Self Financing

Definition of 'Self Financing'

Financing a business wihtout borrowing or issuing shares. In this situation startup capital is required to run the business until profits can underpin the outgoings of the business.

Advantages are that control is not given to shareholders, and their opinion does therefore not have to be taken into account in relation to business decisions.

Disadvantages are that sufficient capital may not be available to reach desired economies of scale, and because of the large capital often required to start a business, few totally Self-Financing.

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