North Thread makes recycled outdoor clothing. It needs £60,000 for production equipment that should be used for at least five years. The owner has £18,000 of personal savings and wants to retain control of product decisions. North Thread has 24,000 social-media followers.
Option 1: Use the owner's £18,000 personal savings and borrow the remaining £42,000 through a five-year bank loan
Option 2: Raise the full £60,000 through a crowdfunding campaign that offers advance orders and branded rewards
Justify which one of these two options North Thread should choose.
38 exam-style questions on Edexcel GCSE Business 1.3 Putting a business idea into practice, covering 1.3.1a Financial aims and objectives, 1.3.1b Non-financial aims and objectives, 1.3.1c Why aims and objectives differ, 1.3.2a Revenue, costs and profit calculations, 1.3.2b Break even and margin of safety, 1.3.2c Interpretation of break even diagrams, 1.3.3a The importance of cash to a business, 1.3.3b The difference between cash and profit, 1.3.3c Cash-flow forecasts: inflows and outflows, 1.3.3d Cash-flow forecasts: net cash flow and balances, 1.3.4a Short-term sources of finance, and 1.3.4b Long-term sources of finance. Each one has a worked solution and a mark scheme showing where the marks go.