Start Small

Starting a small business can be a great way to successfully make money, but if done the wrong way it can be very costly. John Smart, a prominent financial advisor, has a few tips to get you started, especially when it comes to funding and cash flow.

First off, he says many people believe that they need to get a loan to get a business up and running, but before you start looking at an online loan repayment calculator, or going to the bank and asking how much can I borrow?", it's worth trying to get some cash flow happening without borrowing.

Minimise Risk

He says, try to avoid getting a personal loan or bond loan at the start. Start slow to avoid initial outlay and risk, by keeping your day job and starting a side business. Use tools like free or low-cost online marketplaces to sell your products or market your services. This can soon snowball through word-of-mouth and good online reviews and ratings. If is only when you need to expand your business such as purchasing a vehicle for delivery, you need to start considering financial products such as a car loan to fund your business growth to its next stage.

Cash Injection

If your small business is starting to grow, you may need a cash injection. Many small businesses start by borrowing money from friends and family. John advises that while this can work if the business is successful, it can also be fraught with danger. Many family feuds have been caused by borrowed money not being paid back due to the business going under.

Avoid Friction

To avoid this, treat all borrowed money like a loan from a bank. If your family is lending you $10,000, for example, go online and research personal loan and use a personal loan repayment calculator to work out a schedule to pay the money back in instalments. Draw up a contract of this schedule and stick to it, so that there is no friction or miscommunication.