Sources of business finance

Question 1

Internal Sources

Answer 1

Sources of the money within the business, owner previous business

Question 2

External Sources

Answer 2

Money from outside the business , other people putting money into business

Question 3

Examples of Internal Sources : Owner Funds

Answer 3

Money put into business from private savings of owner. Owners own savings , inheritance or redundancy, previous owners

Question 4

Owners Funds Advantages

Answer 4

no need repay finance , retention individually

Question 5

Owners Funds Disadvantages

Answer 5

limited , stress finance individually

Question 6

Retained Profits

Answer 6

Profits to expand and to improve business : RETAINED PROFITS , PLOUGHED BACK PROFITS

Question 7

Retained Profits Advantages

Answer 7

Internal , Instantly available ,not incur additional costs e.g interest payments , Control is not loss

Question 8

Retained Profits Disadvantages

Answer 8

Limited funds available , shorts term returns on investment , not an option for start up business

Question 9

Sale of an Asset

Answer 9

Some business will have possessions they no longer need. Can be sold off to raise money needed for investment. Assets may include: machinery , land , part of business