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Preliminary Material.

It is the business concepts and ideas raised by the Preliminary Material which should be researched. Your teacher is encouraged to give assistance and advice as required. INFORMATION The Preliminary Material is to be seen by teachers and candidates only, for use during preparation for the examination on Monday 18 May 2015. It cannot be used by anyone else for any other purpose, other than as stated in the instructions issued, until after the examination date has passed. It must not be provided to third parties. H/JAW/110317/Junco/E 2 A flying startSheens Patella is a qualified helicopter pilot and holds a Commercial Pilot License. She is a highly experienced pilot and has taught others to fly.

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Since leaving the RAFF, Sheens has earned EYE 000 a year as a pilot, providing helicopter flights for leisure and business purposes for a London-based company. Sheens is keen to start her own business as she has recently received an inheritance Of IEEE 000, although she has not given up her job as a pilot yet. She believes that the desire to be an entrepreneur is in her genes, and she has the ambition to create and expand a business and to generate high refits.Sheens has no entrepreneurial experience but is skilled in IT.

Her father, Reason, is a highly successful and wealthy businessman. He is also chief executive of a chain of hotels which he founded. Reason is a hugely experienced entrepreneur and loves to create new businesses, usually selling them once established. He has many contacts in the business world. He is very busy but has promised to offer Sheens advice and support whenever possible. Sheens is writing a business plan to set up her own business which will provide helicopter charter services for business meetings, sporting and social events as well as for special occasions.Demand for helicopter charter services rises sharply in the summer months, mainly due to customers booking leisure flights.

She wants to start the business in August to catch the end of the summer season. Sheens plans to purchase and operate one Receptor CE 135 helicopter which will seat up to seven passengers. She intends to locate her business in Surrey, as it is a wealthy area with a good number of potential customers.

This location does mean, however, that she will face tough competition. One established rival, BEG Helicopters Ltd (beg- helicopters. o. K), operates a charter fleet Of five helicopters from Iredell Aerodrome, an airfield that Sheens is considering using as her base. Sheens knows that her business represents a considerable risk and will require a capital investment of E million. The planning of its finances is challenging because costs and prices in this market can change. The purchase of a helicopter will be her largest item of expenditure, but a bank loan could be secured against it. She has decided that her business should trade as a private limited company, Surrey Air Services Ltd (AS Ltd), for a number of reasons.

Her father could afford to lend her the entire start-up capital but accepts Sheen’s desire to be as independent as possible. He has agreed to buy shares in the new company, thereby providing 25% of the capital she needs. Sheens is able to buy enough shares to provide a further 23% of the start-up capital needed. She is unsure of whether to raise the remaining capital by issuing more shares or by arranging a loan from her bank whilst interest rates are low.

Pre-examination Research Tasks Investigate the possible sources of finance available to an entrepreneur planning a business start-up that requires a large capital investment.

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