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Starting Up Business without Loans

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Working from Monday to Friday and spending forty hours or more to deal with jobs and professional demands can be tiring. Minimum one third of our time in a day is invested for work. It is not that bad if what we do is what we love and it brings great contribution to the surrounding. Doing these jobs is like just doing our hobbies but with one extra benefit, i.e. getting paid! However, when the thoughts fall to more freedom to manage own time and make decisions for the benefits of ourselves, our families as well as for optimizing our potentials, starting up own business is an inevitable option. But, getting a business started needs capital and when savings are not sufficient yet, loans will be the alternative.

 

Depending on the type of business you will start, the capital varies, starting from office supplies down to other operational costs. Calculating what is needed to set up and secure for the first three months is very substantial to do. Within these months your new business may still need time to open up its ways before really making profits. But is borrowing capital the best way to settle this up?

 

Potential Problems from Borrowing Money

Although bank loans nowadays offer various range of supports for credits and business start up, what you really need to calculate is the time scheme. The frame of time is the duration you have in returning the capital to the bank. This can raise another problem when your business is not smoothly running yet. Failure in paying back to the bank will result in several consequences:

1. Getting fined. This can happen when the term of payment is due date but because of some reasons you are failed to meet this date.

2. Increasing debt. This will definitely happen if for several months the loans are not paid based on the terms and conditions of the agreement.

3. Black list. This can result in termination of loans and all debts will be placed upon the borrower. Your name can be put in the black list within the internal system of the bank.

 

Finding Investor for Fresh Capital

If borrowing from bank is hard in return and your business is not steady yet to deal with it, the idea of proposing for bank loans might not be a great one. Fresh capital can be gained from both own savings and sending proposals to prospective investors. While this strategy may take some time to progress compared to dealing with bank, getting someone investing in your business can give longer time frame for the business to grow.

 

Having an investor can mean several ways, such as profit sharing or other collaboration schemes. In order to convince investors you will need to collect positive record and build sufficient portfolios first. Hence, starting up a new business requires careful preparations which may need to be done ways before the company stands.


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