Center Parcs pre -release material by Sayeedh Ghouse

Business Studies (Unit 1)

EntrepreneursEntrepreneurs are people who bring new businesses and products/services into the market. They are usually creative, patient, determined, resilient and passionate about their ideas. They often receive Government grants to help and encourage them set up a business.

Entrepreneurs are important in the business world because they Create jobs and opportunities Are able to spot gaps in a market

There are a lot of motives or reasons for becoming an entrepreneur, including the following Were made redundant or retired Spotted an opportunity Wanted control over their working life

There are several issues that young people may experience when becoming an entrepreneur Difficult to get funding due to a lack of experience Age discrimination not being taken seriously

FranchisesA franchisee is a person or company who has paid to become part of an established franchise like McDonalds. A franchise enables you to run your own business whilst using a successful formula created by the franchisor.The Government suggests that 70% of new businesses fail before three years compared with 7% of franchises. This is usually because the idea for the business was not viable or because stronger competitors emerged.The franchisor usually controls the rules concerning the following Dcor Product range Staff uniforms

However the franchisee is usually able to make their own decisions about the following Staff recruitment and training Stock managementAdvantagesDisadvantages

It is a good way of starting a business without having to do it from scratchThere is not much freedom in decision-making

Customers will recognise the brand easilyThe franchisor takes a cut of the business income which can make it hard to make large profits

Due to the success of the franchise, banks can approve more loans and with less interestFranchises may not be as good as they sound. It can be expensive to buy into with bad support

Protecting IdeasAn idea cannot be fully protected, but patents and copyrights are methods of preventing others from copying and distributing an invention or creative piece of work. This is called Intellectual Property.A Patent provides a certain amount of time for which an invention or product cannot be copied by anybody else. Patents can cost from 1,000 to 500,000+ and breaking a patent is not a criminal offence. Owners of patents can only claim damages through the civil courts.A Trademark is a sign that can distinguish one product, service or brand from another another. These can be Logos and Pictures Smells SoundsA Copyright applies to written work (for example: books and song lyrics). Unlike a patent, a copyright occurs automatically and there is no need to pay for it.

Adding ValueThe process of adding value involves doing something to a product to higher its price. For example: ready-grated cheese is more expensive than a block of cheese. Products that are protected by patents can be used to add value.

Primary SectorSecondary SectorTertiary Sector

It is hard to add value to products here as they are often the same (oil, coal, gas, etc)This sector is manufacturing and adds the most value (eg: Walkers v Tesco Value)Effective marketing can make products stand out here (eg: M&S)

Business PlansA business plan sets out how a business idea will be financed, marketed and put into practice. It is likely to be essential in getting funding from a bank because they will need to see how well a business idea is thought through and how financially viable it is.It is a great idea to create a business plan because of the following It gives directions It helps make decisions about resources that are needed It helps to measure success

A good business plan should contain How you are going to develop your business How you will manage your finance

Any business plan is only as good as the information on which it is based. It is a good guide, but is only a plan.

BenefitsProblems

It makes the entrepreneur consider every aspect of the start-up so they can try to eliminate failuresThe BP is only a plan and does not guarantee success. For example: sales may be lower than predicted

It makes the entrepreneur aware of what skills they are missing so that they can hire an expertIf the plan is too rigid some problems may arise. It must be flexible to adapt to market changes

Venture capital may be available to the business if investors like the business planHigh sales expectations may cause overspending in other areas such as stock and staffing

Legal StructuresThe legal structure of a business is crucial in determining how seriously the owners will be financially impacted if things go wrong. It also has an effect on the taxation levels that the business and owners need to pay.In Unlimited Liability the owners of a business are fully responsible for any debts incurred, even if this requires them to sell their personal assets or possessions. There are two types of businesses that have unlimited liability Sole traders PartnershipA Sole Trader is someone who owns and operates their own business. A sole trader can have employees, but they must take all the final decisions about running the business.

Advantages of Sole TradersDisadvantages of Sole Traders

They make all the decisions and keep all the profitThe owner is the only one responsible if it fails

There are no administrative costs to payThere are long hours of work involved

They are confidential as accounts arent publishedBecoming ill causes problems running the business

A Partnership is where 2-20 people start their own business with the goal of making profit. Trust is vital.

