9 Raising finance MARKET LEADER 4 Unit 9

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9 Raising finance MARKET LEADER 4 Unit 9 Raising Finance

9 Raising finance MARKET LEADER 4 Unit 9 Raising Finance

9 Raising finance MARKET LEADER 4 Main Menu 1 Starting up 2 Listening: Ways

9 Raising finance MARKET LEADER 4 Main Menu 1 Starting up 2 Listening: Ways of raising finance 3 Vocabulary: Financial terms 4 Reading: Financing start-up businesses 5 Skills: Negotiating 6 Case study: Vision Film Company

9 Raising finance MARKET LEADER 4 Starting up

9 Raising finance MARKET LEADER 4 Starting up

MARKET LEADER 4 9 Raising finance Discuss the questions 1. What are the advantages

MARKET LEADER 4 9 Raising finance Discuss the questions 1. What are the advantages and disadvantages for a private individual of borrowing money from the following: a) a bank? b) a friend or colleague? c) a member of your family? d) a loan shark? e) a credit card company? f) another source? 1 Starting up

9 Raising finance MARKET LEADER 4 Possible issues: a) Bank: • Advantages: it’s a

9 Raising finance MARKET LEADER 4 Possible issues: a) Bank: • Advantages: it’s a business transaction that doesn’t involve friends. • Disadvantages: • high rates of interest which mean it can be expensive; • all sorts of problems if you can’t repay the loan such as your credit rating will be affected and it might be difficult to get loans in future. 1 Starting up

MARKET LEADER 4 9 Raising finance b) Friend or colleague: Polonius seems to be

MARKET LEADER 4 9 Raising finance b) Friend or colleague: Polonius seems to be criticizing all sorts of borrowing (the quotation in the unit: “Neither a borrower nor a lender be…” ) c) Member of family: Families are often the main source of borrowing for many business start-ups but they might be less willing to lend for other purposes. 1 Starting up

MARKET LEADER 4 9 Raising finance d) Loan shark • Advantage: people with no

MARKET LEADER 4 9 Raising finance d) Loan shark • Advantage: people with no credit history can borrow money • Downside: interest rates are extortionate and they might be harmed if they don’t repay. e) Credit card company • Easy to do • Interest rates are very high and a bank loan would be cheaper 1 Starting up

MARKET LEADER 4 9 Raising finance Discussion questions: 2. Imagine you have just won

MARKET LEADER 4 9 Raising finance Discussion questions: 2. Imagine you have just won $300, 000. You want to use it to secure your longterm financial future. How would you invest the money? 3. Do you think it is good business practice for a company to pay its bill late? 4. ‘People with overdrafts are bad money managers. ’ Do you agree? 1 Starting up

MARKET LEADER 4 9 Raising finance 5. What do you think the following saying

MARKET LEADER 4 9 Raising finance 5. What do you think the following saying mean? Do you agree with them? a) Time is money. b) Money is the root of all evil. c) A fool and his money are soon parted. d) Money can’t buy you love. e) Love does much; but money does more. 1 Starting up

MARKET LEADER 4 1 Communication Listening Ways of raising finance

MARKET LEADER 4 1 Communication Listening Ways of raising finance

MARKET LEADER 4 9 Raising finance Listening -A • 9. 1 Listen to the

MARKET LEADER 4 9 Raising finance Listening -A • 9. 1 Listen to the first part of an interview with Rosemary Leith, co-founder of the Internet business consultancy Flametree. com. • What are the two commonest ways for businesses to raise finance? 2 Listening: Ways of raising finance

MARKET LEADER 4 Listening 9. 1 2 Listening: Ways of raising finance 9 Raising

MARKET LEADER 4 Listening 9. 1 2 Listening: Ways of raising finance 9 Raising finance

9 Raising finance MARKET LEADER 4 Keys to 9. 1 Equity 2 Listening: Ways

9 Raising finance MARKET LEADER 4 Keys to 9. 1 Equity 2 Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Listening 9. 2 • 1. 2. 3. 4.

