While there will be many people telling you that now is not a good time to start up a new business, it may actually be the best time to start up a new business. There is a lot to be said for the success or failure of the business depending on the person/people involved, the product/service being sold, the marketing on offer but even with all of these variables in mind, the state of the economy may actually help a new business.
This is because there are increased opportunities when the economy is in its current state. Consumers are looking for value and there is an often an opportunity to purchase stock or raw materials at a more affordable rate. This means that many entrepreneurs find it easier to start up a new business during difficult times in the economy. Of course, it is important to realise that just because it is easier doesn’t mean that it is actually easy.
Starting a new business is difficult
Starting a new business at any time is difficult and one of the biggest issues is finding money to kick-start your business. You will find that the vast majority of businesses require some level of capital to get started. If you are making a product, you need to have the raw materials or ingredients that will help you to make your product and you have to buy these before you make a single sale. The nature of new business means that there is an awful lot of outlay before you start to bring in any money.
Traditionally, people would have turned to banks or financial institutions to obtain start-up finance but in the modern era, these lending institutions are less likely to support a new venture. If you are well-established, have a relationship with a bank and have a track record that can be relied upon, there is a strong chance that you will be able to receive the funding you need. However, if you are starting totally new and don’t have this relationship or track record to rely on, you will find it is very difficult to convince a traditional lender to support your business plans and hand over the cash.
You need to weigh up all of your options
This can be frustrating and it will lead many potential new business owners to stop their plans and think about doing something else. This means that many potential new businesses have been prevented from giving it a go and who knows how many brilliant products or services have been lost to the world.
It is important to remember though that traditional lenders are not the only potential backers when it comes to financing a new business and if you are genuinely serious about getting your business off the ground, you should look into other options. Some other options you should consider include:
- Family members
- Government funding
- Local authority/initiative funding
- Guarantor loans
Some people will point to payday loans as a means of obtaining finance and while that is true, this should be discounted for a number of reasons. These loans are traditionally used for smaller amounts, paid back over a shorter period of time. There is also the fact that payday loans have a very high APR which means that you will pay back a lot more money than what you actually borrowed. This means you will need your business to be a big success in a short period of time, something that can be difficult to achieve. Even the best businesses often take a bit of time to find their audience and start making a return on investment.
Friends and family members will always be available but whether they can support you depends on their own personal circumstances. It is good to ask but you cannot rely on this form of investment. Similarly, depending on where you are located or what industry you are moving into, you may find that there are grants and official funding on offer.
It may also be that guarantor loans will provide you with what you need to kick-start your business. There is a great deal to be said for this option, especially the more attractive APR that goes with this style of loan. Guarantor loans can be arranged for large sums of money and they can be paid back over a lengthy period of time. If you want to finance your new business effectively, a guarantor loan could be your best bet.
Andrew Reilly is a freelance writer with a focus on news stories and consumer interest articles. He has been writing professionally for 9 years but has been writing for as long as he can care to remember. When Andrew isn’t sat behind a laptop or researching a story, he will be found watching a gig or a game of football.