Answer one question only

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. [1] Small businesses typically have significant problems in raising funds.
2. [1] The practice of funding a project / venture by raising monetary contributions from a large number of people, typically via the internet.
3. [1] Access to cheap(er) money for small and medium sized businesses.
4. [1] May not have to pay interest or be repaid. (However, in some instances crowd funding may have interest and repayment.)
5. [1] No need to sell an equity stake in the business.
6. [1] Fast and flexible source of finance.
7. [1] Allows many more speculative projects to be funded.
8. [1] Supports business expansion.
9. [1] Acts as a marketing / brand tool.
10. [1] May give feedback and advice to project fund seeker.
11. [1] Entrepreneurs do not have to risk own money for a new venture.
12. [1] In recent years, there have been moves towards supplementing financial measures of performance such as financial results data and ratio analysis. Nevertheless, quantitative measures of business performance are important and strong answers may well outline the value of financial measures before discussing the case for including the qualitative performance measures.
13. [1] Financial measures could include the following: profit, cash flow, break even, liquidity (current ratio, acid test ratio), profitability (gross profit margin, net profit margin and return on capital employed). Reference may also be made to income statements and statements of financial position.
14. [1] Recognition of the limitations of financial data and often too little emphasis on the qualitative drivers of performance, such as innovation, quality, employee relations, intangible assets.
15. [1] Advantages of non-financial methods of performance measurement: – drivers to success are often intangible assets – customer loyalty innovation, management capability, employee relations, brand value – may well compose a significant proportion of the value of a business.
16. [1] Non-financial measures are more closely linked to long-term strategy of a business – the progress made towards reducing competition, increasing customer loyalty – while traditional measures are more short term.
17. [1] Evaluative answers may just focus on the value and advantages of financial / quantitative measures and assess their performance.
18. [1] Non-financial measures can be better indicators of the long term / future financial performance – R&D decisions made now may well produce longer term benefits – traditional measures do not capture this.