A recent article, 7 Things to Ponder Before Getting Small Business Financing by Melinda Emerson says that if you have bright idea for a business and you think that financing is the best option to get started, then be careful.
Immediately seek small business financing rather than bootstrapping it with your personal assets can be risky— it brings its own crop of distractions.
Here are things to consider before pursuing small business financing.
1. You might appear as a beggar
You don’t have financial track record if you’re a startup. Therefore, your potential investor has the power over you and puts you at a disadvantage by charging you a higher cost of capital.
2. You could undervalue your company
When you seek financing, you need to assign monetary value on your company based on its assets and intellectual property —it’s easy to commit substantial mistake that you’ll be able to calculate afterwards.
3. You might get the wrong partners
You put your business at risk when you partner with an investor hastily. The proposal to finance your endeavor seldom comes without strings, so ensure you understand your financier better than you understand your spouse otherwise you may not be ready to take the leap.
4. You’ll be sidetracked from building your customer base
Building a customer base needs motivation and commitment; acquiring financing needs the same. Once you divert your interest from your clientele to pursue funding, you will be sidetracked from building your clientele which is the essence of your business.
5. You Could Lose Control of Your Company
You’ll have to appoint a Board of Directors that will have financial and board control. Backers don’t know you as a fresh entrepreneur and may vote to disregard you as the CEO.
A true entrepreneur sees business opportunity as a way to hone talents and instincts that yields long- term success rather than quick cash. As a startup, YourOffice can help you launch your business by ensuring the right setup for you. YourOffice features a network of world-class business addresses. Each location offers beautifully appointed day offices and team office space that are fully wired and ready for you to move in and start working.