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Internal and External sources of finance - Coggle Diagram
Internal and External sources of finance
Internal
These are sources of finances that come from inside the business itself
Examples
Retained Profit
Owners personal savings/capital
Sale of assets
Advantages
Usually more sustainable as they are smaller in quantity and so prevents overtrading
Does not require anything to be paid off like a loan
Easy to put into the business and use
Disadvnatages
Usually takes ages to fill up - espically for retained profit
Usually smaller than external factors - not suitable for situations where large amounts of money is needed
Once its used up - its gone
External
These are sources of finance that comes from outside of the business
Examples
Bank Loan
Venture Captlist
Trade Credit
Disadvantages
Usually have to pay at some point like interest off of a bank loan
Possible to overtrade if you are reckless
May have to give some control of the business away to investors
Advantages
Able to get money for more expensive products
More viable options to choose from which makes it more flexible
Potential business experience from Ventur captlists