Startup Capital and You Funding via Personal Loans 720x380 - Startup Capital and You - Funding via Personal Loans

Startup Capital and You – Funding via Personal Loans

There are many of us who can be dissuaded from starting a business, simply because they believe that huge outlay of capital is needed. However, there are many ways in which we can fund and grow a business, and this doesn’t always mean taking out expensive business loans.

 

Why Use a Personal Loan?

Why Use - Startup Capital and You - Funding via Personal Loans

If you’re the owner of a large empire, then it makes sense that a business loan will be required. A business that has managed to sustain an untarnished reputation and a healthy profit will normally have access to a range of funding options at some competitive rates, you can apply easily on this website.

However, those who are yet to open their doors to customers may find that although there are business loans available, they can be difficult to obtain, or expensive if a loan is approved.

This can be due to the fact that a business that is yet to have a record of its dealings is open to more prodding, purely due to the risk being taken by the lender.

Business loans allow those with a business to borrow a large sum of money upfront, but this can be ill-advised sometimes.

Consider this, you have just invested a large sum of cash into renting two properties for an annual term in order to sell your wares. However, your items aren’t gaining much traction, or it becomes clear that the premises aren’t as situated as we first thought. This can mean that the business can be over before it’s hand chance to shine.

However, breaking down your business model into more manageable chunks allows us to make plans that don’t require as much expenditure. An example of this can be a trial run with a specific product. If you don’t invest as much it’s easier to recoup from, which means that the worst-case scenario is that you break even.

A personal loan may give you less than a business loan would, but it can be much cheaper during the startup process. It also allows you to break down your business into smaller projects, which means that more focus is being invested into each aspect of the business.

 

How a Personal Loan Helps with Marketing

How a Personal - Startup Capital and You - Funding via Personal Loans

Let’s make no bones about it, there are plenty of companies out there who will state that give you unbelievable results when it comes to marketing, but these can come with a high price point. If we were given access to a business loan at the start of our business journey, it would be easy to assume that such costs are a representation of the market as a whole.

Having less to work with means that we’re making the necessary enquiries as to how well a marketing company can serve us. This doesn’t necessarily mean the service will be cheaper as a whole, but it does mean that we’re making the right moves for a successful marketing campaign.

Even if the company did transpire to be uninspiring, you could at least be assured that you haven’t overspent and there are still other avenues available.

 

There is Less Risk Associated With a Personal Loan

There is Less - Startup Capital and You - Funding via Personal Loans

When looking at business loans, it will often be the case that if you’re still to start trading, then you’re in for a difficult ride. There is nothing underhand here, but your business is treated as a separate entity. The best way to look at this is by assessing your own financial situation.

If you had not taken any credit out in any form, your credit report would effectively be a blank page. This means that lenders could see you as a potential risk, simply because there is nothing to build a profile on. This means that although credit could be offered, it may be more expensive than those with a more solid credit history.

The same ethos is applied to a business loan. If a business is yet to trade, then it can be difficult to ascertain its reputation, which means finance can be more costly. It can also mean that you may have to use assets as collateral.

However, as it’s more likely that you will have built up a personal credit history, then access to credit is much easier. Many personal loans for smaller amounts will be unsecured, so you don’t have the worry of your assets being at risk looming over you.

 

Using a Personal Loan in the Right Way

Using a Personal - Startup Capital and You - Funding via Personal Loans

While there are many pros in taking out a personal loan in relation to your startup, you still need to ensure that you’re in a position to repay the debt. With this in mind, you should look to ensure that you are fully aware of any interest rates, how long the loan will run for and that you’ve applied for the right amount.

Working out your finances beforehand means that you can plan for any shortfalls, without placing yourself in financial hardship.

It’s important that we apply for the right amount first time, as making a series of loan applications can be seen as over borrowing, which will raise red flags with some lenders. Should you need more capital moving forward, then it can wise to treat each investment as a project. So rather than applying for everything you need in one swoop, you should break down the business model into separate projects, and look to build it up in this manner.

Of course, there will come a time when further expansion will require a business loan, but there’s very little reason to opt for loans that are just too much for a startup to contend with, when you can carry out a little research and build your company in a more productive manner.

 

 

napkin finance loan e1506908323392 - Startup Capital and You - Funding via Personal Loans

Infographic by: www.napkinfinance.com

 

Startup Stumbling Blocks and How to Avoid Them 720x380 - Startup Stumbling Blocks and How to Avoid Them

Startup Stumbling Blocks and How to Avoid Them

Startup companies require innovation, creativity and vision, but this alone is not enough to guarantee success. Many Startup companies fail for very simple, practical reasons, such as team chemistry or funding. So before you begin your startup venture, read these tips on vision, teamwork, funding and finances so you can start as you mean to go on, and avoid bankruptcy.

 

Vision
Vision - Startup Stumbling Blocks and How to Avoid Them
You must have a vision before you begin your startup venture. However it is just as, if not more, important that you never forget your customer, and never push your vision at their expense. You must be flexible.