MARKET LEADER 4 9 Raising finance Listening 9. 2 • 1. 2. 3. 4. 5. 2 Now listen to the rest of the interview and answer these questions. Are start-up companies more likely to raise money through debt or equity? What about growth businesses? Why can debt be more expensive than equity? Which method of raising finance did Rosemary’s company choose? What four factors does the process of raising money depend on? What are the advantages of the way Rosemary’s company raised money? Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Question 1 1. • 2 Are start-up companies

MARKET LEADER 4 9 Raising finance Question 1 1. • 2 Are start-up companies more likely to raise money through debt or equity? What about growth businesses? Keys: It’s unlikely that start-up companies will be able to get loans and finance themselves through debt. More established growth companies can finance themselves through debt. Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Question 2 2. Why can debt be more

MARKET LEADER 4 9 Raising finance Question 2 2. Why can debt be more expensive than equity? • Keys: Debt is expensive because there are regular repayments to be made lenders. (It isn’t specifically mentioned, but shareholders will be willing in some cases to wait quite a long time before they get any payback on their investment in the form of dividends. ) 2 Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Question 3 3. Which method of raising finance

MARKET LEADER 4 9 Raising finance Question 3 3. Which method of raising finance did Rosemary’s company choose? • 2 Keys: Equity Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Question 4 4. What four factors does the

MARKET LEADER 4 9 Raising finance Question 4 4. What four factors does the process of raising money depend on? • 2 Keys: The state of the economy, the business concept, having the right people, having contacts with investors. Listening: Ways of raising finance

MARKET LEADER 4 9 Raising finance Question 5 5. What are the advantages of

MARKET LEADER 4 9 Raising finance Question 5 5. What are the advantages of the way Rosemary’s company raised money? • 2 Keys: The managers kept control of the company because they were the controlling shareholders: Rosemary Leith and her business partner own the majority of the shares in the company. Listening: Ways of raising finance

MARKET LEADER 4 Vocabulary Financial terms 1 Communication

MARKET LEADER 4 Vocabulary Financial terms 1 Communication

9 Raising finance MARKET LEADER 4 A. Word Match • a) money to carry

9 Raising finance MARKET LEADER 4 A. Word Match • a) money to carry on production and keep trading • b) money a company has 2. risk capital raised from investors who bought shares • c) money invested in a 3. share capital project with a high chance of failure 4. venture capital • d) money a company borrows to start up a new business 5. working capital • e) the perceived value of people and their skills • 1. human capital • • 3 Vocabulary: Financial terms

MARKET LEADER 4 9 Raising finance B. Match the following expressions with the correct

MARKET LEADER 4 9 Raising finance B. Match the following expressions with the correct definitions. 1. I took out a……………. to extend the factory. a) credit b) debt √ c) loan 2. He offered his home as security or…………… when he borrowed from the bank. c) warranty √ a) collateral b) deposit 3. The…………………. rate on the loan was 15%. a) charge b) fee √ c) interest 3 Vocabulary: Financial terms

MARKET LEADER 4 9 Raising finance 4. We have a(n)…………. of $1 million to

MARKET LEADER 4 9 Raising finance 4. We have a(n)…………. of $1 million to finance our three-month advertising campaign. c) expense √ a) budget b) cost 5. They have to pay the loan back over three years. The first…………is due in August. a) amount √ b) installment c) part 6. Our state-of-the-art machinery is our major…………. √ a) asset b) possession c) property 3 Vocabulary: Financial terms

MARKET LEADER 4 9 Raising finance 7. We want to find a partner who

MARKET LEADER 4 9 Raising finance 7. We want to find a partner who will take a …………. . in our business. √ c) stake a) risk b) share 8. Thanks to a government…………………the firm was able to move to a new location. a) contribution √ b) subsidy c) support 9. Money owed by a company to its suppliers forms part of its……………. √ b) liabilities a) damages c) losses 10. When the bank grants a business an………………. . facility, their current account can go into the red. √ a) overdraft b) overhead c) overpayment 3 Vocabulary: Financial terms

