Business Innovation, Enterprise, and Entrepreneurship: Funding Sources

This report provides a comprehensive review of funding sources essential for entrepreneurs. It distinguishes between internal sources, such as owner's investment, retained profits, and sale of assets, and external sources, including bank loans, additional partners, and government grants. The report emphasizes the importance of managing both internal and external finances effectively, highlighting the role of design thinking in adapting to rapid changes in the business environment. The study references an interview with Sheryl Page of Page One Consultants, illustrating practical applications of funding strategies. The report concludes by underscoring the need for a strategic approach to financial resource management to achieve business goals and objectives. Furthermore, it stresses the importance of design thinking skills in managing organizational financial resources.

BUSINESS INNOVATION,
ENTERPRISE & ENTREPRENEURSHIP

Executive summary
Funds are the essential part of every business. For initiating any entrepreneurship, it is
important for the entrepreneur to take special care of the sources from where the funds can be
gathered. In this literature review, it is determined that there are mainly two types of sources
– internal sources and external sources from where an entrepreneur can generate the required
funds. While conducting this literature review, the information from the interview with
Sheryl Page has been considered. The internal sources of funds are sale of investor, old assets
and owner’s investment. On the other hand, bank loan is a major external source of funds.
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Table of Contents
Introduction................................................................................................................................2
Internal sources of funds........................................................................................................2
External sources of funds.......................................................................................................3
Management of internal and external sources of finance...........................................................5
Conclusion..................................................................................................................................6
Reference List............................................................................................................................7
2

Introduction
The study will seek to interview the entrepreneur of Page one Consultants "Sheryl Page".
Page One Consultants, Inc. was founded in the year 1993 by Sheryl Page1. The company
provides high quality as well as superior and innovative solutions to the construction projects
and engineering, enterprise architecture planning solutions, and IT infrastructure. The
company is much cost-effective and always focuses on hiring highly experienced as well as
knowledgeable persons to support and serve the needs of the clients. The company is
currently headquartered in Orlando, U.S., and is operating with 76 employees2. The owner of
Page One Consultants “Sheryl Page” serves the company as the Project Manager. Her
expertise in Technical works involves effective planning, budgeting, quality assurance, as
well as control, resolving issues, and development of the projects. She looks forward to
observe the overall operations and activities within the company3. Her hard work helped her
to accomplish the “Small Business Woman-Owned Person of the Year” award.
Internal sources of funds
Money is the most crucial need of every organization. It is a continuous need of the business,
which makes them accomplish their goals and objectives. Companies raise money to start the
company, and incur their initial expenditure, fund the business activities continuously and
maintain the inflow and outflows of cash along with the expansion of the business.
The sources of finance depend upon various factors such as the period, the exact purpose of
the fund, the needed amount of the operations, as well as the ownership and the company’s
size4. However, two significant sources of funds are there, namely the internal as well as the
external sources. The internal sources have been referred to those funds that are raised within
the firm. Five internal sources of funds are there, such as Owners Investment (additional
capital or start-up), Retained profits, fixed assets sale, collection of the debt, as well as the
stocksale5.
1, "SBA Announces 2017 District And State Of Florida Small Business Week Winners | The U.S. Small
Business Administration | SBA.Gov". 2019. Sba.Gov. https://www.sba.gov/about-sba/sba-newsroom/press-
releases-media-advisories/sba-announces-2017-district-and-state-florida-small-business-week-winners.
2, "About Page One - Page One". 2019. Page One. https://www.pageoneconsultants.com/about-us/.
3"Our Staff - Page One". 2019. Page One. https://www.pageoneconsultants.com/about-us/our-staff/.
4 Campbell, Bonnie. "Why Such a Focus on External Sources of Funds to Finance Development?." Mondes en
développement 2 (2017): 77-92.
5Sastry, VemparalaSita Rama. "Study on the sources and application of funds Of Bse Sensex companies."
(2015).
3