Advantages of PartnershipsDisadvantages of Partnerships

There is additional skills and a shared workloadThere is UL even when it is your partners fault

There is more capital available to invest intoThere is a loss of control and profits are shared

There are no administrative costs to payThere may be business disagreements

With Limited Liability, debts incurred by the business must stay within the business. The owner doesnt have any personal liability and doesnt need to sell personal possessions if the business fails.A business must go through a legal process to gain limited liability. This process is called incorporation.A small business can be started up as a sole trader, partnership or Private Limited Company (LTD). The start-up for an LTD can be as little as 100 and the company can be fully owned by the entrepreneur.Shares cannot be floated on the Stock Market this allows the owner to have full control over the business.Putting LTD after a company name is a legal requirement and says that a business is small with limited liability.

Advantages of Limited liabilityDisadvantages of Limited liability

It gives confidence to shareholders to investMore annual costs (eg: audited accounts)

There is wider access to finance opportunitiesBusinesses must publish financial information

An LTD can become a Public Limited Company (PLC) when it has 50,000+ in share capital. The business may then be floated on the stock market where the public can buy shares. This provides finance for the business to expand. However, too much cash in a short amount of time can make a business grow too fast.There may also be some other problems with PLCs It is hard to have any objectives other than profit A small group of control can be unlikely due to the availability of shares on the market There may be a lack of concern for the future of the business if the only goal is profitSome other forms of businesses include non-profit organisations which focus on the interests of the members and not shareholders, and Co-operatives which are worker-owned.

Market ResearchMarket research gathers information about consumers and competitors. A target market is the chunk of the whole market that the product or service is aimed at.It aims to identify consumers buying habits and attitudes to products and services. It can be numerical (how many people buy the Daily Mail?) or qualitative (why do these people buy the Daily Mail?)Secondary Research is data that already exists. Secondary research can be found through the internet, newspapers and Government produced data.

AdvantagesDisadvantages

It is easy to accessIt may not be to the specific needs of your business

It is usually cheap or even freeIt may not be accurate

It saves a lot of timeThe reliability and quality may be questioned

Primary Research is the process of gathering information directly from people within your target market. This can be very expensive when carried out by specialist market research companies and there must be a lot of care taken to eliminate bias from your research! Types of Primary Research may include the following Observation/Experimentation Questionnaires Phone calls

AdvantagesDisadvantages

The research will be specific to your businessIt can be time-consuming

You can guarantee reliability and qualityIt can be very expensive

It is confidential to you and your business

Quantitative research asks questions which usually provide simple, numerical answers. For example, which pack do you prefer? or how many newspapers did you buy last week? However it can be hard to find valid data when using quantitative methods in small-scale research.

Qualitative research is in-depth research into the motivations behind buying habits. It does not produce statistics like 53% liked the chocolate but asks why they liked it instead. One form of this research could be interviews. However, it is hard to collect qualitative research in small-scale samples and bias may creep in.

SamplingA Random sample is where everybody in the population has an equal chance of being chosen. Achieving a truly random sample requires careful thought because people may often be missing.A Quota sample is where interviewees are selected in proportion to the consumer profile of the target market. For example: if the total amount of people at college was 1,000 with 40% males and 60% females, the male number would be 400 and the female number would be 600. These people can then be broken down into age groups, directorates, etc.This method allows interviewers to interview anybody as long as they achieve the correct quota in the end. It can work out relatively cheap and effective and is used most often by market research companies.

A Stratified sample is when you interview people with specific characteristics (eg: 30-45 year olds). So within this section of the population individuals can be found at random or by setting a quota.

There are many factors which can potentially influence the choice of sampling methods Cost Time

Sample SizeAfter deciding which method to use the next consideration is how many interviews should be conducted. Some companies interview between 100 and 1,500 people and consider it large enough to reflect the views of 45 million people. This can be heavily argued.A sample with at least 1,000 responses usually produces a high confidence level compared with 10 or 100.However, it can be extremely expensive to conduct large amounts of research and sampling 1,000 people can cost 30,000. Surveys of 4 or 5 new products may cost 120,000+ on research alone.When answering a question on market research or quantitative figures I MUST question the following Who produced the information? How was it produced? What was the sample size? What is the confidence level of the research?Types of MarketsA market can be anything from the amount of people that buy a specific product, the amount of products in a category or how much is spent on one specific thing. They key elements to any market are Size (how much is spent every year) The extent to which it can be divided (eg: TV magazines, health magazines, clothing magazines, etc.) Market share (eg: the food market can be divided into breakfast cereals and Kelloggs are the leader)

