7 - Why Businesses Plan

Question 1

Credit Card

Answer 1

A plastic card which enables goods to be purchased on credit.

Question 2

Trade Credit

Answer 2

When a supplier allows you a period of time (such as 30 days) to pay for goods and services.

Question 3

Hire Purchase

Answer 3

Allows business to have use of assets without large initial investments up front.
Business pays a deposit to acquire item and then makes regular payments for a set period of time.

Question 4

Mortgage

Answer 4

A long term loan to purchase property or business premises. Repaid over a set period of time typically 25 years, but different repayment periods can be set. Business owns the property on the final payment.

Question 5

A person or company who invests (buys shares in a business) which has considerable risk, in the hope will grow fast.

Answer 5

Venture Capitalist

Question 6

Business overdraft

Answer 6

Where you can use more money then you actually have in an account. Helping businesses in the short term.

Question 7

Loans

Answer 7

An amount of money borrowed from the bank and then repaid with interest over a set period of time. The loan period can range from 1 year to 10 years.

Question 8

Crowd funding

Answer 8

Funding a project by raising small amounts of money from many people.

Question 9

What is the benefit of share issue?

Answer 9

To gain a large source of income and expand the business.

Question 10

Reserves

Answer 10

Liquid assets held by a bank, company or government in order to meet expected future payments and/or emergency needs.

Question 11

Advantages of savings?

Answer 11

They won’t have to borrow long term and they won’t get charged any interest on the money they have saved.