9 Raising finance MARKET LEADER 4 Reading Financing start-up businesses

9 Raising finance MARKET LEADER 4 Reading Financing start-up businesses

Language points of the text

Language points of the text

poised (L. 5) adj. completely ready to do sth. or for sth. to happen,

poised (L. 5) adj. completely ready to do sth. or for sth. to happen, when it is likely to happen soon poised to do sth. Spain was poised to become the dominant power in Europe. poised on the brink/edge of sth. The economy is poised on the edge of collapse.

catalyst (L. 6) noun, sth. or someone that causes an important change or event

catalyst (L. 6) noun, sth. or someone that causes an important change or event to happen catalyst for They hope his election will act as a catalyst for reform.

conducive (L. 20) adj. be conducive to sth. , if a situation is conducive

conducive (L. 20) adj. be conducive to sth. , if a situation is conducive to sth. such as work, rest etc, it provides conditions that make it easy for you to work etc: an environment conducive to learning. Other things being equal, visual improvements are conducive to survival and reproduction.

sanctuary (L. 49) noun. a place where people who are in danger from other

sanctuary (L. 49) noun. a place where people who are in danger from other people can go to be safe. • Fleeing refugees found sanctuary in Geneva. • His church became a sanctuary for thousands of people who fled the civil war.

scramble (L. 55) verb. If you scramble over rocks or up a hill, you

scramble (L. 55) verb. If you scramble over rocks or up a hill, you move quickly over them or up it using your hands to help you. • Tourists were scrambling over the rocks looking for the perfect camera angle. • She scrambled down the tree as quickly as she could.

Article B entrepreneurship (L. 2) • noun. the state of being an entrepreneur, or

Article B entrepreneurship (L. 2) • noun. the state of being an entrepreneur, or the activities associated with being an entrepreneur. • Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail.

averse (L. 30) • adj. formal, unwilling to do sth. or not liking sth.

averse (L. 30) • adj. formal, unwilling to do sth. or not liking sth. • be averse to (doing) sth. • Jim is averse to using chemicals in the garden. • Some banks are risk averse (=do not like taking a risk).

equity (L. 67) • noun. shares in a company from which the owner of

equity (L. 67) • noun. shares in a company from which the owner of the shares receives some of the company's profits rather than a fixed regular payment • The rankings were based on return on equity.

stake (L. 68) • noun. if you have a stake in a business, you

stake (L. 68) • noun. if you have a stake in a business, you have investedmoney in it • hold/have a stake in sth. • He holds a 51% stake in the firm.

9 Raising finance MARKET LEADER 4 Look at the exercises 4 Reading: Financing start-up

9 Raising finance MARKET LEADER 4 Look at the exercises 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -A • Scan the two articles on

MARKET LEADER 4 9 Raising finance Reading -A • Scan the two articles on page 79 and match them to the following statements. 1. Emerging entrepreneurs will be essential to the future prosperity of the country. 2. With banks reluctant to lend, many entrepreneurs have looked to family and friends for help providing start-up capital. Article A: statement 1 Article B: statement 2 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -B • Work in pairs. Student A

MARKET LEADER 4 9 Raising finance Reading -B • Work in pairs. Student A reads article A; Student B reads article B. Do not read your partner’s article yet. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 1.

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 1. In both countries entrepreneurship has always been an important part of the culture. ‘Only now is Japan starting to develop a business environment conducive to entrepreneurial growth’. But in Italy, ‘entrepreneurship seems part of the culture’. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 2.

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 2. In both countries businesses usually start with finance from banks. In Japan, capital was available from banks, but new companies found it hard to obtain: ‘The head of a big bank … doesn’t know what it’s like trying to raise ¥ 500, 000’. In Italy, ‘banks have… become risk -averse and reluctant to lend’. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -C • True or False T 3.

MARKET LEADER 4 9 Raising finance Reading -C • True or False T 3. Risk money is available in Japan, but not readily available in Italy. ‘… the country has attracted [risk capital]’. Whereas in Italy, in one study, out of ‘scores of entrepreneurs’ only two had obtained capital. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 4.

MARKET LEADER 4 9 Raising finance Reading -C • True or False F 4. Families often provide finance for start-up companies in Italy and Japan. Families are not mentioned in the article about Japan. It’s true of Italy, where people ‘borrow from parents, other family members and friends’. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -C • True or False T 5.

