Owners of small businesses often invest their own money into their business. This money could come from:
- Personal Savings
- Inherited Funds
- Selling of Personal Assets
- Taking out personal Bank Loans
They do this because they want the business to survive and grow. It's quite challenging for a small business to get credit for financing it, hence the reliance on personal funds.
The ultimate risk is that any business can fail and the owner loses their personal assets.
Activity 23 - What is the major risk of an individual investing their own money rather than acquiring finances from another source?
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