Borrowing Trouble
Considering a loan? Look at your options.
Before incurring onerous debt likely to plague your bottom linefor years, askyourself if getting that loan is really necessary.Could you start your newbusiness with personal savings? Wouldliberal credit terms from vendors helpcarry your existing businessthrough downturns? Might improved cash flow beenough to fundexpansion?
Fact is, most small businesses are funded by savings, leavingowners with noloan repayments, no partners, no one to share profitswith and no exorbitantinterest to pay. But if you absolutely mustlook elsewhere, ask friends andrelatives to help with start-upcapital. Or investigate borrowing against yourretirement plan (ifyou're currently employed), stock-marketholdings,life-insurance policy, certificates of deposit or home.(Be aware that ahome-equity loan is risky; in a worst-casescenario, you could lose yourhouse.) Other options:
Economize. Slash start-up expenses to meet availablefunds. Forgo movinginto an office or buying new equipment. Use yourexisting vehicle, furnitureand supplies. Need tools or materials?Buy used or lease.
Conduct business from home. If you must have an outsidelocation,negotiate for lower rent and leasehold improvements.
Need professional services? Look into trade-outs or timepayments.
Do you buy from outside vendors? Arrange in advance forvolume discountsand just-in-time (JIT) delivery. JIT reducesinventory and the need for storagespace--plus, you don't haveto pay for materials until they're delivered.