Local markets are small firms which dont really care about the size of the national market. They are more concerned with the state of the local market (eg: local hairdressers and plumbers).However, some small businesses may still be focused on the national market (eg: selling their products through large supermarkets or by operating on the internet)

National markets cater for the nation but are also concerned about local competition (eg: H&M, New Look). Therefore, these businesses are located everywhere and use national media to advertise.Electronic markets are markets that used to be physical. The stock exchange and exchange currency markets are now all on-screen and eBay and other auction markets are transforming how we make transactions. Electronic markets often have key characteristics They are very price competitive so the costs are kept down They can operate from anywhere The market is cheap to enter so new competitors can arrive anytime

Market Size, Growth and ShareMarket Size is the amount of goods purchased or the amount spent on those goods.By establishing Market Growth you can determine whether a market is growing or declining. The formula for calculating market growth is belowNew figure old figure = Market ChangeMarket Change / the old figure * 100 = % in Market Change

Market share is the proportion of the total market that is owned by one company. It is essential for evaluating the success of a firms marketing activities. The formula for calculating market share is belowCompany revenue / whole market revenue * 100 = % of Market ShareThere are many advantages of being a market leader High distribution without much effort Able to charge higher prices Able to get new products onto shelves as their name is widely recognised

Market SegmentationMarkets can be subdivided into several different ways. The magazine market is a good example and can be split up into gender, age and lifestyle. Businesses must know their target markets needs and wants.

AdvantagesDisadvantages

Segmentation is acknowledgement that customers are not all the same and will not respond the sameSegmentation only works if the business can provide products and services that the market needs

With small adjustments, products can appeal to different target markets (eg: a club at night and day)The size of the segmented market needs to be sufficient to be profitable for the business in question

The business can target their marketing efforts, therefore making more efficient use of the resourcesProviding different products and services to different segments can cost more (lose economies of scale)

DemandDemand is the desire to buy a product backed by the ability to do so. It is also known as effective demand.Price can affect demand in the following ways The higher the price of the product the less of the product people can afford to buy The price of other competitors products The value that the consumers place on the brand can affect its demand

Income has grown in the last century. The demand for most products and services grows with the economy. Normal goodsthe demand for these grows broadly in line with economic growth (eg: petrol and food)

Luxury goodsthe demand for these grows faster than the growth of the economy

Inferior goodsthe demand for these falls as the economy grows. As we get wealthier we prefer to buy branded products instead of home-brand onesOf course, if the economy is struggling luxury goods quickly vanish and inferior goods become more popular.

The Actions of competitors plays a big influence on demand. For example, the demand for a Ryanair flight to Dublin doesnt just depend on the price of the flight or customers incomes but the prices of rival flights too.A firms own Marketing objectives may also play a part in the demand for a product or service.Seasonal factors are the biggest influence on demand for some businesses. For example: Ice cream sales will boom in the summer whereas the coat market will be more successful in the winter.LocationOne of the most important factors influencing the success of a business is its location. This makes good locations with good infrastructure very expensive, and small businesses often struggle to compete.Factors affecting the choice of location The cost of landa business whos products are price sensitive need to keep costs down so a cheap location may help

Spaceis there room for expansion? This should be a consideration in case the business does well

Government grantsfinancial incentives that are offered by the government may influence the decision on location

Accessibility to the marketbusinesses that operate on the internet may not need to worry about this factor but hairdressers and such will benefit from being close to their target market

Accessibility of suppliersbusinesses that use JIT will benefit from being close to suppliers due to shorter deliveries

Cost of labour in the locationlocating in a high area of unemployment may help to keep costs down, but will the workforce have the required skills?

Infrastructurethe provisions available in a certain area, for example transport links and telecommunications. Online businesses such as Amazon and Play will need to be in areas with sufficient transport links.

Sources of FinanceA source of finance is the term used to describe where a business gets its money from. Almost all new businesses will need money to invest before it can start operating, including the following Capital investments such as machinery, equipment and property Money for running the business (bills, wages, etc.)

