It's not easy to raise a capital to start a business nowadays, is either you have someone help you up or get a loan. A loan can be a great way to fund your business, but I think it's good idea to start business. However, it's important to know that a loan can be a bad idea when considering a new business, the truth is, loans can be risky, especially if you're not sure if your business is going to succeed or not. But if you're convinced that you can make a good business and you have the finances to back it up, a loan may be worth the risk.
For me, I think it is better to use savings to start up a business. This is because it is easier to save money than to borrow money, borrowing money is not hard but repay the money borrowed can be difficult. Starting a business with funds that you already have can help business grow than just the loan.
Why a loan can be a bad way to start your business
Although some people may not be able to afford to start their own business without a loan. This is True because raising capital is not something that we found easier especially in this hard economy that things get difficult for us and we endup not have money to execute our plans. However, there are a few things that taking loan can cause to start a business.
If you're starting up a business that you don't know what the future of the business will looks like, or how much profit you'll make with the business, it's bad idea to start it with loan.
Taking loan for business is one of the bad idea that ruin many people's business in Nigeria. People take a loan to start business that deal with selling of goods with the agreement to payback monthly or weekly(Lapo). However, when the business is still in early stage when they're still in process to gain more customers, it get difficult for them to have enough profit to repay back their loan, therefore they endup paying with part of the money they borrow at the start of the business, because the income generated when business is still in early stage is not enough to repay as agreed.
At the end of everything the, part of the money borrowed will be part of money using to payback their loan and that is going to affect the entire business and their paying back. Although If you have a good business idea, it might be a good idea to take out a loan to help you start your business. I have see lot of people who do not have the money to start a business and they obtain a loan and the business is doing fine. Other hand, this can be a risky decision, because you might not be able to repay the loan or you pay it when it's not convenient for you. However, I advise everyone to work hard and raise a capital to start their business.
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The tips you have provided in your article are really helpful. I have assisted many professionals during their careers, and most of them always gave me the same suggestions. That's why I recently took out a loan on the no-credit-check application to invest in my business. I have decided to follow a new marketing strategy and I sincerely hope that it will improve my current level.
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I'm glad the tips make sense to you.
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