The owner's investment refers to those financial funds that come from the savings of the
proprietor of the organization. It has been used as the start-up capital to set the business. It
can be used as the additional capital to expand the business effectively. It is often termed as
the long term financial source, which helps the firm to resolve its financial issues6. It has a
significant advantage that the funds, which are raised by the organization through the owner’s
investment, do not hold the responsibility to be repaid the amount or its interest. However, no
limit of amount is there as an owner can invest in the business as per his choice.
Retained profits are sources of finance which are available within the firm through the
process of more than one-year trading. The benefits that are made by the organization have
been ploughed back for the business expansion7. Retained profits are also a long term source
of finance. Moreover, retained profits or interest do not require any repayment within the
business. However, the retained earnings are not available in new business.
As provided by the sale of stock refers to those sources of funds that come from selling off
the stock. It is one of the quickest methods of raising the firm’s finance. The selling of the
stock also lowers the cost of holding the stock. However, businesses often lead to take a
lower price of the stock8.
As mentioned in the fixed asset’s sale are those funds of sources that come from the selling of
the firm’s fixed assets. However, the firm does not always have the excess fixed assets to sell
them, as well as it is medium-term finance9. It is one of the effective ways of raising finance.
However, some of the businesses have excess assets to sell it is a slower method as compared
with the other sources of raising the firm’s fund.
External sources of funds
Debt collection refers to those sources of funds in, which the businesses looks forward to
raising finance by collecting the various amount of money that is owed to the firm's debtors.
6 Clark, Gordon L., and Ashby HB Monk. "Asset Owners, Investment Management, and Commitment: An
Organizational Framework." (2019): 9-22.
7Lee, Sanghoon. "Growth, profits, and R&D investment." Economic research-Ekonomskaistraživanja 31, no. 1
(2018): 607-625.
8 store, Don M., Thomas J. Boulton, and Marcus V. Braga‐Alves."Failures to deliver, short-sale constraints, and
stock overvaluation."Financial Review, 50, no. 2 (2015): 143-172.
9Arnold, Marc, Dirk Hackbarth, and Tatjana Xenia Puhan."Financing asset sales and business cycles." Review of
Finance 22, no. 1 (2017): 243-277.
4

It is a short term financial source of the firm10. No additional cost is there to get the firm’s
finance. It is a part of the normal activities or the operations of the firm. However, it also
involves the risk of not getting the debts repaid.
The external sources of funds are those methods that are raised from sources outside the firm.
Bank overdraft, additional partners, government grants, trade credit, hire purchases, leasing,
and share issues are the external financial sources of the firm. The bank loan refers to the
financial sources gain from outside the firm sourced by the money borrowed by the bank over
a period. It can be a medium or long term source of finance11. It always looks forward to set
the methods of repayments, which also facilitates effective budgeting. However, it is an
expensive method as it includes interest payments.
The source of finance from the additional partners is suitable for partnership organizations. It
does not have to repay, as well as no interest is payable into these sources of funding12.
However, it also leads to the diluting control of the partnership.
A limited company is suitable for the issues of shares. It is a long term financial source,
which involves issuing more of the shares. The profits are paid as dividends to the firm’s
shareholders. The process of Mikami, Kazuhiko, can also change the process 13.
Leasing is the method of financial source, which allows the way to obtain the assets without
any lump sum money. It has been arranged through finance companies. It facilitates the
organization to use up to date machinery and equipment14. The repayment procedures are set
over a certain period, which is also budgeting effectively for the firm. However, it can be
many processes, which is much expensive.
The hire purchase is a method, which facilitates an organization to obtain the assets without
paying any lump sum money. The main difference between leasing and hire purchase is that
in the process of hire purchase, the assets have been owned by the company. However, in
leasing, the assets are owned by the financial company15.
10Deville, Joe. Lived economies of default: Consumer credit, debt collection, and the capture of
effect.Routledge, 2015.
11Gallagher, Thomas H., and Matthew DeCamp. "SGIM and External Funds: Continuing Our Conversation."
In SGIM Forum, vol. 41, no. 2, pp. 3-13. 2018.
12Ang, Andrew, Bingxu Chen, William N. Goetzmann, and LudovicPhalippou. "Estimating private equity
returns from limited partner cash flows." The Journal of Finance 73, no. 4 (2018): 1751-1783.
13ownership of the company. "Cooperatives, transferable shares, and unified business law." Annals of Public and
Cooperative Economics 87, no. 3 (2016): 365-390.
14. Zhang, Na. "Leasing and business cycles." Economics Bulletin 38, no. 1 (2018): 262-270.
15Balan, Panickar. "The Hire Purchase Order 1980." Journal of Malaysian and Comparative Law 7, no. 2
(2018): 277-283.
5

