Family businesses have limited sources of external capital because:

Question

Quizplus · Accepted Answer

Family businesses tend to avoid sharing equity with nonfamily members, which limits their sources of external capital. This can lead to difficulty in securing funding from outside investors, who may be unwilling to invest unless they have a significant stake in the company. As a result, family businesses often rely on internal sources of funding, such as retained earnings, to finance their growth and expansion.

Family Businesses Have Limited Sources of External Capital Because