Group activity sheet Case Study analysis / Story analysis on

3.2 Sources of finance

Title: Case Study /Story Analysis Activity Instructions: (45 Mins)

Objective:

The objective of this activity is to enhance your critical thinking skills and
comprehension abilities by watching a video and answering questions based on its
content.

Learning Objectives:

Sources of finance for businesses:

a) Internal Finance - Personal funds, retained profit and sale of assets
b) External Finance - Share Capital, Loan capital, overdrafts, trade credit,
crowdfunding, leasing, microfinance providers, Business angels.
c) Short or long term sources of finance.
Extra - Fixed assets, Capital expenditure, capital income, revenue expenditure,
Revenue income.

Materials Needed:

● Access to the internet and a device to watch the video

● Pen or pencil
● Notebook or paper for taking notes and answering questions
Step 1: Select any one ( a.Read story or b.case study)

a.Read the Story:

Once upon a time in the bustling city of Prospera, there was a young entrepreneur
named Sarah. Sarah had always dreamed of starting her own bakery, where she could
create delectable treats and share her passion for baking with the community. However,
she faced a significant challenge: financing her business venture.

Sarah began her journey by utilizing internal finance. She tapped into her personal
funds, diligently saving every penny she earned from her part-time job at a local café.
With determination and frugality, Sarah managed to accumulate a modest amount of
money, which she earmarked for her bakery venture.

Additionally, Sarah decided to reinvest any profits she made from her part-time job into
her bakery fund. She understood the importance of retained profit as a source of
internal finance, recognizing that it would help bolster her startup capital over time.

Despite her efforts, Sarah realized that her personal funds and retained profit were not
sufficient to cover all the expenses associated with launching her bakery. This is where
external finance came into play.

Sarah decided to explore various external finance options to supplement her internal
funds. She began by seeking share capital, reaching out to friends and family members
who believed in her vision and were willing to invest in her business in exchange for
ownership stakes.

Additionally, Sarah approached a local bank to inquire about loan capital. She
presented her business plan and financial projections, demonstrating her commitment
and potential for success. The bank approved her loan application, providing her with
the necessary funds to lease a commercial space, purchase baking equipment, and
cover other startup costs.
To further diversify her sources of external finance, Sarah secured an overdraft facility
from the bank, allowing her to access additional funds as needed to manage cash flow
fluctuations during the early stages of her business.

As Sarah's bakery began to take shape, she also leveraged trade credit from suppliers,
allowing her to purchase ingredients and supplies on credit terms and defer payment
until a later date.

In a stroke of creativity, Sarah turned to crowdfunding to engage with the community

and raise additional funds for her bakery. She launched a crowdfunding campaign,
offering exclusive perks such as pre-order discounts and VIP event invitations to
backers who supported her project.

Sarah's entrepreneurial spirit and innovative approach caught the attention of a

seasoned business angel in the city. Impressed by Sarah's passion and potential, the
business angel decided to provide financial backing and mentorship to help Sarah scale
her bakery business to new heights.

With a combination of internal and external finance, Sarah's bakery flourished,

becoming a beloved establishment in Prospera known for its mouthwatering pastries
and warm hospitality. Her journey served as a testament to the power of determination,
resourcefulness, and strategic financing in turning dreams into reality.

Note:.
Some of the advantages of reading include gaining a deeper understanding of a concepts,
increasing reading comprehension, expanding your business terminology, and improving your
own writing skills. When you read to fully gain meaning from the story, characters, or author's
message, you deepen your understanding of a text

(or)
b. Read the Case study:

Case Study: The Rise of Blossom Boutique

Blossom Boutique, a small floral shop in a quaint town, started its journey with a vision to
spread joy through beautiful flower arrangements. Founded by Emily, an aspiring entrepreneur
with a passion for flowers, the boutique faced various financial challenges and opportunities
along the way. Let's analyze the sources of finance utilized by Blossom Boutique:

Internal Finance:

Personal Funds: Emily initially invested her personal savings into Blossom Boutique to cover
startup costs such as leasing a storefront, purchasing inventory, and setting up the necessary
infrastructure.

Retained Profit: As Blossom Boutique gained traction and started generating revenue, Emily
reinvested a portion of the profits back into the business to expand its product offerings,
enhance the storefront's ambiance, and launch marketing campaigns.

