Question

Mandy used to work as a costume designer at her local theatre until she left work 3

years ago to bring up her daughter Natalie, now 4 years old. Mandy now works from
her house in Slough where she provides, makes and sells hand made glove puppets.
At the moment she sells at local craft fairs and through word of mouth. She now
wants to expand her business to include an on line shop and also to provide puppet
shows for children's parties and puppet making workshops for slightly older
children's parties.
1. Identify 2 reasons why Mandy may need to raise finance.
(2 marks)
2. Explain 1 advantage and 1 disadvantage to Mandy of taking out a bank loan.
(4 marks)
3. Mandy is considering applying for an additional mortgage on her house to
finance the business expansion. Do you think this is a good idea? Justify your
(9 marks)
answer.

Answer 1

1. Mandy may need to raise a finance because she wants to expand her business, so therefore she may need extra money.

2. 1 advantage of taking out a bank loan is that she could build up her business with the money she’s taking out and the disadvantage is that her business may not work out or she won’t be able to pay the bank back

3. It may be a good idea to finance the business expansion because she may or may not grow her business after expanding it. But after expanding it there is possible chances of her business working out and growing more.

Step-by-step explanation: