Many people choose to start their own businesses instead of working for someone else. Over 400,000 new businesses started up in the UK last year. Some people spot a gap in the market that they wish to exploit; others aim to use a skill they already possess. Barclays, the major global financial services provider, offers a range of support for new business start-ups whatever their reason for wanting to strike out on their own. It has a special banking service specifically for small enterprises called Local Business. There are many considerations when starting a new business so Barclays provides support to entrepreneurs all the way through from the initial stages when they are generating ideas, through the business planning stages and continues on as trading commences.
It is expected that the economy has started growing again over the last four months. House prices have started to rise, as have share prices. The FSTE 100 Index is up by nearly 50% since March. Unemployment, however, is set to continue to rise by 150,000 by the end of the year according to the CBI. This is because employment does tend to lag about 12 to 18 months behind economic activity. Perhaps then, these conditions might result in more entrepreneurs wanting to start up their own businesses as confidence in the economy begins to recover and yet there are still few openings in current firms. (Times Online 30th September 2009)
Starting up in business carries risk but the right support and guidance can reduce these risks. In addition to services offered by Barclays to help entrepreneurs through the process of business start-up, such as seminars throughout the country and free banking for the first year, it can also provide the finance which is often required to get off the ground. Some firms will require very little funding whereas others will need to purchase premises and equipment. This combination of financial services and advice offered by banks gives many entrepreneurs the opportunity to realise their ambitions.
- Define the terms bank loan and overdraft.
- Using the case study, explain the type of support that banks like Barclays can provide to small businesses.
- Discuss the extent to which writing a good business plan will determine the success of new businesses.
Answers to questions
Define the terms bank loan and overdraft
- A bank loan is a sum of money borrowed for a given period of time which is paid back with interest.
- An overdraft is when more money is withdrawn from a bank account than it actually contains.
Using the case study, explain the type of support that banks like Barclays can provide to small businesses
- Business planning tools and advice
- Financial forecasting software
- Advice on how to improve cash flow e.g. guidance on effective ways to prevent late payments
- Providing finance e.g. overdraft, loan, mortgage, company credit card
- Free banking services for 12 months
- Support of local business manager
- Seminars for new and existing entrepreneurs
Discuss the extent to which writing a good business plan will determine the success of new businesses
On the one hand…
- Provides goals and targets for entrepreneurs to work towards which can be motivating
- Easier to control and monitor performance and take action if necessary
- A comprehensive business plan will be required to obtain finance from a bank
- Other internal factors will affect the success of the business such as how well it is managed and the quality of any employees
- External factors will affect the success of the business e.g. competitors setting up nearby, new laws being introduced
It may depend on…
- How thoroughly the market research was carried out before writing the business plan
- Whether the business plan is reviewed and updated regularly