Only borrow what you need. Imagine that you have done a great job figuring any and every possible cost you are going to incur over the first 5 years of your business. You have taken into account the fact that you may struggle in the beginning. You are not relying on early success for money to keep your business afloat. You are instead planning for every possible penny you are going to need to give your company a chance to develop a sustainable position in your industry.
If that number is $100,000, don't borrow $200,000 if it is offered to you. The business owner that knows exactly what money is required for startup success and ongoing operations should not arrange for excessive capital over that figure. There are too many things that can go wrong, even if you have conducted excellent market research. It's okay to allow for a little wiggle room and calculate 10% to 15% over the amount of capital you're going to need. Anything over that is dangerously excessive and tempting.
5. Don't Obsess Over Your Interest Rate
You obviously want to secure a good interest rate or loan repayment particulars. Looking around for an attractive rate could save you thousands or tens of thousands of dollars. Sometimes obsessing over getting the best possible interest rate is a mistake. Having tunnel vision that takes your interest rate into account while blinding you to other financing considerations can cost you more money in the long run.
Only borrow what you need. Imagine that you have done a great job figuring any and every possible cost you are going to incur over the first 5 years of your business. You have taken into account the fact that you may struggle in the beginning. You are not relying on early success for money to keep your business afloat. You are instead planning for every possible penny you are going to need to give your company a chance to develop a sustainable position in your industry.
If that number is $100,000, don't borrow $200,000 if it is offered to you. The business owner that knows exactly what money is required for startup success and ongoing operations should not arrange for excessive capital over that figure. There are too many things that can go wrong, even if you have conducted excellent market research. It's okay to allow for a little wiggle room and calculate 10% to 15% over the amount of capital you're going to need. Anything over that is dangerously excessive and tempting.
5. Don't Obsess Over Your Interest Rate
You obviously want to secure a good interest rate or loan repayment particulars. Looking around for an attractive rate could save you thousands or tens of thousands of dollars. Sometimes obsessing over getting the best possible interest rate is a mistake. Having tunnel vision that takes your interest rate into account while blinding you to other financing considerations can cost you more money in the long run.
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