MARKET LEADER 4 9 Raising finance Reading -C • True or False T 5. Both governments want to promote schemes to encourage new businesses. ‘Japanese authorities have been [making] the country’s legal and structural framework more venture business-friendly. ’ (We can assume this includes specific schemes. ) In Italy, there ‘is an outstandingly successful government-funded scheme to encourage young entrepreneurs’. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -D • Match the definitions below to

MARKET LEADER 4 9 Raising finance Reading -D • Match the definitions below to words in the articles. Then use the words in sentences of your own. 4 Reading: Financing start-up businesses

9 Raising finance MARKET LEADER 4 Article A • something that causes an important

9 Raising finance MARKET LEADER 4 Article A • something that causes an important catalyst change or event to happen (para 1) • to encourage something to happen over a foster period of time (para 3) • favouring people who want to start up new entrepreneur-friendly businesses (para 3) • a company paid to do part of the work of subcontractor another company (para 2) 4 Reading: Financing start-up businesses

9 Raising finance MARKET LEADER 4 Article B • a company’s business expressed as

9 Raising finance MARKET LEADER 4 Article B • a company’s business expressed as sales of turnover goods and services over a period of time. (para 3) • shares that one company owns in another equity stakes company (para 5) • a loan which is not guaranteed by the borrower’s unsecured loan assets (para 5) • a bank that deals with businesses rather than the merchant bank public (para 2) 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E • Study the order of the

MARKET LEADER 4 9 Raising finance Reading -E • Study the order of the underlined words in the sentence from article A. Then rewrite the sentences below beginning with the words in brackets. Discuss how the meaning of the sentence is affected in each case. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E • E. g. Only now is

MARKET LEADER 4 9 Raising finance Reading -E • E. g. Only now is Japan starting to develop a business environment conducive to entrepreneurial growth. 1. (Seldom…) We rarely have goods returned to us because they are faulty. • Seldom are goods returned to us because they are faulty. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E 2. (At no time…) He never

MARKET LEADER 4 9 Raising finance Reading -E 2. (At no time…) He never apologized for his mistake. • At no time did he apologize for his mistake. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E 3. • 4 (Under no circumstances…)

MARKET LEADER 4 9 Raising finance Reading -E 3. • 4 (Under no circumstances…) The budget must not be exceeded. Under no circumstances must the budget be exceeded. Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E 4. (Only by…) We will increase

MARKET LEADER 4 9 Raising finance Reading -E 4. (Only by…) We will increase sales significantly by spending more money on advertising. • Only by spending more money on advertising will we increase sales significantly. 4 Reading: Financing start-up businesses

MARKET LEADER 4 9 Raising finance Reading -E 5. (On no account…) Private calls

MARKET LEADER 4 9 Raising finance Reading -E 5. (On no account…) Private calls should not be made from the office. • On no account should private calls be make from the office. 4 Reading: Financing start-up businesses

MARKET LEADER 4 1 Communication Skills Negotiating

MARKET LEADER 4 1 Communication Skills Negotiating

9 Raising finance MARKET LEADER 4 Negotiating • A. Which of these negotiating tips

9 Raising finance MARKET LEADER 4 Negotiating • A. Which of these negotiating tips do you agree with? Explain why or why not. 1. In the early stages, you need to ask the other side a lot of questions. 2. Always interrupt if you don’t understand sth. 3. Never make a concession for free. Always get sth. in return. 4. Use simple, direct language and be open about your aims. 5 Skills: Negotiating

9 Raising finance MARKET LEADER 4 Negotiating 5. Signal what you are going to

9 Raising finance MARKET LEADER 4 Negotiating 5. Signal what you are going to do. For example, say, ‘I’d just like to clarify that’. 6. Summarize often so that everyone is clear when you reach agreement. 7. Adapt your language so that you don’t appear aggressive. 8. Talk about your emotions and how you are feeling. 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance B. Research shows that skilled negotiators often use

MARKET LEADER 4 9 Raising finance B. Research shows that skilled negotiators often use techniques 1 -5 below to achieve their negotiating objective. Match the techniques to their definitions. • • • 5 Open questions: Closed questions: Softening phrases: Signalling phrases: Summasrising: Skills: Negotiating