Sale of Assets: To free up capital for growth initiatives, Emily decided to sell some underutilized
equipment and inventory. The proceeds from these asset sales were reinvested into Blossom
Boutique to fuel its expansion.

External Finance:

Share Capital: As Blossom Boutique's popularity grew, Emily sought additional funding from
investors who shared her passion for floristry. By offering ownership stakes in the business,
Emily raised capital to hire more staff, upgrade equipment, and expand the boutique's reach
through online sales channels.

Loan Capital: To finance larger-scale projects such as renovating the storefront and purchasing
a delivery vehicle, Emily secured a loan from a local bank. This loan provided Blossom Boutique
with the necessary funds to undertake capital-intensive initiatives while maintaining financial
stability.

Overdrafts: During seasonal fluctuations in demand and cash flow constraints, Blossom
Boutique utilized an overdraft facility from its bank to cover short-term expenses such as
inventory purchases and payroll, ensuring smooth operations during peak periods.

Trade Credit: Emily established favorable trade credit terms with her suppliers, allowing
Blossom Boutique to acquire inventory on credit and defer payment until a later date. This
arrangement helped manage cash flow effectively and maintain strong relationships with
suppliers.

By analyzing Blossom Boutique's financing strategies and addressing these questions, students
can gain insights into the importance of internal and external sources of finance for businesses,
as well as the considerations involved in utilizing different financing options to support growth
and sustainability.

Step2: Answer the following questions.

Internal Finance:

1. How did Emily's utilization of personal funds impact the initial growth trajectory of
Blossom Boutique?
2. What are the advantages and disadvantages of relying on retained profit as a
source of internal finance for business expansion?
3. In what ways did the sale of assets contribute to Blossom Boutique's ability to
fund its growth initiatives?

External Finance:

4. What factors influenced Emily's decision to seek share capital from investors?
 5. How did this funding source impact the ownership structure and decision-making
process within Blossom Boutique?
6. How did Blossom Boutique leverage loan capital to finance long-term
investments?
7. What risks were associated with this form of external finance, and how were they
mitigated?
8. Discuss the role of overdrafts in managing Blossom Boutique's short-term cash
flow needs.
9. What considerations should businesses take into account when utilizing overdraft
facilities?
10. What factors do managers need to decide on before choosing their source(s) of
finance?
11. How did trade credit arrangements with suppliers contribute to Blossom
Boutique's financial flexibility and operational efficiency?
12. What strategies can businesses employ to negotiate favorable trade credit
terms?
13. Difference between price and cost.
14. Define the terms:
a. Fixed cost
b. Variable cost
c. Crowdfunding
d. Microfinance
e.Business angles

Write Your Responses: Take your time to write clear and concise responses to each
question. Use complete sentences and provide specific examples or evidence from the
video to support your answers.
Step 3: Prepare the questions and answers
a) Create powerpoint presentation - Q & A
b) Create a Mind map on short and long term source of finance
C) Find the pictures related to the topic.

Step 4: Summary Test

Bingo Sheet on Source of finance (Please Collect from Teacher).

Rules:
1. Write your name then answer the questions.
2. Approach one student at a time and He/she will answer one question only.
3. Don’t answer the same question and Each time answer different questions.
4. Process will end when the Bingo sheet is fully completed.
5. Mark the correct answer. Put the total mark on top.

Step 5: Complete the worksheet uploaded on Toddle.

Worksheet on 3.1 Introduction to Finance.

Step 6: Individual Reflection on padlet:

https://padlet.com/ramesh27/my-dazzling-padlet-vl5rgiwpl89zzp16

1) Reflection should include 3C’s.

2) Mention your name at the end.
3) Please mention: you have understood the topic - Poor/Good/ Excellent.
Step 6: Discussion: If this activity is part of a group or classroom setting, you may have
the opportunity to discuss your responses with your peers. Share your thoughts, listen
to others' perspectives, and engage in meaningful dialogue about the video content.

Submit Your Work: If required, submit your completed responses on toddle within the
deadline.

Note: Remember, the goal of this activity is not only to watch a video but also to
actively engage with its content, think critically, and articulate your understanding and
opinions effectively. Enjoy the process of learning and exploration!