Source of finance
Description of source of finance
Peronal sources tend to be the first form of finance used by very small firms. And important personal source of finance is the savings that the entrepreneur accumulated before starting up the business. #Savings are a cheap form of finance as they do not involve paying any interest. #Using savings enables the owner to keep control of the business. This is especially valuable to those owners who are choosing to run a business partly so they can enjoy the independence it gives them. #Setting up a new business is always risky. With high failure rates among new businesses, there is a good chance that an entrepreneur will quickly lose savings that have taken a long time to accumulate. #Many entrepreneurs do no have sufficient savings to finance a new business. Older people are more likely to have accumulate savings but it is often the young who have the most innovative ideas Ordinary share capital
Ordinary Share Capital are the resources supplied to the company (equity capital) through the issuance of ordinary shares. Ordinary shares refer to certificates/securities enabling owners to possess a portion of the company through contributing to the equity capital of the company in the primary stock exchange market, i.e. first-hand trading of shares. Ordinary Share Capital also contribute to a part of the shareholders' funds #Shareholders have the right to vote
#Shareholders have the ability to elect the board of directors #Shareholders are able to buy as many new stocks as possible #Share prices fluctuate a lot, which short term oriented investors find very distressing. #Some companies go broke, and due to the occasional dishonest auditor you won't be able to see it coming.Therefore you need to diversify a lot, though this is easyto do since you can buy small amounts of shares. #Shares require analysis and hard work if you are going todo better than...
Please join StudyMode to read the full document