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Ask Leo: Is it advisable to start a new business with loans?

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@adedayoolumide
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I don't think that starting a business with borrowed money is ideal because you have to start paying when your business is still in its infancy.

Loans, as we all know, are not money that you can take and leave without paying back, it means that it does not belong to you, you have to pay it back even with interest. But a lot of people don't really know much about it until they end up being borrowers because they really want to start a business without really laying out the plan.

Yes, you have borrowed money to start a business, but it is the money that controls you over your investment, it continues to dictate what you will do because it lives in your heart, how you will repay the loan, and in that way, expose yourself to risk.

I never say that loan is not a good thing, but what I mean is that it is not good for some people and it does not seem like a good idea to start a new business, you never know how the future of the business with loans.

There are many challenges that you will face if the business is still new. source

Why not good

Starting a business with loans can be risky, especially if you have to pay weekly or monthly, you will find it very difficult. For example, you have a loan to start a business you've never been in before to see what the sales will be like. The first thing you will find is consumer ignorance. What does this mean?

In the early stage of your business, you are still new to the medium, it will be difficult for people who live there their own client to buy from you because they do not know you yet, few will. And in this initial stage you will not earn enough to pay your loan if it is basic weekly or monthly, therefore you will end up taking part of the remaining loan for the payment because you have to do it according to the terms and conditions that you have. was provided. .

Secondly, when the business started to grow and you start to have some clients before that, you will start to run out of capital because you are already taking part of the business loan for payment, which continues to rotate and use other sale money. to pay as soon as possible.

Taking out a loan to start a new business is like putting burdens on yourself. Loans work for people who have a standard business that they run, which I think when they borrow, they immediately see their profit and it would not be a problem to pay, but for companies that do not move in that situation, it will be a problem and when such occurs affects your initial capital and the visit completely

Loans can easily boost a business that you already started and you know the INs and OUTs of it, not the new business to start or you may end up bankrupt. Therefore, it is advisable not to start a new business with loans because its objective is to pay and not to strengthen the business.

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