Business 2.1.1 raising finance internally

business need finance for

\-start a business

* finance expansion to production capacity
* to develop and market new products
* to enter new markets
* take over or acquisitions
* moving to new premises
* to pay for day to day running of the business

owner's capital; personal savings

the most important and only source of finance for a start-up company.

Involves owner investing their money into business ventures. Sources of owner's capital include-personal savings

* redudancy payments
* inheritance
* personal credit cards

owner's capital; personal savings positives and negatives

(+)

* 100%control of business
* no interest to pay
* no delay in obtaining finance
* (-)
* in the case of personal savings

retained profit

profit retained as opposed to being distributed to the owners/shareholders

retained profit positives and negatives

(+)

* doesn't need to be repaid no interest
* the owner of the business control
* does not dilute the ownership of the company
* (-)
* in a smaller business take a while to build up a significant amount of retained profit

sale of assets

the business sells an asset that they no longer need for example

* property
* machinery
* factory

sale of assets positives and negatives

(+)

* depending on the asset significant amount raised
* finance raised does not need to be paid back with no interest
* does not dilute ownership

(-)

* limited to business spare surplus assets
* may take a long time to sell the asset and may need to accept a lower price for a quicker sale
* business loses future use of assets