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ACCT 2220 (69)


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ACCT 2220
Scott Brandon

Often the hardest part of starting a business is raising the money to get going. The entrepreneur might have a great idea and clear idea of how to turn it into a successful business. However, if sufficient finance can’t be raised, it is unlikely that the business will get off the ground. Raising finance for start-up requires careful planning. The entrepreneur needs to decide:  How much finance is required?  When and how long the finance is needed for?  What security (if any) can be provided?  Whether the entrepreneur is prepared to give up some control (ownership) of the start-up in return for investment? The finance needs of a start-up should take account of these key areas:  Set-up costs (the costs that are incurred before the business starts to trade)  Starting investment in capacity (the fixed assets that the business needs before it can begin to trade)  Working capital (the stocks needed by the business –e.g. r raw materials + allowance for amounts that will be owed by customers once sales begin)  Growth and development (e.g. extra investment in capacity) One way of categorising the sources of finance for a start-up is to divide them into sources which are from within the business (internal) and from outside providers (external). Internal sources The main internal sources of finance for a start-up are as follows: Personal sources These are the most important
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