MONEY AND ME

FINANCE AND ME

Learning objectives:

You should understand the meaning of 'finance'.

Identify different types of businesses and how they are financed

Understand what risk is, and the rewards that it bears

Open Ended

In your own words, what is finance?

What we now know about Finance...

It is an umbrella term. It focuses on how money and other forms of money (stocks, bonds, debentures, etc), are acquired, spent and managed effectively to yield more.

We would look at a few aspects.

Open Ended

The hope is that young people would nurse ideas on how to solve problems, and contribute to the society. To achieve their dreams, some people might have to set up businesses.

What forms of business ownerships do you know?

Forms of business ownerships-Sole trader

• Sole proprietorship or sole trader is a one-man form of business. The owner is responsible for all decision-making and day-to-day running of the business. At the start of his business, a sole trader will likely need to invest a great deal of his own funds into the business. Some others might seek out a loan from a bank. Sole proprietorships are also generally the most likely type of business to get initial start-up funds from friends and family.

Forms of business ownerships-Partnerships

• A partnership is a business that is jointly owned between two or more people.

• The source of funds can range from each partner making a personal investment in the company; that would involve taking money out of each of personal savings accounts. Another option is to go to a bank to obtain a small business loan. Both partners are ultimately accountable for eventually repaying the loan.

Forms of business ownerships-Corporations

• A corporation unlike the sole trader is a legal entity that is separate and distinct from its owners. By law, a business registered as a corporation is considered to have most of the rights and responsibilities that individuals possess: they can enter contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. 

• Corporations are owned by shareholders who invest money in the business by buying shares of stock.

Forms of business ownerships-Cooperatives

• A cooperative is a business owned and controlled by those who use its services. They are formed to meet the specific objectives of members, and are structured to adapt to member's changing needs.

Open Ended

If the staff of Children's International School has formed a cooperative, how is the business funded?

Multiple Choice

In business, risk means that...

• a company's or an organization's plans may not turn out as originally planned or that it may not meet its target or achieve its goals.

• a company's or an organization's plans may turn out as originally planned or that it may meet its target or achieve its goals.

• a company's or an organization's plans must turn out as originally planned or that it must meet its target or achieve its goals.

• a company or an organization does not plan and so it does not meet its target or achieve its goals.

Managing financial risks requires skills and discipline. Below are some of the ways financial risks can be managed.

• Diversify- requires businesses and individuals to invest in a wide variety of investments.

• Use a savings account. This would ensure that you have cash on hand for emergency purposes if necessary.

• Invest early. This would make your money work longer and potentially earn higher returns.

A lot of successful businesses have prepared POWERFUL business plans that they pitch to potential investors.

Do you know what a business plan is?

What a business plan is...

A business plan is a written description of your business's future. It is a document that tells what you plan to do and how you plan to do it.

Open Ended

Why do you think business plans are important?

Just like any other plans, business plans are important are important. See some of the importance of business plans below.

• they help business owners make better decisions.

• It helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

•  the exercise of creating a business plan can help you avoid major mistakes.

• Business plans are very effective ways of securing loans for anyone seeking outside financing.

MONEY AND ME

How much do you know about finance?

Do you know how to prepare a business plan?

Open Ended

Finance is an umbrella term. It focuses on how money and other forms of money are acquired, spent and managed effectively to yield more.

Two examples of other forms of money includes...

Open Ended

List the forms of business ownership that you know.

Multiple Choice

Which of the following is not a way of managing business risk?

• Diversification investments

• Using a savings account

• Invest late

• Invest early

Group Task

Use the Google Document to guide you on how to complete the group task.

You will be pitching your business plan!

Which group has the most powerful business plan?