Source of Finance
Keep a Personal Checklist:
Distinguish between capital expenditure and revenue expenditure.
Distinguish between internal and external sources of finance.
State three sources of internal finance and five sources of external finance.
What are the differences between share capital and loan capital?
Distinguish between venture capital and business angels.
What is the difference between short-, medium- and long-term finance?
What factors do managers need to decide on before choosing their source(s) of finance?
Source of Finance
Choosing the right source of finance to fund a business start-up, business growth, or the daily operations is another one of those tough decision the business owners and managers have to face at various stages of the business.
Let's hear from two business angels share an opinion (among many) on getting a loan when you start a business:
Barbara Corcoran, Entrepreneur & Shark says:
"You DON'T Need MONEY to Start a BUSINESS!" It's about sweat, work ethics, skills, and attitude
According to Barbara Corcoran, if you have a business idea, don't plan it to death. Just get it out there in the market and test it out for real
A business starts when you so business, not on paper
Mark Cuban, Entrepreneur & Business Angel says:
"99% of small businesses - you can start with next to no capital. It's more about effort"
According to Mr. Mark, there are many uncertainties in starting a business, yet one certainty is that you'll have to pay back a loan.
Loans are therefore more suitable for business growth.
Internal & External Source of Finance
At various stages of the business, there are many ways to raise funds
Among the most commonly used sources of finance for businesses are: Retained profits (internal) & Bank loans, overdraft, share capital and trade creditor (external)
Internal Source of Finance
External Source of Finance
Overdraft & Bank Loans
Debt Factoring
Trade Credits
Leasing
Here are some innovative and modern ways to raise funds
