Every person aspires to be successful in his life. To be successful, the person has to choose a career path that he will enjoy and will also be somewhat profitable. In deciding a career, some of us take the wrong decision, and for us, success becomes nothing but a dream. A prominent source of employment in the world is to establish a business. It is considered the most fruitful financially because everything that the company earns belongs to the owner. At the end of his life, he will not just retire but set a legacy to be carried forward by his children and grandchildren.
Even though a businessman, majority of times, only reaps benefits from his organisation, there are entrepreneurs all over the world who struggle to keep their business afloat and end up in losses. Now, the question is, what can the businessman do not to let it happen?
The first hurdle to overcome
The first step to be taken by a business owner is to get investors. These investors will ensure your enterprise has enough finances to become operational. There are several ways to get the initial seed for your business. You can-
- Use your personal savings.
- Take a loan from a bank or a direct lender.
- Establish a line of credit using your credit card.
- Apply to local investor’s group.
- Avail government grants for emerging start-ups.
An important consideration to keep in mind, when deciding the amount of investment, is that your business needs this money to maintain a steady stream of working capital for at least the first couple of years. A new establishment will probably not give you any returns in the initial period. At this time, if you are at equilibrium, meaning a no profit- no loss position, consider yourself one of the lucky ones.
For a businessman who has invested everything he had in his business, such a time is especially difficult. And owners who have taken bank loans, come under a conundrum wherein choosing what to do with the little money that he is making becomes troublesome. Does he give himself a salary or pay for the installments? How to choose? Most people decide to jump their installments because the bank owners will get a meal even without his payment, but his family might not.
How to conquer a business debt?
A business debt is pretty common amongst all classes of businessmen, whether small or big. However, a budding entrepreneur suffers the most with it, as his expenses surpass his income by a landslide. In such a situation, the only option for him is to get more funds. But how does he accomplish it? A bank surely won’t give him another loan since his credibility is short. Borrowing money from friends and family only complicates the situation even more. So what is the way out?
The businessman has first to transform the way he has been his company because certainly something is wrong, and then look for finances to make it happen. To do so, there are TWO ways.
- The owner can either revise his business strategy. He can easily do it by changing his target audience, promoting his product more or improving his packaging. For instance, an ill packaged crayon would never be bought by a kid, and he would want something that is very bright and has his favourite cartoon that he can draw. The packaging is the first impression of the product, so you have to make it worth buying.
- Or the entrepreneur can try to understand the need of the customer and capitalise the same. Let me explain it better; for example, you have started a women’s shoe line. But whatever you are producing is already available in the market. You have to make yourself unique. Christian Louboutin is a giant in women’s footwear. A Louboutin on average costs around £800 to £1000. What makes it different is its red sole that separates a Louboutin from all others. Think out of the box, and you can even incorporate Swarovski diamonds in your shoe design; remember something that is unique sells faster.
There is a big problem here. You will need finances for both of these. A bank won’t touch you. So who will? There are direct lenders that can become your saviour. As we have established that your creditworthiness will not be very appealing, loans for bad credit that mandate no guarantor and will save you a few bucks as there will be no fees can be your answer to the financial dilemma. These loans are mainly targeted towards the unemployed, people without a full-time job and regular paychecks, however, a business owner can also avail it.
Once you decide to take on a loan, you have to single-handedly work to make your business a success this time around because failure will guarantee your financial demise. So before taking a loan, make sure you have a set path that will give you honest returns.