When you are starting a new business, the absolute best way to fund it is via cash savings – there are actually several hidden benefits of doing it this way:
1) No interest payments – if you borrow money then there will be an interest charge. Instead, the money you would have spent on interest is available to you.
2) Retaining control – some people choose to sell shares in their business, but if you avoid this then all the future profits are your own.
3) Less stress – you are able to focus on growing the new business, rather than being diverted towards making finance repayments. In addition, should the new business not work out then you have avoided the situation where payments are still required for a closed business – perhaps for several years.
4) Pursue value options – there can be the tendency to overspend when you have a bundle of money raised through finance. You may think that you need the latest & best equipment, when in fact a lower cost and better value solution exists. If demand proves to be sufficient then the more advanced equipment may be worthwhile at some point in the future – preferably again funded from cash savings, made from your sales.
5) Avoid sharks – sadly you will come across people offering products and services that they claim will be beneficial to your business. As a new business owner you are unlikely to have sufficient information and experience to judge whether that is the case. The best defence against such people is to just say “it’s not in the budget”, avoid any financing offers they may have and also most definitely avoid them if they say you can “just put it on a credit card!”