Business funding – Do’s and Don’ts
Starting your new business brings on a lot of excitement and promise, nevertheless, it involves considerable effort and responsibilities. One of the most common demands of starting a business is looking for a source of funding at some point.
There are many options for small business loans which include government loans, bank loans, business lines of credit, business credit cards, crowdfunding, angels investors, business incubators, and other short and medium-term loans.
We have put together a list of tips for what you should and shouldn’t do when deciding on a source of funding for your startup business in Dubai, UAE
Funding startups – Do’s and Don’ts
- Thorough research.
The first question to ask yourself is why you need the funding. Determining the objectives of the funding will help you research the best options of resources that are available.
- Good planning.
Other key factors when researching your small business funding are preparation and timing. Take your time to prepare your business plan and decide the best time to have the funding and the right ways to use it. Designing a business plan will help you decide the best type of small business funding.
Read more about the principles of building your business plan
- Be open to all options.
Shop around for the best lenders with the terms that suit you; It’s never a wise decision to take the first funding source you find. Be open to knocking on new doors, and carefully study the terms and conditions for repayment.
Explore some of the funding resources in the UAE
- Study every detail.
One of the main criteria of small business funding is the interest rate, which is a valid concern for any borrower, but besides the interest rate, you should also consider other important factors, like how much the lender is willing to fund based on your assets, the loan’s term and conditions, the guarantees you’re required to provide and the flexibility of the repayment.
- Only ask for what you need.
Once you decide on a method to fund your small business, you might feel tempted to ask for as many funds as they’re willing to give. But you need to be careful at this stage; You don’t want to increase your debts by asking for funds you’re not positively sure you’re going to pay back on time. On the other hand, being too careful and asking for less than what your business plan is advising will simply leave you in a shortage of funds, especially in the case of unexpected expenses.
- Track your finances carefully.
When it comes to funding your small business, bookkeeping is one of the most important parts of your management practices. Your lender will be asking for detailed information about the financial situation of your company. It’s also crucial for you to know where you’re standing financially at every stage of your project.
7. Do have extra funds.
As a small business owner, you must have enough money to ensure that you can pay your bills and living expenses during the first year of your company building.
8. Leverage the expertise of professionals.
Seek the help of an experienced accountant, bookkeeping service, or attorney. Dedicating a part of your budget to such services will only pay back well, in terms of your money and time.
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