So, you have decided to start your own business, or are at least thinking about it! Starting a business can be one of the most rewarding—personally as well as financially—decisions of your life. However, many potential entrepreneurs fail at the first hurdle as they are unable to fund making their business idea a reality.
Thankfully, there are likely to be business loans available to you wherever in the world you are based. Applying for a business loan can provide you with the funds you need to get your business off the ground. However, it is not the only way—many entrepreneurs choose to fund their startups themselves.
What Upfront Costs Do You Have?
Some businesses require little more than a laptop and internet access to get started. If this is the case for you, you may well have everything you need to get started already. If this is the case, taking out a loan is probably unnecessary.
Other businesses require a lot of expensive equipment. For example, manufacturing firms require all kinds of factory machinery to get started. While companies like Fluent Conveyors offer equipment at highly competitive prices, you will still most likely need funding to get hold of everything you need to start your own factory.
How Many Employees Are There?
If you are self-employed and starting your business alongside an existing job until it is profitable, a loan may not be required. However, if you are employing other workers who need to be paid regardless of whether you are turning a profit yet, a loan may be a good idea.
What Is Your Cashflow Forecast?
Setting a cashflow forecast enables you to make predictions of your profits over certain time frames as accurately as possible. Before submitting an application for a loan, make sure that your cashflow forecast predicts that you’ll be able to pay it off when required.
What Could Potentially Go Wrong?
In business, as in all aspects of life, it is important to have contingency plans in case of disaster. It’s a cliché, but the phrase “hope for the best, prepare for the worst” is worth following. Identify anything that could potentially go wrong that would jeopardize your business plan and cashflow forecast, and make sure that you have back-up plans (or even extra funds) in place just in case.
Do You Have Other Funding Options?
It might be the case that you’ve other potential sources of funding. For example, some governments sometimes provide business grants aimed at stimulating the economy—unlike a loan, you do not have to pay these back. You may also consider taking out loans from friends or family members, who may have lower or no rates of interest.
It’s vitally important to remember that no investment is completely risk-free, and funding from any source can be lost if your business does not succeed. However, if you truly believe in your business idea and are willing to take the risk, starting your own business can be a great choice.
Review Should You Take Out a Business Loan or Fund Your Startup Yourself?.