You are planning to start up your own business, making and selling ice cream. You will start off renting a room from your Uncle, who runs a bakery nearby, to make the ice cream in and will use your own secret recipe, which has been passed down through your family from generation to generation. You need to find out how much money it will cost you to get started. What do you imagine your costs will be? What will you need to spend money on in order to get going (start up costs), and then in order to operate the business day to day (running costs)?

Where could you get the money to start up the business from? What would be the advantages and disadvantages of each source of finance? Would you employ anyone to help you in the business?

Go back to the list of start up and running costs that you started with. Which of your running costs will stay the same regardless of how much ice cream you make each day (Fixed costs), and which will change in relation to the quantity that you make each day (Variable costs)?

Suppose that you now need to go to see a Bank about borrowing some money to set the business up. What sort of information are they going to want about your finances? How could you reassure them that you will be able to sell enough ice cream to pay them back?