Dangerous Investments to Fund a Small Startup | Get Financial Freedom Tips | Transform Your Financial Future


Sunday, September 1, 2013

Dangerous Investments to Fund a Small Startup

If you are starting a business, there are many ways that you can finance it. However, some are much wiser than others. There is a list below, of investments that you should avoid when you are starting in business.

Credit Cards

Credit cards are an easy way to buy things. It can be tempting to use either a business or personal credit card to buy the things that you need. If you pay the balance off in full when it is due, then this is fine. However, it can be tempting to only pay off the minimum balance and this could cause all sorts of problems. There will be interest to pay each month and it will take a long time to pay it off. You may end up paying for the items many times over in the interest costs.

Dangerous Investments to Fund a Small Startup


Using an overdraft can be a very easy way to get hold of some money. However, they can be one of the most expensive ways to borrow money. If you have an authorized overdraft then it is not so expensive but an unauthorized overdraft can carry a lot of fees. You may even be charged every day that you are overdrawn and this can add up to a large amount of money. With no pressure to pay it back, you could end up being in debt for a long time before you even realize how much it is costing you.

Payday Loans

It is so easy to apply for payday loans these days. With the money being available quickly and no credit checks required, it can be easy to think that when applying for a no credit check loans you could also use one to fund your business. However, it is not always wise to use them. If you cannot make the repayment, then you will end up being charged a lot of interest and fees. This can lead to you getting in to all sorts of financial trouble. It is therefore a good idea to try to look for other ways to fund your business.

Emergency Savings

It is important to have an emergency savings account that you can fall back on should you need to. It is a good idea to calculate how much your monthly expenses are and have a few months money tucked away safely in a savings account. Using this money to start a business could be very dangerous as you may find that you suddenly need it and it has gone.

Borrow from Friends & Family

Borrowing from friends and family can seem like a great idea. They may even volunteer to lend you money or ask if they can invest in your business. However, it can all go very wrong. If the business does not do well, then you may not be able to pay them back and they may fall out with you over it. If the business does really well, then they may expect a really big return on their investment which you may not agree with. This may also cause you to fall out with them. It is probably best to avoid taking money from friends and family.

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