Businesses will also need to be able to raise money for other reasons such as expansion of premises, machinery and employees, to buy more produce for large orders, or for more external reasons such as a dip in the economy. The amount of finance available to a business will depend on: The type of businessa sole trader is somewhat restricted to the amount they can put into a business from their own resources. A limited company will be able to raise share capital in addition to being able to borrow. A balance between equity (own money) and debt (loans) should be around 50:50 The stage of development of the businessnew businesses will have a harder time raising finances than a business that is already established

The state of the economyif the economy is booming there will be higher business confidence and therefore more money

Having sufficient funding will ensure that a business can meet its current and future needs. A distinction between short, medium and long-term objectives should be made and the appropriate type of funding used.Short-term finance (less than a year) should not be used to finance long-term projects.

Internal financeExternal finance

Stretching existing capital further (eg: cutting stock)Bank loans and overdrafts

Retained profits (not suitable for start-ups)Trade credit (extending time to pay suppliers)

Selling some of the businesses assets (eg: buildings)Share capital and Venture capital

DescriptionAdvantagesDisadvantages

Retained ProfitKeeping previous profits to invest in the futureIt is free because it is an internal source!Not available to start-up businesses

Sale of assetsSelling off items with value (eg: buildings and shares)It can reduce or eliminate debtYou may have to pay TAX

LoansBorrowing money (usually from a bank) with interestMay not have to pay interest if the financer is family or friendsYou may have to pay large interest fees

DebenturesA loan or share paid back with interestInterest is usually lower than bank loansYou still have to pay interest

Venture capitalWhen someone invests in a high-risk businessIt can be very successful (Dragons Den)It is very risky with a high failure rate

Share capitalSelling shares on the stock market (PLC only!)You can make money to investGiving away ownership of the business

OverdraftsAgreement with the bank to have a negative balanceThey are usually easy to accessInterests are usually higher than loans

LeasingRenting something you cannot afford to buyIt is yours to use whenever you want itYou do not own it and it isnt an asset

Trade creditYou dont have to pay for something immediatelyIt can be easier to pay for thingsMoney may not be available when due

EmployeesAn employee is somebody who works for an organisation; usually under a contract of employment in return for a salary or a wage.At the start of a new business it is common for an entrepreneur to work on their own, taking on all jobs associated with running the business. However, as the business expands they may need help.Types of employees include Temporary and permanent part-time (less than 30 hours per week) Temporary and permanent full-time

Advantages of part-time staffDisadvantages of part-time staff

Flexible and able to respond to fluctuationsRecruitment costs

Theyre cheaper because they arent in everydayTraining costs

They may improve the quality of the workforce (more motivation and higher productivity and a decrease in absenteeism and labour turnover

May miss out on vital information as theyre not 24/7

Advantages of temporary staffDisadvantages of temporary staff

Flexible and able to respond to fluctuationsRecruitment costs

They are able to cover for permanent employees

Training costs

Specialists can be employed for short periods

May have a lack of commitment (as with PT staff)

An alternative to hiring staff on a temporary basis is to use an employment agency. Although the workers carry out work in your business, they are paid by the agency. This means that the business owner has a contract with the agency and not the employee.The main benefit to using an employment agency is that all recruitment/administration is done by the agency.

Businesses may choose to recruit an advisor/consultant for a specific period of time. These individuals provide services such as accountancy, business strategy, IT, etc. They are paid a fee for their services.

Advantages of advisors/consultantsDisadvantages of advisors/consultants

Able to stand back and ask questions staff cannot seeTheir ideas may not be trusted

They bring ideas from outside the businessThey may not be ideal for the needs of the business

They can raise sensitive issues that staff may ignoreThey can often cost a lot of money to hire

BudgetsA budget is a detailed plan of the income and expenses expected over a certain period of time. Businesses will be required to produce a Budget for Revenue and Profits in order to persuade banks to lend finance.Advantages of budgets They can help ensure that a business does not spend more than expected They can help measure managers performance They can motivate all the staff in the section (delegating budget-power can be motivating)

An Income budget is the expected Revenue over a certain period of time. An Expenditure budget is the expected Expenses over a certain period of time.In a Profit budget is the expected difference between Revenue and Expenses (Income & Expenditure Budgets)

Setting budgets is not an easy job. How do you decide on the level of sales next month or next year? This is especially hard for new businesses with no previous trading experience. Heres how start-ups do it They produce an estimate of sales in the first few months based on secondary and primary market research conducted for their business plan The entrepreneur relies on their own instinct and experience in the industryMost established firms will use last years figures as a guide to the next years with an adjustment for any known changes or objectives.