MARKET LEADER 4 9 Raising finance B. Research shows that skilled negotiators often use

MARKET LEADER 4 9 Raising finance B. Research shows that skilled negotiators often use techniques 1 -5 below to achieve their negotiating objective. Match the techniques to their definitions. • Open questions: • gather information and explore the opposite number’s views. • Closed questions: • check understanding and ask for precise information. 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance • Softening phrases: • modify language so that

MARKET LEADER 4 9 Raising finance • Softening phrases: • modify language so that it does not appear too aggressive. • Signalling phrases: • say what you are going to do before you do it. • Summasrising: • go over the points covered to highlight when agreement is reached. 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance C. Match the statements and questions below to

MARKET LEADER 4 9 Raising finance C. Match the statements and questions below to the headings in the Useful language box. Then, make up two expressions of your own for each heading. Closed question 1. Can you offer any collateral? Closed 2. What sort of figure doquestion you have in mind? Open question 3. What sort of benefits are you looking for? 4. There seems to be a discrepancy in your Softening phrase figures. 5. Let me clarify my last point. What I meant Signalling phrase was… 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance Summarising 6. Can I just recap? phraseour problem.

MARKET LEADER 4 9 Raising finance Summarising 6. Can I just recap? phraseour problem. 7. I’m afraid that Softening doesn’t solve 8. Could I make a suggestion? Why don’t we Signalling phrase renegotiate the loan? 9. When can you Closed begin question repayment? 10. Let’s go over what we’ve agreed. Summarising 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance D. Work in pairs. Role play the following

MARKET LEADER 4 9 Raising finance D. Work in pairs. Role play the following situation. • A financial manager learns that he / she has been posted to one of the company’s subsidiaries in a developing country. He / she does not really want to take up the posting but cannot refuse because it will improve his / her career prospects. He / she meets the Personnel Director to negotiate better financial terms for the posting. 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance • Financial Manager: turn to page 148. •

MARKET LEADER 4 9 Raising finance • Financial Manager: turn to page 148. • Personnel Director: turn to page 155. 5 Skills: Negotiating

MARKET LEADER 4 9 Raising finance Case study Vision Film Company

MARKET LEADER 4 9 Raising finance Case study Vision Film Company

9 Raising finance MARKET LEADER 4 Task • Work in groups. • Group A:

9 Raising finance MARKET LEADER 4 Task • Work in groups. • Group A: Director and Executive Producer of Vision Film Company (turn to page 153). • Group B: Directors of European Finance Associates (turn to page 150). • Read your role cards and prepare for the negotiation. Then hold a meeting and negotiate a suitable agreement. 6 Case study: Vision Film Company

9 Raising finance MARKET LEADER 4 Background 6 Activity Film making Based Krakow, Poland

9 Raising finance MARKET LEADER 4 Background 6 Activity Film making Based Krakow, Poland Founded 15 years ago Output so far commercials and documentaries, some award-winning Personnel production staff plus freelancers Case study: Vision Film Company

9 Raising finance MARKET LEADER 4 Background Current project Finance source Provisional finance package

9 Raising finance MARKET LEADER 4 Background Current project Finance source Provisional finance package feature film set in post-war European Finance Associates $ 10 million Stage in negotiations second meeting next month to finalise Usual investment return sum invested + interest + share of profits 6 Case study: Vision Film Company

9 Raising finance MARKET LEADER 4 Writing • As Executive Producer of Vision Film

9 Raising finance MARKET LEADER 4 Writing • As Executive Producer of Vision Film Company or as a Director of European Finance Associates, write an e-mail to all senior staff informing them of the results of the negotiation and indicating how the project will proceed. • Writing file page 139 6 Case study: Vision Film Company

MARKET LEADER 4 9 Raising finance Learn t. Review and Practice what you have

MARKET LEADER 4 9 Raising finance Learn t. Review and Practice what you have Learnt.

9 Raising finance MARKET LEADER 4 Review Practice Learn Review and Practice what you

9 Raising finance MARKET LEADER 4 Review Practice Learn Review and Practice what you have Learnt.