03 Outline two reasons why Kala’s business might need finance. [4]

[BASEL Moderator]

Kala always wanted to be an entrepreneur. She used to work for a business which downsized its workforce 5 years ago. She then decided to start up CHL. She produced a business plan which helped her obtain finance. Kala now designs customised sports clothes for women. Kala sells these products directly to customers using e-commerce. She has a loyal customer base of 25-40 year olds. However, Kala is worried about increased competition in this niche market. One idea she has is to target different market segments.

03 Outline two reasons why Kala’s business might need finance. [4]

Possible KN Points:
• Increase working capital/examples such as buy inventory or materials/pay day to day costs
• To expand/buy more non-current assets
• To pay for market research and advertising