Zero Based Budgeting is an alternative approach to Expenditure budgets. This starts each budget at zero instead of last years figures. This helps to stop budgets from rising every year.However, there may be some problems with this type of budgeting because managers may lack the experience of knowing what things really cost.The best way to set budgets is to Relate the budget directly with the businesses objectives (what it is trying to achieve) To involve as many as possible during the process; budgets should then be agreed and realistic Make budgets realistic and meaningful to the staff who have to work with them

Cash FlowsA cash flow is the flow of money in and out of a business over a given period of time. Cash flow forecasting is estimating the flow of money in and out of the business. Remember that cash does not always mean profit!Managing cash flow is one of the most important aspects of financial management. Without the cash to pay bills, all businesses will fall.Cash flow problems are the most common reason for business failures. Cash flow forecasts are vital in business start-ups because they help get finance and will also show the finance provider when they will be paid back.

All businesses need to manage their cash position carefully and will need to predict their cash position in the forecast for at least the next six months. This will help enable them to take action if cash becomes short.To prepare a cash flow forecast, businesses need to try and estimate all the money coming into and out of the business. These flows are then set in a grid showing the cash movements each month. Cash Flow example

In order to prepare cash flow forecasts, businesses need to make estimations, just like in budgets, so the estimations are only as good as the research used to carry it out. It is much easier for an established business to create a forecast but all companies must build their forecast in contingencies.When conducting a forecast businesses must anticipate disasters like cash shortages. By creating a worst-case forecast, companies will be able to arrange financial cover for these events before they happen.

Calculating Revenue, Costs and ProfitThe revenue received by a business can be a crucial factor of its success. When a business starts up they should expect low revenues because Their company or product is unknown They are unable to buy large amounts of stock to supply big orders Its difficult to charge premium prices as they arent yet establishedEntrepreneurs start their financial planning by assessing what revenue they might receive in their first financial year. Revenue is calculated by using the following formulaQuantity of goods sold * Selling Price = Sales Revenue

A business that plans to increase its revenue may benefit more from selling a high amount of products at a low price rather than a low amount of products at a high price.

The Cost of Production is important for a manager to know because it will Assess whether it is possible to trade Find out how actual costs and predicted costs match Makes judgements on cost efficiency

Fixed Costs are those that do not vary with the level of output (eg: salaries, rent, utilities, interest charges).Variable Costs are those that do vary with the level of output (eg: materials, piece-rate labour).The formula for calculating Total Costs is:Fixed costs + Variable costs = Total costs

Profit is the difference between revenue and expenditure and is main motive for many businesses. However, some businesses are not established with the aim of making a profit. Profit can be calculated by using the following formula:Total revenue Total costs = Profit(Remember that revenue does not always mean profit!!)

Managers usually refer to Net/Operating Profit as the amount left once all fixed and variable costs have been deducted from revenue. However, this is before TAX has been paid.After working out the total profit after TAX, it can be used to Pay shareholders Reinvest in the company (retained profits)

Profits are important for most businesses because They provide a measure for business success They are the best source of new finance for a business (retained profits)

Forecasting costs and revenues can be difficult new businesses as they dont have any past figures give them ideas. It is possible that entrepreneurs will underestimate fixed and variable costs and overestimate revenues.A business will want to compare its profitability over time. This is called the Net Profit margin and the higher the margin the better! The Net Profit Margin can be calculated with the following formulaNet Profit x 100 / Total revenue = Net profit marginCalculating Break-EvenThe breakeven analysis compares a companys total revenue with its total costs to find out the minimum level of sales required to cover its costs. This is usually shown on a graph called a breakeven chart. In order to calculate the breakeven point a business will need to know the following: The selling price of the product/unit Their fixed costs The variable costs per unit

The breakeven point can be calculated by using the following formulaFixed costs / (Selling price per unit Variable costs per unit) = Breakeven Output

Contribution is the difference between sales revenue and variable costs. It pays for a businesss fixed costs and the remaining money is then counted as profit. Contribution can be calculated by using the following formulaSelling price per unit Variable costs per unit = Contribution PER UNITTotal revenue Total variable costs = Contribution(Contribution PER UNIT is effectively just the second part of the breakeven formula)

Contribution can be reduced by lowering variable costs and increasing selling prices. Lowering fixed costs can then also produce more profit as they are paid for by contribution.If sales revenues exceed the variable costs, the product will be making a positive contribution. Contribution should rise as output increases, covering fixed costs and then increasing profits.