This does more than ensures you don’t alienate your market; it can also help you create the best product that you can. It may be a cliché, but problems, and failure, really are opportunities in disguise. ‘Slack’, the instant messaging tool for business, for example, was the result of founder Steward Butterfield’s failure to create a new multiplayer game. Instead of giving up, or sticking rigidly to his vision, he adapted the part that was working, the messenger, and the rest is history!

Another common problem, inspired by the perception of Silicon Valley culture and success, is arrogance. Many people model themselves on the image of various ‘big names who didn’t play by the rules’, like Steve Jobs, Bill Gates and Elon Musk. These men have definitely carved their names into history, but through the strength of their ideas. Flat-out arrogance will get you nowhere.

Interestingly, there has been a lot of recent buzz surrounding a shift in Silicon Valley culture. The Holder report on Uber released this summer, which has resulted in the indefinite leave of their difficult ‘big name’ CEO, Travis Kalanick, who is now being sued by one of his investors, is being touted as a turning point for the region. Similarly, the resignation of David Bonderman, a partner at private equity firm TPG, for a sexist quip, and the firing of a Google engineer over his ‘diversity manifesto’ demonstrates a change in culture which could see arrogant attitudes tolerated even less.

 

Your Team
Your Team - Startup Stumbling Blocks and How to Avoid Them
Your first step should be to find the right co-founder. And yes, you do need one. Convincing someone to join you on your venture will speak volumes as a vote of confidence for investors. Very few successful startups manage with only one founder. That being said, some fail through having too many voices, and it is recommended that you settle on two, or maybe three, founders.

Your founders should not be ‘yes men’, they should complement you and your skills. If you don’t understand all the details of your product, or its industry, you will definitely need a co-founder who does. Or maybe, you could do with someone with business experience, such as an experienced CEO. They need to balance you out, and you need to be honest with yourself what your weaknesses are. Ultimately, it is most important that you share a vision, and they are not simply after a pay out, otherwise you could be causing tension down the road.

The people you hire are vital to a successful startup, so it is not an area that you should take lightly. Your aim is to have a reliable team who you can delegate tasks to and a large part of this is hiring the correct people for the correct job. For example, some founders delegate cash flow management to their assistants, who then go on to damage the business through over-ordering and early paying. Cash flow management is best left to an accountant. If you are in doubt about successful hiring strategies, you should provide extra training, or hire an outside advisor.

As you get bigger, document your processes and vision for new employees to ensure that they will continue your work, even if they don’t have the exact same experience or abilities that you do.

 

Getting funding
Getting funding - Startup Stumbling Blocks and How to Avoid Them
After you have your founders, and possibly your initial team, assembled, you are going to need funding. According to Martin Zwilling, founder and CEO of ‘Startup Professionals’, the most common misconception here is that you will be able to get money from the bank. In reality, banks are the least likely benefactors for startups. This means you are going to have to be creative.

Zwilling notes that the most important thing to remember when you are looking for initial funding is that, at this stage, it is more about selling yourself, than selling your product. As such, it would be expected that you will be putting some of your own savings into the company, after all, how can you expect someone else to have faith in you, if you don’t have faith in yourself? This means it could be necessary to put your idea on hold while you build up savings.

This could be a blessing in disguise, however, as it is not generally recommended that you up and quit your day job on a whim. You may need three-years of living expenses saved just to survive life before you make a profit. You could start slow and work alongside your day job to make sure you can still afford to eat, and saving up some capital to invest in your own venture should be part of that.

But other than that, you can turn to a huge number of creative financing opportunities, such as personal credit lines, friends and family, peer-to-peer lending, crowdfunding, and many others. Angel and Venture Capital Investors are not usually the best option at this stage. This is because brand-new companies pose too much of a risk, and they would prefer to see evidence of a proven business model, with existing revenue and customers.

 

Long-term finances
Long term finances - Startup Stumbling Blocks and How to Avoid Them
After all that work, your initial surge of revenue will feel amazing. But, don’t let yourself believe that you are now a success. This is the last pitfall of setting up your own startup company, you need to separate your profitability from your cash flow so you don’t spend all your initial revenue and investment at once on a large customer base. Business health is not simply how much money is coming into the company, but how profitable the company is. Once that initial revenue is gone, it will be harder to find more revenue later on, so spend it wisely.

To keep on top of your profitability, document all your profits and losses from the get-go, even when they are small enough to be memorable. Hopefully, they soon won’t be, and if you don’t have a system in place, it can get on top of you.

As well as this, keep an eye on growing overhead costs. Once you start to grow, you will need to pay for greater insurance, office admin, taxes, customer support and transportation needs. If you don’t review your prices to keep in line with your overhead costs, you may find your profit margin eroding.

Ultimately, nothing is guaranteed when you start your own business. Your ideas, vision and passion could be perfect, but the smallest slip-up at the early stages could make your company a failure. Do lots of research and take as much advice as you can find, and you will increase your chances of success.