Page 47 - Business_Studies_F5

Student's Book Form Five

There are various sources of finance for
Activity 3.1 medium-sized businesses. These sources

of finance are grouped into two main
Visit at least five businesses in your categories; internal and external sources.
locality, and consult the owners or Some sources of financing for medium-
managers concerned on the detailed sized businesses are shown in Table 3.1.
FOR ONLINE READING ONLY
information related to features of those
businesses. After consultation, use size Table 3.1: Sources of financing for
metrics or indicators provided in the medium-sized businesses
Tanzania SME Development Policy of Internal sources External sources
2003 to categorise those businesses.
(a) Retained (a) Share capital
earnings (b) Venture capital
Exercise 3.1 (b) Sale of non- (c) Overdrafts

1. Suppose you are invited to talk to current assets (d) Secured loans
a group of entrepreneurs who are (c) Leasing of (e) Debentures
not familiar with medium-sized non-current
businesses. Which issues will you assets (f) Crowd funding
talk to them? (d) Sale and (g) Grants
2. Suppose you are the owner of a leaseback of
particular medium-sized business. non-current
How can you compare your business assets
to other categories of businesses?

Internal sources of finance

Sources of financing for medium- The internal funding of a business is
sized businesses acquired within the business without any
Business enterprises need money for support from outside. Some internal sources
conducting different activities including of finance include retained earnings, sale
buying raw materials, paying labours, or of non-current assets, leasing of non-
other production costs, and operational current assets, and sale and leaseback of
costs. Commonly, financing a business is non-current assets which are explained as
essential as it assists the business to reach its follows:
pre-arranged goals. Thus; without finance, Retained earnings
the business will not be able to engage Retained earnings are also termed as
in production and realize its objectives. undistributable profit. These are profits
Medium-sized businesses are either obtained in the business that are not
financed by the owner (s), other people or distributed to owners as returns on their
organisations outside the business.

Business Studies for Advanced Secondary Schools 38

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