Once you have calculated the breakeven point on a graph you can then work out the Safety Margin. This is the amount of sales a business can lose before it starts to lose profits (the difference in units between the breakeven point and the quantity of units sold)

You can work out the Margin of Safety using this formulaNumber of units sold Breakeven point = MOSYou can also work out the Margin of Safety in by:MOS in units * Selling price per unit = MOS in Key TermsTermDefinition

Adding ValueDoing something to a product in order to increase its price

Advisor/consultantSomebody who provides businesses with help and advice

Bank LoanBorrowing a fixed amount from a bank with interest

Bank OverdraftAn agreement with a bank to go into a negative balance high interest

Breakeven PointThe point at where a businesss revenue covers its total costs

BudgetA plan of income and expenses expected over a period of time

Business AngelSomeone who invests in a high-risk business and provides help/support

Business PlanSets out how a business idea will be financed, marketed and put into practice

Business ObjectiveA goal that a business wishes to achieve

Cash FlowThe incomings and outgoings of a business

Cash Flow ForecastA forecast predicting the incomings and outgoings of a business

ContributionThe difference between total revenue and total variable costs

Contribution Per UnitThe difference between the selling price per unit and variable costs per unit

CostsAmounts incurred by a business during trading operations

DemandThe amount or price of a product that customers are willing to pay

DemographicDefining a market in terms of segmentation (eg: age, income)

Elasticity of DemandThe responsiveness of demand to a change in price or customers incomes

Electronic MarketA market where sellers and customers do not meet (eg: Play, Amazon)

EnterpriseWhere new businesses are formed to offer products or services

EntrepreneurSomebody who takes calculated risks to start up a business

Expenditure BudgetThe budget that sets out the total costs (usually split into categories)

Fixed CostsCosts that do not change with output (eg: rent, salaries, utilities)

FranchisorSomeone/a business who rents their business to other people/businesses

Full-time EmployeeSomebody who works 30+ hours a week under a contract

Income BudgetThe budget which sets out estimates of revenue

InputThe resources that go into producing goods and services

Limited LiabilityBusiness owners/shareholders that are not fully responsible for a business fail

LocationThe place where a company is located or does business

Margin of SafetyThe difference between the output sold and the breakeven point

MarketThe place where buyers and sellers come together to do business

Market GrowthThe percentage of growth of a market over a time-period

Market ResearchThe process of collecting and analysing data to help make marketing decisions

Market SegmentationSegmenting a market into difference sections (eg: age, gender)

Market ShareThe percentage of an market that particular business or product owns

Market SizeThe total demand or value in a specific market

Niche MarketA small part of a large market where customers have specific needs

Opportunity CostThe cost of missing out on the next-best alternative

PatentThe right to be the only producer of a specific product or service

Permanent EmployeeSomeone who works for a business with no set-out ending period

Primary ResearchResearch which is carried out by a company for its own needs

ProfitThe difference between total sales and total costs

Qualitative ResearchDetailed research like beliefs, values and opinions

Quantitative ResearchNon-detailed numerical research like sales figures

ReturnsThe rewards to a business (eg: profit, customer satisfaction)

RevenueThe income of sales (selling price per unit * total units sold)

RiskThe probability or change that wanted outcomes will not occur

SampleA subset of a population usually chosen for market research

Share CapitalFinance invested into a business by shareholders

Social EnterpriseA business that has objectives other than making profits (eg: charities)

Sole TraderA one-person business with unlimited liability

SupplierA business that provides goods or services to other firms

Total CostsA businesses total variable and fixed costs added together

Trade CreditWhen a business does not have to pay for something immediately

TrademarkA sign that can distinguish the goods or services from one trader to another

Unlimited LiabilityOwners of a company that are completely liable if a business fails

USPA unique selling point of a product or service that makes it stand out

Variable CostsCosts that change with the level of output

Venture CapitalSomeone who invests in a new start-up business

Working CapitalThe amount of money that a business has available for day-to-day activities