When starting a business, most of us are discouraged because of money. Most of us thought that it is impossible to start a business without large sums of capital to invest in our business. With the right mentor and financial knowledge, money alone will not hinder your startup business.
By using the leverage of other people’s money, business is able to start with a minimal budget. The techniques such as using good debt, money from investors, and consignment agreements are widely used in the business world. Personally, I also struggle financially for my business ventures, thanks to these techniques, I could start a business with minimal financial investment.
Not all debt are bad, debt is a powerful tool if utilize properly. Good debt is the opposite of the traditional debt that we practiced in our lives. From the word itself, good debt must be used for good expenses and investment purposes, not just for the things that are liabilities to us financially.
Most businesses borrows money from the banks. Not only private businesses borrows money, countries are also borrowing huge sums of money from other countries, banks, and investors to help their economy thrive. Recently, our Philippine government borrows more money to help the economy fight COVID-19.
As a young entrepreneur, I personally choose investor’s money to generate capital. With lack of financial resources, I share my business proposals with my friends. If my friends liked my proposal, we would make an arrangement on how we operate the business together and split our potential profits.
Even big companies like Facebook borrows and raise more money for the growth and expansion of their business. They sell stocks of their company to raise capital through Initial Public Offering (IPO) to potential investors. We just have to look for the right partners.
Have you ever wondered how car dealership works? It is a form of consignment agreement. With minimal financial investment, for instance, you apply a dealership program for Toyota. You will not spend most money on cars, Toyota will let you borrow its cars for you to sell. If a client buys a car from you, then that’s the time that Toyota charge you from the cars they let you sell. Most dealership programs has a grace period for you to sell their cars, otherwise, they will charge the cars unsold under your account.
My experience with consignment was when we joined Capiztahan Festival here in the Province of Capiz. During Capiztahan Festival, we sold grilled seafoods, bbq’s and beverages. Most of the foods and beverages that we sold are under consignment agreement. They allow us to sell their products without payment for a certain time or grace period rather. After the event, we paid our partner’s with the total amount of the products that we borrowed.
Ideas alone are asset that attracts investors. Most investors lacks of creative ideas in this digital age. That is why investors are looking for partners with creative ideas for the success of their business. Most billionaires now, started their business with just ideas, investors raised capital for them.
By knowing and applying these techniques to your business ventures, I wish you all the best! To increase your financial knowledge, I recommend reading a book entitled “Rich Dad, Poor Dad” by Robert T. Kiyosaki.
