Studied by 1 person
What is a source of finance?
Different ways a business can access funds
Why do entrepreneurs need sources of finance?
Start or grow a business
What is an internal source of finance?
Taken within the business
What is an external source of finance?
Taken from out of the business
Is retained profit internal or external?
Internal
Is owners capital internal or external?
Internal
Is the sale of an asset internal or external?
Internal
What is owners capital?
Personal savings
What are the advantages of owners capital?
Don’t have to repay
No interest
Owners maintain control
Motivational
Not time consuming
What are disadvantages of owners capital?
Limited amounts
Threat to family and personal finances
What is retained profit?
Profit kept from a business to help future finance activities
What are the advantages of retained profit?
Don’t have to repay
No interest
What are the disadvantages of retained profit?
Only available if it exists
Shareholder’s won’t like if it is at the expense of their dividends
What are the advantages of selling an asset?
No interest
Don’t have to repay
Making use of a dead asset
Immediate lump sum cash injection
What are the disadvantages of selling an asset?
Only one off
May be losing a good asset
Is crowdfunding internal or external?
External
What is crowdfunding?
Many people invest small amounts
What are the advantages of crowdfunding?
Quick
Easy
No big promises
What are the disadvantages of crowdfunding?
Target amount may not be reached
Idea could be copied by competitors
Are business angels internal or external?
External
What are business angels?
Wealthy people investing in start-ups for share
What are the advantages of business angels?
May offer expertise
What are the disadvantages of business angels?
May be hard to get them to invest
Is raising finance from family and friends internal or external?
External
What are the advantages of raising finance through family and friends?
Repayment flexible
What are the disadvantages of raising finance through family and friends?
Limited amount
Pressure on relationships
