It has been said that money is the mother’s milk of any start-up – African hub of choice. Capital may be broadly defined as the monetary investiment to jumpstart the business. A new business requires equipment, machinery, service deposit, purchase of stock and working capital among other capital requirements to commence its operations. Unfortunately, these initial business requirements usually come up with high cost setup tag, and the at this stage may take months or even years to startup due to insufficient capital. There are various options a new business owner may consider to raise up to raise the required capital. Most business owners usually start up their business after retirement or resignation from formal employment. More often than not, this category of people will depend on their accumulated personal savings to start the business. The two secrets in investing from personal savings are:
1. To save up as much money as possible before venturing into setting up the business, and 2. To save up for personal living expenses to cover the period the business is likely to take before it can report a profit.
The monetary injection will complement your investiment, and such persons may be connected within the industry.
Limited parnerships have special provisions to limit the direct involvement of the partner in decision-making as well as the liability in the debts of the company.
Among other business financing options, borrowing generally proves more costly and reliable than self financing in the long run, but if initial cash flow is an issue for you, it’s definately something to consider.
It is also important to stick as much as possible to the terms agreed with lenders to foster a good relationship and even lay the ground for future funding requirements.
The overarching aspiration of your business is to transform it into competitive and prosperous within the next decades. That’s, if you are much on course.