The mortgage is known as the secured loan, where installments make the repayment. It is a
financial source of the long term. After making all the repayments, the businesses own the
assets. However, if the business fails to repay the installments timely, the property can be
repossessed16.
The trade-credit refers to the process of buying products or materials and services for the
business operations as well as paying the amount later. It is an effective method for cash
flow17. However, the organization must manage the cash to pay off the debt in time.
Government grants are the external sources of funds, which are provided to established or
new businesses. It does not have to be repaid to the government18. However, it involves
certain specified conditions in which all businesses are not eligible or the grant.
Management of financial internal and external sources of
To effectively manage the sources of finance by the entrepreneurs' design, thinking is the
most effective as well as non-liners and interactive process. The theory seeks towards
understanding the end-users, challenging the various kinds of assumptions, redefining the
issues or problems as well as creating innovative solutions to test the effectiveness of the
method. It helps the entrepreneurs to cooperate with the rapid changes in the environment and
provide the correct framework to design the thinking effectively to grab the opportunity and
growth for the organization19.
As mentioned in the theory of design, thinking improves the organizational ability to generate
effective solutions innovatively in order to cope up with the financial crisis of the
organization. It is an innovative method, which facilitates the management to manage the
cash flow effectively and improves the methods efficiently. It facilitates the speed of control
to adopt practical solutions, which generate value for the organization. The strong
engagement of users enhances the contribution of the employees towards effective decision
making regarding the choice of sources of funds, and its appropriateness for the company20.
16Horvath, Jaroslav, and Philip Rothman."Mortgage Spreads, House Prices, and Business Cycles in Emerging
Countries." House Prices, and Business Cycles in Emerging Countries (February 1, 2019) (2019).
17Cole, Rebel A. "Bank credit, trade credit, or no credit: Evidence from the Surveys of Small Business
Finances." Trade Credit or No Credit: Evidence from the Surveys of Small Business Finances (July 31,
2018) (2018).
18al, Martin, and Roger Svensson."Allocation of R & D Grants in the Business Sector." (2018).
19Verganti, Roberto. "Design Thinking, Design Theory: About the Series." (2017).
20Jackson, Sally. "Design thinking in argumentation theory and practice." Argumentation, 29, no. 3 (2015): 243-
263.
6

However, it is most suitable for the medium or long term duration. It directly involves the
users to contribute time as well as the resources effectively.
Conclusion
There are various sources of finance, namely the internal and external, which facilitate the
business to operate the business activities effectively and accomplish their goals and
objectives. It can be concluded that design thinking skill is one of the most effective methods
to manage organizational financial resources and funding.
7

Reference List
"About Page One - Page One". 2019. Page One. https://www.pageoneconsultants.com/about-
us/.
"Our Staff - Page One". 2019. Page One. https://www.pageoneconsultants.com/about-us/our-
staff/.
"SBA Announces 2017 District And State Of Florida Small Business Week Winners | The
U.S. Small Business Administration | SBA.Gov". 2019. Sba.Gov. https://www.sba.gov/about-
sba/sba-newsroom/press-releases-media-advisories/sba-announces-2017-district-and-state-
florida-small-business-week-winners.
Ang, Andrew, Bingxu Chen, William N. Goetzmann, and LudovicPhalippou. "Estimating
private equity returns from limited partner cash flows." The Journal of Finance 73, no. 4
(2018): 1751-1783.
Arnold, Marc, Dirk Hackbarth, and Tatjana Xenia Puhan."Financing asset sales and business
cycles." Review of Finance 22, no. 1 (2017): 243-277.
Autore, Don M., Thomas J. Boulton, and Marcus V. Braga‐Alves."Failures to deliver, short-
sale constraints, and stock overvaluation."Financial Review, 50, no. 2 (2015): 143-172.
Balan, Panickar. "The Hire Purchase Order 1980." Journal of Malaysian and Comparative
Law 7, no. 2 (2018): 277-283.
Campbell, Bonnie. "Why Such a Focus on External Sources of Funds to Finance
Development?." Mondes en développement 2 (2017): 77-92.
Clark, Gordon L., and Ashby HB Monk. "Asset Owners, Investment Management, and
Commitment: An Organizational Framework." (2019): 9-22.
Cole, Rebel A. "Bank credit, trade credit or no credit: Evidence from the Surveys of Small
Business Finances." Trade Credit or No Credit: Evidence from the Surveys of Small Business
Finances (July 31, 2018) (2018).
Deville, Joe. Lived economies of default: Consumer credit, debt collection, and the capture of
effect.Routledge, 2015.
8

Falk, Martin, and Roger Svensson."Allocation of R & D Grants in the Business Sector."
(2018).
Gallagher, Thomas H., and Matthew DeCamp. "SGIM and External Funds: Continuing Our
Conversation." In SGIM Forum, vol. 41, no. 2, pp. 3-13. 2018.
Horvath, Jaroslav, and Philip Rothman."Mortgage Spreads, House Prices, and Business
Cycles in Emerging Countries." House Prices, and Business Cycles in Emerging Countries
(February 1, 2019) (2019).
Jackson, Sally. "Design thinking in argumentation theory and practice." Argumentation, 29,
no. 3 (2015): 243-263.
Lee, Sanghoon. "Growth, profits, and R&D investment." Economic research-
Ekonomskaistraživanja 31, no. 1 (2018): 607-625.
Mikami, Kazuhiko. "Cooperatives, transferable shares, and unified business law." Annals of
Public and Cooperative Economics 87, no. 3 (2016): 365-390.
Sastry, VemparalaSita Rama. "Study on the sources and application of funds Of Bse Sensex
companies." (2015).
Verganti, Roberto. "Design Thinking, Design Theory: About the Series." (2017).
Zhang, Na. "Leasing and business cycles." Economics Bulletin 38, no. 1 (2018): 262-270.
9