Social Enterprise Defined
TITLE
Explain the term ‘social enterprise’.
ESSAY
Title: Understanding Social Enterprise Financing: A Detailed Analysis
Introduction
💥 Brief overview of social enterprise
💥 Importance of understanding sources of finance for social enterprises
Understanding Sources of Finance for Social Enterprises
💥 Explanation of various sources of finance: bank loans, overdraft, share capital, venture capital, trade credit, sale of assets, retained profit, crowd funding
💥 Importance of choosing the right source based on the needs and characteristics of the social enterprise
Factors Affecting Choice of Funding for Social Enterprises
💥 Discussion on factors influencing funding decisions in social enterprises
💥 Consideration of business ownership, profitability, amount of finance needed, short or long term finance, purpose of finance, ease of obtaining finance, stage of business development, cost of finance, risk attitude, and impact on business control
Impact of Limited Company Structure on Financing
💥 Analysis of how a limited company can raise share capital but may dilute ownership and control
💥 Implications of share capital raising for social enterprises seeking financing
Impact of Business's Track Record on Financing
💥 Examination of how a successful track record facilitates borrowing
💥 Implications for social enterprises in establishing credibility for financing
Effect of Economic Conditions on Financing
💥 Evaluation of how economic cycles affect borrowing capabilities
💥 Strategies for social enterprises to navigate financing during economic fluctuations
Consideration of Interest Rates in Financing
💥 Discussion on the impact of interest rates on borrowing costs
💥 Strategy recommendations for social enterprises in managing financing costs
Examples of Financing Scenarios for Social Enterprises
💥 Illustrative examples of financing options based on different funding needs
💥 Analysis of short💥term and long💥term finance decisions in various growth scenarios
Conclusion
💥 Summary of key points discussed in the essay
💥 Importance of informed decision💥making in social enterprise financing
💥 Closing remarks on the significance of understanding different financing options for social enterprises
SUBJECT
BUSINESS STUDIES
LEVEL
A level and AS level
NOTES
Explain the term ‘social enterprise’. Answers may include: • Understanding of sources of finance – bank loans, overdraft, share capital, venture capital, trade credit, sale of assets, retained profit, crowd funding • Understanding of factors affecting choice of funding – business ownership, profitability, amount of finance needed, short or long term finance, what finance is required for, how easy finance will be for business to obtain, stage of development of the business, cost of finance, attitude to risk, effect on control of business. • Limited company can raise share capital but will dilute ownership and control. • Track record of success makes borrowing easier. Well known firm with recognised brands likely to be a PLC and able to offer new share issue to raise large amounts of finance. • State of the economy – borrowing is easier in a boom when confidence is high. Business may delay growth until it is easier to borrow money. • High interest rates make borrowing expensive. Retained profit would be ideal as no interest to pay but only available to a previously profitable business. • High amount of funding for fairly short term could use overdraft or retained profit, one with high interest, the other with none. Would need a quick return from the growth to justify the overdraft. • Short term injection of low amount of cash could sell assets no longer needed or sale and lease back. If a business is growing this may not be the ideal source of finance as will need more assets not less.