Photo AI
Assess two suitable external methods of finance that could have been used by Holly and Andy for The Wonky Table start-up capital in 2010. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Question 2
Assess two suitable external methods of finance that could have been used by Holly and Andy for The Wonky Table start-up capital in 2010.
Worked Solution & Example Answer:Assess two suitable external methods of finance that could have been used by Holly and Andy for The Wonky Table start-up capital in 2010. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 3
Step 1
Investments from Family and Friends
Answer
Holly and Andy could have sought investment from family and friends, which typically does not require high interest or formal agreements. This method would generally be less risky as it might not involve significant amounts of money or complex legalities. Such funds can be crucial in covering start-up costs without the added pressure of repayment schedules or interest rates.
Step 2
Bank Loan Application
Answer
Another external finance method could be applying for a bank loan. This option would provide a large sum to cover start-up expenses, but it comes with responsibilities, including interest repayments. The choice of a bank depends on the perceived risk, which could affect profitability if Holly and Andy were unable to generate enough revenue to meet loan obligations. Additionally, securing a bank loan might require collateral or a good credit history, presenting potential challenges.