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Extra expenses, not counted on in the planning stage of a new business, can quickly eat up cash intended to grow the business.

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User CAB
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Final answer:

Unexpected expenses can significantly impact the finances of a new business, which are often funded by the owner, loans, or angel investors. Managing these expenses is crucial for the survival and growth of the business.

Step-by-step explanation:

The question refers to extra expenses that were not anticipated during the planning stage of a new business. This is an important consideration in business financial planning, as such expenses can deplete funds reserved for growth.

Entrepreneurs often finance their startups through personal savings, loans using personal assets as collateral, or through angel investors – affluent individuals who offer capital for a share in the business.

However, they must also prepare for unexpected costs that can arise. Early-stage companies face unique challenges in financial capital, as they might not have customers or profits yet and thus struggle to demonstrate their ability to pay investors.

Securing funding for a new business, whether from personal resources, loans, or angel investors, is crucial. Nevertheless, effective budgeting and contingency planning are equally important to accommodate unforeseen expenses without jeopardizing the business's growth potential.

User Janan
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