Finance case study. Explain two methods that John and Jackson might have used to finance the business start up.

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Finance case study

Model answers and mark schemes

Outline the main costs and revenues for the business                        (4 marks)

AO1: Kn: State start up costs and running costs

AO2: Ap: state costs that are relevant to their business

Costs of a business are outgoings and examples for John and Jackson’s business are machinery, materials for washing ie: sponges and liquids, rent of the premises and space, as well as furnishings for the waiting area ie: TV and seating. Revenues is money coming into the company from customers, the main revenues are from car washing, car care products and coffee and snacks.

Explain two methods that John and Jackson might have used to finance the business start up.                                                                        (4 marks)

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AO1: Kn: State to possible ways of financing

AO2: Ap & An: Provide a detailed explanation

The first method that can be used to set up their business is their own savings, this is beneficial as there would be no interest charged on this money, however if the business does not do well they would have lost their money. They could also ask friends and family to invest in the business although to do this they would need to set up as a private limited company.

The car wash machine will cost around £15,000 ...

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