Unit 3 - Finance & accounts
Unlock Business Growth: Internal Vs. External Sources Of Finance
Table of content
Where's the money coming from? 💰
-
🏠 Internal Sources of Finance (That's money from within the business, folks!)
-
Personal Loans: Just like borrowing cash from your cool aunt, but for your business.
- Real-world example: Imagine Steve wants to open a café. He borrows $20,000 from his savings to buy coffee machines and beans. Voila! That's a personal loan in action.
-
Retained Profits: Earnings the business keeps to reinvest rather than distributing it. Kind of like saving up your allowance instead of buying candy.
- Real-world example: If Apple didn’t spend all its earnings and kept some in the bank, that's retained profit.
-
Sale of Assets: Selling stuff the business owns but doesn’t need anymore.
- Real-world example: Let's say McDonald's decides to sell an old ice cream machine (which hopefully worked!). That's selling an asset for cash.
External sources of finance 🌍
-
Share Capital: Selling pieces (or shares) of your business.
- Real-world example: You've heard of the stock market, right? That's where companies like Tesla sell shares to raise money.
-
Loan Capital: Borrowing money with a promise to pay back later, usually with interest.
- Real-world example: Ever heard of a mortgage? It’s like that, but for businesses.
-
Overdrafts: A bank lets the business spend more money than it has in its account. Kind of like a financial safety net.
- Real-world example: If your business bank account has $1,000 but you spend $1,200, that $200 extra is an overdraft.
-
Trade Credit: Buying now, paying later. It's like having a tab at your favorite snack bar.
- Real-world example: Coca-Cola gives a store its drinks now but says, “Pay me in 30 days!” That's trade credit.
-
Crowdfunding: Many people chip in small amounts online to help a business or idea. Like passing a hat around, but digitally!
- Real-world example: Kickstarter campaigns! Ever chipped in for a cool new board game or tech gadget?
-
Leasing: Renting an asset instead of buying. It’s like Netflix for business equipment.
- Real-world example: A restaurant might lease a pizza oven instead of buying one outright.
-
Microfinance Providers: Small loans for small businesses. It’s like a mini-bank for your mini-business.
- Real-world example: Kiva, a platform where you can lend $25 to help someone start a goat farm or a sewing business.
-
Business Angels: Super-rich people who believe in your business dream.
- Real-world example: Ever watched Shark Tank? The Sharks are your business angels (though not always angelic!).
Unlock the Full Content! 
Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 🌟
Unit 3 - Finance & accounts
Unlock Business Growth: Internal Vs. External Sources Of Finance
Table of content
Where's the money coming from? 💰
-
🏠 Internal Sources of Finance (That's money from within the business, folks!)
-
Personal Loans: Just like borrowing cash from your cool aunt, but for your business.
- Real-world example: Imagine Steve wants to open a café. He borrows $20,000 from his savings to buy coffee machines and beans. Voila! That's a personal loan in action.
-
Retained Profits: Earnings the business keeps to reinvest rather than distributing it. Kind of like saving up your allowance instead of buying candy.
- Real-world example: If Apple didn’t spend all its earnings and kept some in the bank, that's retained profit.
-
Sale of Assets: Selling stuff the business owns but doesn’t need anymore.
- Real-world example: Let's say McDonald's decides to sell an old ice cream machine (which hopefully worked!). That's selling an asset for cash.
External sources of finance 🌍
-
Share Capital: Selling pieces (or shares) of your business.
- Real-world example: You've heard of the stock market, right? That's where companies like Tesla sell shares to raise money.
-
Loan Capital: Borrowing money with a promise to pay back later, usually with interest.
- Real-world example: Ever heard of a mortgage? It’s like that, but for businesses.
-
Overdrafts: A bank lets the business spend more money than it has in its account. Kind of like a financial safety net.
- Real-world example: If your business bank account has $1,000 but you spend $1,200, that $200 extra is an overdraft.
-
Trade Credit: Buying now, paying later. It's like having a tab at your favorite snack bar.
- Real-world example: Coca-Cola gives a store its drinks now but says, “Pay me in 30 days!” That's trade credit.
-
Crowdfunding: Many people chip in small amounts online to help a business or idea. Like passing a hat around, but digitally!
- Real-world example: Kickstarter campaigns! Ever chipped in for a cool new board game or tech gadget?
-
Leasing: Renting an asset instead of buying. It’s like Netflix for business equipment.
- Real-world example: A restaurant might lease a pizza oven instead of buying one outright.
-
Microfinance Providers: Small loans for small businesses. It’s like a mini-bank for your mini-business.
- Real-world example: Kiva, a platform where you can lend $25 to help someone start a goat farm or a sewing business.
-
Business Angels: Super-rich people who believe in your business dream.
- Real-world example: Ever watched Shark Tank? The Sharks are your business angels (though not always angelic!).
Unlock the Full Content!
Dive deeper and gain exclusive access to premium files of Business Management SL. Subscribe now and get closer to that 45 🌟