Start Up Expenses for A Business – How to Source for Funds
The major stumbling block we encounter when starting a business is sourcing for funds. Start up expenses for businesses are in most cases over and above entrepreneurs’ financial capabilities. One quality of a successful entrepreneur is that of a risk taker. I have to be bold enough to venture into businesses that require capital which is more than my personal savings. Sourcing for funds is not a difficult process but a tricky one.
A business plan is an important tool when looking for funds to cater for the start up expenses for a business. A well laid down plan is used to convince investors and financial institutions alike that the proposed business is viable and that their money will not go to waste. A financial analysis should be provided of how the entrepreneur is planning to repay back the loan if granted assistance. Common providers of business financing include the government, NGO’s, commercial bank and other financial institutions. We can also approach Private investors, but in most cases they would want to partner us in the business, which may not be such a good idea for all of us.
No source is out-rightly superior to the other. What we need to consider are the terms of the loan. Compare the interest rates charged and the repayment period of the potential financiers then select the most favorable. Unless we want to limit ourselves to small engagements, it is highly improbable that as entrepreneurs we are able to meet all the start up expenses for a business. When external financing is a prerequisite, a business plan is an important aid when looking to top up your own savings.