of finance, refer to where a business gets money from to fund their business activities. A business can gain finance from either internal or external sources.

A balance sheet shows: assets. - what the business owns. liabilities. - what the business owes.

Ultimately, crowdfunding has numerous benefits. These include easy accessibility, the democratisation of funding, the potential for broad reach and high engagement, the ability to resonate with key or niche audiences, and the potential to attract a very large pool of supporters.

So, in short, retained earnings are the company profits after taxation, dividends and costs are all paid out.

Is retained profit good? ›

Keeping your company earnings increases your balance sheet, which has a knock-on effect to stockholder equity and corresponding stock value. Retained profit makes your business look better on paper with more money in your accounts, in turn attracting further investment.

Retained earnings are a type of equity and are therefore reported in the shareholders' equity section of the balance sheet. Although retained earnings are not themselves an asset, they can be used to purchase assets such as inventory, equipment, or other investments.

The advantage of ploughing back profits into the business, as opposed to paying out dividends to shareholders, is that it allows for the creation of long-term value for the company. This ultimately helps the share price at some stage in the future.

Savings account benefits include safety for your savings, interest earnings and easy access to your money. However, savings accounts may have drawbacks, such as variable interest rates, minimum balance requirements and fees.

Crowdfunding is a way of raising money to finance projects and businesses. It enables fundraisers to collect money from a large number of people via online platforms. Crowdfunding is most often used by startup companies or growing businesses as a way of accessing alternative funds.

A high-profile example of crowdfunding is Oculus VR, now part of Meta (the parent company of Facebook). It produces virtual reality headsets and other hardware and software.

About 24 percent of projects are fully funded. Based on these numbers, crowdfunding for a small business can be successful and help your business raise money without traditional debt. Before trying it for your business, learn about the benefits, hazards and regulations unique to this fundraising method.

Crowdfunding is the use of small amounts of capital from a large number of individuals to finance a new business venture. Depending on the type of crowdfunding, investors either donate money altruistically or get rewards such as equity in the company that raised the money.