In case you have a business, and you intend on starting a project, you may find the need to finance it without using the money of the company. You can find external financing through acquiring bank loans, seeking private investors, or selling a few company shares. Nevertheless, before you consider such project funding in Kenya, it is imperative you understand the merits and demerits of receiving such funds entirely. Below are some of them.
Your company has enough expenses, and if you draw finances from various sectors, you might disrupt their progress. As such, it becomes wise to look for sources outside the business. This way, you fund your projects without having to use your resources. The savings can be utilized in other sectors within the company. Therefore, you do not disrupt operations in the company as you facilitate your new venture.
In some instances, a company may fail to meet the demands of its customers due to less production. The firm may fail to have resources to increase their manufacturing. With the extra cash from outside sources, additional equipment could be purchased for the growth and success of the business. The money can also be used to increase the salary of workers to motivate them or form marketing to acquire extra customers.
The organizations funding the scheme can help give expert advice. For instance, the bank has financed a lot of small businesses. Therefore, it can guide you on how you will avoid various pitfalls so that your plan is successful. If you have an investor with technological skills, they can offer technical advice that you incorporate in your projects to make more significant changes.
Some cons come with getting cash from external sources. The organization or person lending you the money may ask for particular shares for them to allocate you the payment. Some lenders want to be part of the team that makes the decisions regarding the business. Making this agreement may eventually lead to the company going off track with your original vision.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
It takes considerable time to get this cash. As such, you are supposed to find suitable sources, come up with a plan, and arrange meetings to present your ideas to them. The time taken to do all this is long, and still, you may not end up getting the results you hoped for. This has made outside sourcing of money a significant disadvantage.
Different financial solutions will require you to provide an asset as collateral. The asset could be equipment, land, machine, or vehicle. No matter what item you submit, you risk having them taken away in case you fail to pay back the money at the agreed time. Defaulting on your payments means you do not get the assets back.
Your company has enough expenses, and if you draw finances from various sectors, you might disrupt their progress. As such, it becomes wise to look for sources outside the business. This way, you fund your projects without having to use your resources. The savings can be utilized in other sectors within the company. Therefore, you do not disrupt operations in the company as you facilitate your new venture.
In some instances, a company may fail to meet the demands of its customers due to less production. The firm may fail to have resources to increase their manufacturing. With the extra cash from outside sources, additional equipment could be purchased for the growth and success of the business. The money can also be used to increase the salary of workers to motivate them or form marketing to acquire extra customers.
The organizations funding the scheme can help give expert advice. For instance, the bank has financed a lot of small businesses. Therefore, it can guide you on how you will avoid various pitfalls so that your plan is successful. If you have an investor with technological skills, they can offer technical advice that you incorporate in your projects to make more significant changes.
Some cons come with getting cash from external sources. The organization or person lending you the money may ask for particular shares for them to allocate you the payment. Some lenders want to be part of the team that makes the decisions regarding the business. Making this agreement may eventually lead to the company going off track with your original vision.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
It takes considerable time to get this cash. As such, you are supposed to find suitable sources, come up with a plan, and arrange meetings to present your ideas to them. The time taken to do all this is long, and still, you may not end up getting the results you hoped for. This has made outside sourcing of money a significant disadvantage.
Different financial solutions will require you to provide an asset as collateral. The asset could be equipment, land, machine, or vehicle. No matter what item you submit, you risk having them taken away in case you fail to pay back the money at the agreed time. Defaulting on your payments means you do not get the assets back.
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