Six Tips To Help You Save When You Start A Business
Launching your own business is a brave and exciting venture – and it has the best chance of success if you start out with a thorough approach to money planning and saving.
Few people can start their own business without a loan of some sort and while it’s true that borrowing money can be expensive, smart entrepreneurs can save on costs by taking the right approach to securing a loan. Junior Achievement South Africa (JA South Africa), which provides entrepreneurship programmes for youth to develop the skills they need to launch their own businesses, celebrates July’s National Savings Month with six smart tips on how entrepreneurs can keep costs under control at launch and keep saving once they’re up and running.
Successful entrepreneurs ask for advice
Seek out mentors and advisers who can give you information on the best approach to legal, accounting or funding business issues. While some starter expenses are unavoidable, you can learn smart cost-saving methods from those who have already set up their own businesses.
Speak to a friend or family member first
You’ve heard people say don’t mix family or friends with business, right? If you can borrow money from friends or family (rather than apply for finance), they are likely to charge you little or no interest on an agreed payment plan. It’s important to stick to your promises about repayment with loans like this though, to avoid conflict in your relationships.
Borrow money from trusted financial institution
Make sure that any financial institution you approach for a loan is a formal and accredited one. The law does not protect you from informal lenders, who also charge outrageous interest rates.
Knowledge is power – don’t be tricked
Understand the cost implications of the various loans options available to you. Paying a loan back over a longer term may mean lower monthly payments, but this will cost you more in total once the interest has been included.
Micro-lending can help you through the tough times
If you need a small amount of money to launch your business or tide you over a cash-flow wobble, a formal micro-lender may save you time and money. Micro-lenders often provide support and financial advice, and are regulated, ensuring good business ethics and governance. Again, check out their credentials before signing anything!
Find investors or shareholders
If you need a large amount of money to start or boost your business, you could sell a share of it in an equity finance deal rather than taking out a loan. This will save you the cost of paying interest on borrowed money, but be sure that your new shareholders share your vision for the company and that your business idea is sound.
There’s no time like the present to start saving and planning to realise your business dreams. If you haven’t run or managed a business before, look for small courses or programmes on how to develop a business plan, then do your research and start trading in an environment that wants or needs your products.
Source: JA South Africa. Images: Pixabay