In starting up a business, there are certain things to consider. You must have a business plan to serve as your guide in operating your projected business efficiently. You need to conduct due diligence in terms of the viability of the business in relation to the location and the primary needs of your target customers.
You also need to study the product you want to market – if they are seasonal or all year round. And of course, you also need to check the competition. Can your business withstand it? Once you’ve considered these scenarios and decided to go ahead with your planned business endeavor, the next thing to think about is where the capitalisation will come from. You can refer to How To Start Preparing For A Business Loan for added resources.
Raising money for your business in Australia may not be as hard as you probably imagine. There are many ways to get the capitalisation or part of it for your business start-up. The ideal scenario is if you have savings to fund the business venture. This way, you’ll be in total control of the business operations because there is less pressure in making returns immediately since you are not paying any interest on the money you are using.
No one will blame you in case the business does not deliver the expected results. But aside from personal funds, there are other options you can take to get capitalisation. You can tap the resources of investors to seed money on your business or use another alternative like crowdfunding. In this case, you need to be able to convince the investor through your business plan. Another option is to obtain business loans from one of the numerous microfinancing institutions in the country, if not from family or some friends.
While not all businessmen are keen on taking loans for business capitalisation, but are more in favour of getting investors, a business loan has its own advantages and benefits, including:
- Personal Commitment
It is easier to deal with loan companies than investors. With loan companies, you have less personal commitment because loan companies are only interested on the viability of your business and your ability to repay the loan. Your commitment to the loan companies is shorter. However, if you take investors, you have a personal obligation to make your investors happy and satisfied. Your commitment does not end when you have repaid your borrowed amount.
- Time and Payment are Fixed
When you take a loan from any Aussie lending company, you enter into an agreement in which repayments for the borrowed amount are fixed in terms of amount and date. Once the loan is settled, the income that your business will generate will be all yours. However, when you have investors, you’ll be tied to them as long as the business is running, sharing with them whatever income your business generates.
- Full Ownership of the Business
If you choose to take a business loan, you’ll be the sole owner of your business. And as such, you have full control of how to operate the business. In the case of having an investor on board, you share the decision-making process related to the business operations.
Different business entrepreneurs may have different opinions on taking business loan and getting an investor to infuse the capitalisation needed by the business. But at the end of the day, what counts most is how you utilise the funds to ensure that your business income will repay them as your business slowly but surely tread the path to success.