Inquiries, Investigation,

and Immersion
(Feasibility Study)
12
2

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Inquiries, Investigation, and Immersion (Feasibility Study) – Grade 12
Quarter 2 – Module 2: Financing the Business
First Edition, 2020

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Inquiries, Investigation,
and Immersion
(Feasibility Study)
12
Quarter 2
Self-Learning
2 Module 2

Financing the Business

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Introductory Message

For the Facilitator:

Welcome to the Inquiries, Investigation, and Immersion (Feasibility Study)

Self-Learning Module 2 on Financing the Business.

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and independent
learning activities at their own pace and time. Further, this also aims to help learners
acquire the needed 21st century skills especially the 5 Cs, namely: Communication,
Collaboration, Creativity, Critical Thinking, and Character while taking into
consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies that
will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them to
manage their own learning. Moreover, you are expected to encourage and assist the
learners as they do the tasks included in the module.

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 For the Learner:

Welcome to the Inquiries, Investigation, and Immersion (Feasibility Study)

Self-Learning Module 2 on the Financing the Business.

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an active
learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.

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 EXPECTATIONS

In this module, you are expected to:

1. define what capital is and its kinds;

2. explain the role of money in a business enterprise; and

3. discuss sources of funds;

PRETEST

Answer the following briefly with your group mates.

1. Why do we need to determine the capital needed when establishing

a business?
2. How are we going to raise the said capital?
3. What is the role of money in a business?
4. What are the different sources of funds?

RECAP
Careful management of the operations of the business is crucial in bringing
about the expected outcome of the laid plans. During start-up, the
entrepreneur stands as the overall operations manager, he has to oversee all
the activities in the production of goods and services. Delivery of goods and
services has two categories, the Manufacturing Operations, and Service
Operations. A strong operational plan has the following aspects Money,
Manpower, Materials, Machines, and Methods. To sum up, planning the
operations of the business is like what we do when we cook or bake. We have

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to put in appropriate ingredients of the right proportion. In the same manner,
the Ms of production should be properly combined to get the desired output.
Outputs that are expected to make our customers or clients delighted.

LESSON
As discussed in the previous lesson, we have different aspects of Operations.
These are what we call the 5 Ms of Operations: Money, Manpower, Materials,
Machines, and Methods. Today, we are going to talk about the first M, Money.

Capital.
All businesses, small or large, may it be on a starting phase or already
maintaining their operations need capital in generating revenue. These are
financial resources (cash or money) or assets (buildings, equipment, tools,
and materials, etc.) that are used by the business to produce goods or provide
services. Capital has different forms according to its uses.

Types of Capital.
1. Fixed Capital - money needed in purchasing fixed assets or capital goods
2. Working Capital - refers to funds used in the day-to-day operations
3. Growth Capital – money that is used to fund the expansion or growth of
business

Role of Money in Business.

Money is the lifeblood of a business; it should continuously flow to sustain
the operations. Even if you have skilled people, great products of competitive
price, and the best promotional strategies, without enough money, goals will
be difficult to materialize. Money can be used not only in purchasing real
estate, vehicles, tools and equipment, materials and supplies, and other needs
of the enterprise. But also, in paying for the expenses incurred, such as
salaries and wages of the employees, electric and power bills, rentals, and

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other expenses. However, when a business generates sales the money received
will then be used to pay for materials, salaries, among others.

Sources of Funds.
Money that is used as an investment can be raised in different ways. First, it
can come from your savings plus sales of personal properties such as a car,
a house, jewelry, and other valuable things like equipment/gadgets. This
money that comes from the owner’s resources is what we call the owner’s
capital.

Second, you can go to your close relatives or friends who will be willing to lend
their money to support you. Of course, they will not expect that you will repay
them immediately. Indeed, these two are the safest ways to finance your
business.

However, after extracting the resources from your pocket and sourcing out
from relatives and friends for funds, sometimes the accumulated amount is
still insufficient to meet the capital requirements of the business. If that is the
case, you may start looking for outside resources.

External Sources of Capital.

According to Asor (2009, 110), there is a wide range of choices for borrowing
money. These include the following:

Pawnshops. You can borrow money by pawning your valuable items.

Credit Cooperatives. These are a popular and easy sources of credits

especially in rural areas. Usually, it lends an amount up to three times
bigger than the money of the member deposited in the cooperative. Interest
charges are often minimal.

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Money Lenders. These are people who lend quick money without collateral
but charge exorbitant interest rates. They are otherwise known as “five-
six” operators because they usually charge one peso interest per month
for every five pesos they lent.

Lending Investors. These are business enterprises engaged in money-lending

operations. Interest rates are higher than bank rates but lower than those
charged by money-lenders-usually ranging from three to five percent a
month.

Formal sources of credit. These include banks, financial institutions, as well

certain government development agencies and development-oriented, non-
government organizations. They are called formal sources of credit because
they have the legal authority to lend money to individuals and businesses.

ACTIVITIES

Performance Task.

Directions: Using your proposed business, work with your group mates.
Answer the following questions:

1. How much money or capital does your proposed business need to start?

2. How are you going to finance your business?

3. What are the possible sources of funds that can be utilized by your business
to raise capital in case the owner’s resources are not enough?

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 WRAP–UP

Reflect upon.
From what you have learned today:

1. What will you do in case you have sound business ideas but has not enough
funds to put it into business?

2. Will you consider settling with the resources available then strategize in
growing it? Or acquire additional funds to augment what’s readily available?
Which is safer for you?

VALUING

When we have money, we also feel powerful. Money answers everything; it

opens doors for more opportunities and a wider range of options for your
business. However, it will be futile if you fail to use it properly.

REFERENCES
Asor, Winefreda T. 2009. Entrepreneurship in Philippine Setting. Manila City:
Rex Bookstore, Inc.,

Morato, Eduardo A. Jr. 2016. Entrepreneurship. Manila City:

Rex Book Store Inc.,

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