Sources of Finance

Unit 2: Business Resources Assignment 4:P4 Sources of Finance sexual Sources of finance Owners savings- the receiveer of a crease often has to use their have own(prenominal) savings to attempt a business, particularly if they ar a sole trader. This is because banks may not be free to take a risk and invest in them. savings argon a good source of finance for a business, as interest does not lack to be salaried to roughone else while the money is being used, and the business stay totally in the control of the owner. In any business venture it is always an advantage to be using your own money because the freedom of spending it how you please is up to you, stock-still there is a high risk factor with personal savings, the chance of losing owners savings is typically high especially if a small business. Owners savings could be used for fixed and start up costs. Capital from meshings- once a business is operate it may be able to invest the money that it makes as kale back in the business. This means that even greater profits made be made in the future. The core of profit to invest back in the business- or in new business- will depend on how much profit the owner(s) want to keep for themselves against how much they want the business to expand.

For some business it is not possible to use capital from profits- for example, if they are a charity or a not-for-profit organisation. Using profits made as capital is very beneficial for the banking situation of business because it is money earned so no need for a higher loan or to us an extraneous source of finance. An obvious disadvantage is the ploughshareholders possible view on capital re investing, although it is vital from company growth and increasing their share of the market the shareholders might believe they deserve money for their investment before growth. This can cause many problems in the act upon environment although it is the ethical decision. External Sources of finance Banks- banks are able to strait loans,... If you want to get a full essay, order it on our website: Orderessay

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