internal sources of finance

• What is the focus of the lesson on internal sources of finance?

  Where businesses source funds internally
• Why do enterprises require financial resources?

  To cover premises, personnel, advertising, and equipment
• What are the two main categories of finance sources?

  Internal and external sources of finance
• What are internal sources of finance?

  Sources that originate within the business itself
• What is a key advantage of internal sources of finance?

  They offer quick accessibility
• What is a limitation of internal sources of finance?

  They might not suffice for larger costs
• What is the first internal source of finance discussed?

  Personal sources
• When are personal sources of finance typically used?

  When launching an enterprise or addressing cash flow issues
• What are the three primary types of personal sources?

  Personal savings, credit cards, informal loans
• Why do business owners invest personal savings at startup?

  It shows commitment and helps secure funding
• What is a risk associated with using personal savings?

  It puts personal finances at risk
• How do credit cards serve as a source of finance?

  They allow purchases on credit to be paid later
• What is a downside of using credit cards for business?

  Accumulated interest can raise overall costs
• What is an informal loan?

  A loan from family and friends
• What is an advantage of informal loans?

  They often have flexible payback terms
• What is a potential risk of informal loans?

  Mishandling can strain personal relationships
• What is retained profit?

  Earnings accumulated over time by the business
• What is a key advantage of retained profit?

  No repayment is required
• What is a disadvantage of retained profit?

  Slow accumulation may mean missed opportunities
• How can businesses generate funds through asset sales?

  By selling assets they no longer require
• What is an advantage of selling assets?

  Proceeds do not need to be repaid
• What is a disadvantage of selling assets?

  It can be time-consuming and may miss chances
• What are the pros and cons of using personal savings as a source of finance?

  Pros:

  • Easily accessible
  • No repayment required

  
  

  Cons:

  • Puts personal finances at risk
  • Can constrain personal life
• What are the pros and cons of using credit cards for business finance?

  Pros:

  • Flexibility in managing cash flow
  • Quick access to funds

  
  

  Cons:

  • Accumulated interest raises costs
  • Requires careful management to avoid debt
• What are the pros and cons of informal loans from family and friends?

  Pros:

  • Flexible payback terms
  • Potentially lower interest rates

  
  

  Cons:

  • Can strain personal relationships
  • May involve lenders in business decisions
• What are the pros and cons of retained profit as a source of finance?

  Pros:

  • No repayment required
  • Easy access to funds

  
  

  Cons:

  • Slow accumulation may miss opportunities
  • Can expose business to cash flow risks
• What are the pros and cons of selling assets for finance?

  Pros:

  • Proceeds do not need to be repaid
  • Can aid during cash flow deficits

  
  

  Cons:

  • Time-consuming process
  • May incur future costs if needed later