Advisory

Q Starter Advise

Starter Loan Advice

"What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.”  –Dave Thomas, Founder, Wendy’s

Before you firm up decision on taking a loan to start that business, try starting with own funds or grants from family and friends, as stage 1. During this stage (Stage 1), run the business as though your start up capital is a loan that must be paid back with interest.

- Keep records of every activity from time, money and resources spent on the business, to every kobo made in revenue.

- Take feedback seriously as this will help you grow your product or services better for your target customers and improve your demand.

- As your demand rises, keep the record.

Stage 2

-Identify the steps to take for the start-up business, taking account of lessons learnt during Stage 1.

-Calculate the cost required to start on your desired level.

-Determine if the steps and costs can be undertaken in phases.

- Always go for the most necessary first, so as not to incur unnecessary costs.

-Determine the costs per phase and the milestones to reach before execution of the next phase.

-Use our loan calculator to gauge and obtain an estimate of the loan cost.

-Calculate the potential/expected revenue you might make from the business following the execution of phase 1.

-Think through how many months (from minimum to maximum) required for phase 1 execution prior to revenue generation. This helps determine if moratorium period will be required before loan repayment.

Remember there may be teething problems at the beginning of the business, as prevalent with start up business.

-Forecast your potential revenue using the worst case scenario when you were running with own funds.

-Would you be able to cover loan costs and still be profitable?

-Be careful not to be over enthusiastic with your revenue or profit, or with how well you think the product will do.

- Think hard about your fallback plan (have your plan B ready) if this hits a rock on the first try.

-Your loan repayment is key because the more you delay, the more your debt grows and penalties may also accrue.

- Be confident of your business and personal ability to pay back the loan before taking on one.

- Think deeply and critically about the risks involved in your chosen business; learn the trade and tricks.

- Be disciplined and committed to the repayment of your loan and ensuring that business succeeds.

"...what separates the successful entrepreneurs from the non-successful ones is pure perseverance."  – Steve Jobs