Btec Unit 2 Business Resources Task 3

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Business Resources Task 3 What are financial sources? In order to be successful businesses, no matter how big or small they are, need finance. It’s the key element in business. Finance is the money for a business. And so wellbeing and growth of business depends on how much of financial sources businesses obtain. Businesses require finance to: * To open a company (rent/buy premises, marketing, stock, to buy equipment/machinery etc.) * To operate a company (employees’ wages, to buy more stock, pay for insurance etc.) * To grow a company (open a new branch, export products to other countries etc.) Types of financial sources There are two types of financial sources available for a business: * Internal sources * External sources In addition, they are categorized into short, medium and long term sources of finance: * Short-term: must be paid back within a year. * Medium-term: must be paid back within 5-7 years. * Long-term: can be paid back over many years. Further we going to look into the wide range of financial resources available for Tesco company. Internal: Internal sources of finance is money which is readily obtainable within the company. Internal sources of finance consist of: Owner’s investment Owner’s investment is a long-term source of finance. This source of finance comes from the personal savings of the owners of Tesco. Owner’s investment is often used as a start-up capital when opening a new business and as additional capital to expand the company. Also, as Tesco is a PLC company (Public Limited Company) it is mainly owned by public, they invest money into Tesco by buying their shares. Although Tesco is run by members of the board - Mr David Edward Reid who is the Chairman, and Sir Terry Leahy who is the current Chief Executive. Advantages | Disadvantages | Quick to obtain – If Tesco ever needs to get extra

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