Never borrow to start a business
It always seems to be a good idea to borrow money to start a business when you don’t have. Well, I would say before you so that make sure to take calculated risks.
Now you are someone with this big business idea and you believe it going to make you a huge sum of money but the one thing you lack is fund. Someone introduces you to loan and tell you to pay back within a period of time and you jump on the offer as you feel it’s a good idea. Without even doing your research to see if the business is the risk.
I always advise people it’s better to lose your own money than lose another person’s money. Let me tell you why.
When you borrow money from someone because you’re ap fascinated about the whole idea and you feel your business is going to do very well within the period you are sales to pay back. Business do6nt work like that especially if it’s a new business. Most new businesses struggle in their first year of establishment. You are then carried away by the fact that you feel your business would be booming and you will be able to back what you borrowed.
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Time flies and its almost a year since you borrowed the money to start your business. You haven’t made half the capital you borrowed and you are expected to pay off the loan within a year.
Eventually, you become under pressure to back and still your business is struggling to survive. Every dime you make goes to the borrow you borrow an at the end of the day you have nothing left for yourself. This process will continue until you finish paying what you borrowed.
This is one of the disadvantages of borrowing money to start a business. It’s always better to use your own money to avoid stories that touch.
While other the other hand, some people borrow money to start a business and are able to pay back before the expected date. These are people with an existing business or have a very good knowledge of how the business works.