There are 2 main ways that businesses can access financial resources: From within the business (internal source) From outside the business (external source) Internal sources If you want to grow you small business into an large one, it is very important to invest. If you are going to invest in your own business you need access to finance’s. Almost always only external sources of finance(lenders/investors) don’t find it worthy to invest their money in a new small business. So then you have to rely on your own internal sources of finance to invest in your business. Retained earnings. Retained earnings are easy source of internal finance. They are liquid assets(your profit). Instead if the owner wants he can decide to not spend it but reinvest it in his own company. Current assets. Vodafone’s current assets consist of cash or anything that is easily converted into cash. An example of current assets are stock holdings in other companies. If you invest them correctly you can finance yourself with them and pay off your debts. Fixed assets. Fixed assets are not easily converted to cash like current assets. Fixed assets mostly consist of for example equipment, factories or property’s. Company’s like Vodafone cannot rely on these kind of assets for short-term access to finance. But if Vodafone has a certain time limit before they need to pay off their debt they could use these if they are able to sell them within that time gap. These kind of assets are good to have if you want for example to renew your equipment so you just first sell your old ones. Personal/Owners savings. Personal savings are the backbone of many small businesses. If your business doesn’t have the fixed assets/current assets to finance your idea. You could maybe still have personal finances that you are be willing to be contributing to your business. This gives Vodafone’s owner an alternative to seeking external investors and gives him a opportunity to retain control of his business. When Vodafone was created the owner often needed to use his own personal savings to start the business. External sources. Small business owners almost always need to find a source of external financing in order for them to grow / fund operations. External finance comes in two forms equity or debt. Debt includes credit card purchases, bank loans or promissory notes. Equity financing happens when businesses sell of their shares of their ownership of their company to outside sources that are willing to invest. Banks are able to offer loans, business accounts, commercial mortgages and overdraft facilities based on the business plan. Hire purchase. Vodafone uses the hire purchase law you pay every month an certain amount of money from your mobile subscription what you agreed on while buying it and if you don’t pay it in time Vodafone has the right to take their phone back. Bank loans. Bank loans are one of the primary sources of external finances for starting/small businesses. A company sends an request for a loan application to a bank. The request includes a purpose what they are going to do with the money, the amount and info about what their history is with the company’s credit. The bank searches thrue the data and approves or declines then the loan. If its accepted it will also determine the interest that the company has to pay back as a debt for lending the money. Venture capital. A popular form of equity financing is venture capital. Venture capital consists of people who invest in new and up-and-coming risky ventures, usually in return for a share of the ownership.
All Research Proposal
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