There’s a romantic notion about being your own boss that attracts many to start a business but most end up getting a rude shock rather than a fat bank account they dreamed of. The reality is when you go into business there is huge risk; and you will either fail or succeed as a business owner. That risk can be slightly minimised if you know where to find capital when you get started.
We often believe that business owners’ are wealthy but really, we are rich with worry and stress about when or where the next pay cheque will arrive. Small business owner’s need to get the money by hook or by crook – this is why it is important that we MUST have capital behind us when starting up.
Good old fashioned savings go a long way when you’re getting set up. Having savings limits some of the risk you will be open to – depending on your business structure, of course.
- Credit cards:
Certainly not ideal but will often help you get by in a pinch. This works well for paying for the small day to day expenses of a business but one should remember their repayment schedules and shop around to get the best interest rates.
- Private loans:
For private loans which may be from friends or relatives to allow you to get started. But you MUST put something in writing to protect the relationship. In the written agreement you should include the amount loaned, how you will pay back the funds and when.
Big banks offer business loans but they normally have to be secured by an asset like property. However, there are many agencies that provide loans for small businesses unsecured. The SBAA has aligned with Kikka Capital as we feel their product is well suited to SMEs and their unique needs. Providers like Kikka are best suited to businesses that have been running for a little while and record of sales. A great option for businesses that need a cash injection to take the next step, to grow their business.
Grants usually come from the Government or Government agencies to help people get set up in business. There is a long list of requirements that need to be met to receive a grant and this definitely should not be relied upon. For more information about grants, visit: http://www.asbc.gov.au/resources/faq/funding
According to the Australian Bureau of Statistics, more than 60 percent of small businesses cease operating within the first three years of starting. And if you factor in that small businesses account for 97% of business in the Australian Private Sector, it is even scarier.
ASIC released a report into corporate insolvencies for 2011-2012 that found 44 percent of businesses suffered poor strategic management, 40 percent had inadequate cash flow or high cash use and 33 percent suffered from trading losses.
If you are going into business with enough capital – afore mentioned savings – you have more chance of success in business and beating the odds of failure. Capital is king when it comes to small business so by hook or by crook you must get that cash into your business if you want to keep your business going.