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Business Finance and the Myths That Surrounds It

When you’re thinking of starting a new business, there are plenty of people willing to give you advice about everything from corporate finance and business funding to logo design. However, with a few exceptions, many of those people are telling half truths, and whole lies!

In this article, we look at the biggest myths about business finance, so that you are better equipped to tell the good advice from the bad.



1. You Can’t Start a Business Without Financing.

If you believe this one, then you probably haven’t heard of Microsoft. Yes, big companies like Microsoft do get business finance – at some point. But many, including the world’s favorite software company, started with little or no outside funding at all.

You can start a business without business finance. It’s harder, and you’ll have to put a lot more effort and thought into it, but it’s very possible.


2. Your Idea Is Everything

If you have a great idea, you have a better chance of getting business finance, but it’s no guarantee. There are many reasons that entrepreneurs who have great ideas are turned down for finance – everything from their personal credit score, to their age, lack of experience, and even, often, for no clear reason at all.

If you really believe in your idea, don’t give up because one avenue for business finance doesn’t work out. Even if banks won’t lend to you, angel investors might, or you might be able to bootstrap.


3. All Business Finance Must Be Paid Back

When most people think business finance, they think bank loans. They worry about being able to repay a loan every month, and that puts them off the idea of becoming a business owner.

However, while traditional finance is one of the business financing options out there, not all options require regular repayment. Equity investors will take a share of your business, for instance, or you might be able to negotiate deferred payments.

Look into all the repayment options before you let loan repayments put you off the dream of owning your own business.


4. If You Get Finance, You Have It Made

When you first start thinking about starting a business, you probably think of getting business finance as the pinnacle of achievement, and that everything after that will fall into place.

However, while it’s true that getting business finance is a major milestone in your route to business success, it’s really only the first step. There’s a lot of hard work ahead of you, and business finance does not guarantee business success.


5. Asking for Less Is Better

Many small business owners think that asking for the bare minimum in business finance is a better idea. Yes, it may make it easier to find finance in the first place, but if it’s not enough, you may find yourself undercapitalised, and in serious trouble, very early on.

Many lenders (traditional and otherwise) will also see an entrepreneur who underestimates their funding needs as a risky investment – so being overly ambitious may hurt your chances! Rather be realistic, hope for the best and plan for the worst, and make your business finance requests accordingly.


It’s All Part of the Process

Now that you’re aware of the biggest myths surrounding business finance, it’s probably also time to realise that this is something nearly every business owner goes through, and that it’s nearly always hard.

Most entrepreneurs try for months, or even years, to find funding for their ideas, so make sure that you go into the process with the idea that you will have to be patient, and persevere.

As they say, however, all good things come to those who wait, and what could be better than finding business finance, and launching your dream company?

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© Copyright Caban Capital Ltd.

Bank House, 81 St Judes Road, Englefield Green,

Surrey, TW20 0DF, United Kingdom
info@cabancapital.co

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