When starting out many entrepreneurs are quick to run to the bank to get finance, but a loan might actually end up killing your business.
Apart from the obvious alternatives to a loan, such as using your own savings, cashing in on your provident fund or getting your family to invest in your business, what can you do to avoid the bank loan?
One way is to start small, build yourself up, and learn from failures before expanding. The main thing is to test your assumptions. Too many young upcoming entrepreneurs are too ambitious when they start out. It’s not a problem to dream big, you just have to be prepared to start small.
Another way to bypass a bank loan is to look at renting equipment, furniture or office. It makes more sense to rent the equipment you need for your business, than to buy it when you are starting out.
THULASIZWE’S LESSONS ABOUT START UP BUSINESSES
Cash runs out very quickly and does not come back. Cash gives you flexibility and mobility so use it carefully.
The Customer is everything. How you treat your customers has serious implications for the business. Treat your clients badly and they will not only take their business elsewhere, but they’ll also tell as many people as they can what a terrible company you have.
Don’t fob off customers. Always get back to them and maintain the personal touch.
Respect compliance. If you do not comply with rules and regulations and have the necessary certificates, you will never be paid.
Chase your invoices. Make sure you are invoicing on an ongoing basis or you won’t get the cash.
Whatever business you go into, you had better know it inside out, down to the last bolt. You must always have a strong sales ability in the business, and cash is king, so whatever money you make, try to retain as much of it as possible and use it to advance the company.
Follow Thulasizwe at: @Blacknation_SA