Finding the capital to start the business

Thanks a lot for the advice and encouragement you give us thorough the emails you send. I would like to run a business where I can work at home, so I can look after my family.

But the problem I have is finding the capital to start the business. In my country, this is difficult to find.

Answer

You are not alone here, Capital is difficult to find in every country. Investors want to be certain that you will develop a profitable company, repay their investment and provide them with a return on their investment.


If they are not confident you can do this , they would rather invest their money in a bank, where they are more likely to make a profit, or at least not lose their money

An exception to this is borrowing from family. In this case, they may be prepared to be more flexible and patient with the requirement for return of the capital and a good return on their investments.

BUT they may not be able to be so flexible and patient if something unforeseen arises, which means they need the money returned quickly, or are not content with the return you earn for them. This could cause family problems.

So, you need to think carefully before borrowing from family.

And bear in mind that investors may want to take a stake in your fledgling business. In this way, they can exert some control over the running of the business, and believe they will be able to ensure their investment is returned to them, ideally with interest. So, think about whether you are prepared to relinquish a share of your business and be governed by partners and shareholders?

But there may be another way. Can you start a business that doesn’t need a lot of capital? Perhaps you can start small, and use profits to plough back into the business. In this way, you may be able to grow slowly and manageably, and retain ownership and control of the business.


So, give some thought to the possibility of using your own money, or just use a small loan to launch with?

But on the other hand, try to make sure your new business is not hampered by lack of capital. The best way to evaluate this is to draw up a business plan and produce a cash flow forecast.

We have studied this in detail already on this site. To revisit the lessons, click on this link.

Starting a Business

This first module offers advice and information on starting a business, including how to write a business plan, and how to produce a cash flow forecast. It also considers how to carry out market research, and suggest some ways that you can seek funding.

The other thing I should mention is that you want to start your own business to enable you to work from home so you can look after your family. Be aware that running your own business is not an easy option. It can require more effort than working for an employer. And crucially, a salary is not guaranteed.

Although you are probably correct in assuming that it will offer you more flexibility in terms of choosing your own hours, subject to the demands of the business.

I hope that has given you something to think about, and will help you to weigh up all these factors before you make your decision.