Want to start a business, is it better to try for a loan or invest my own money?

Got2Save

I been researching online how getting a start up loan would be a bad idea as you don't want to start off owing money to anyone, and that it's better to invest your own money. Now, I want to start a clothing line but unsure at the moment how much I would need exactly, which is something I still need to look into.

What is your opinion on this?
If you have started your company, did you invest or borrow to start up your business?

Obviously I have no idea how successful it could be. My idea is fairly unique, and my target group would be males and females aged anywhere between 18-30 (and older depending on personal taste).

steampowered

It is always in your interests to put other people's money at risk rather than your own, where possible.

If you can get a no-recourse start-up loan into a limited company or some kind of grant, that is ideal. You'd probably have to top it up with your own funds.

But if we are talking about a bank loan, the banks will all require a personal guarantee, so it isn't much different from personal borrowing.

Got2Save

steampowered wrote: »

It is always in your interests to put other people's money at risk rather than your own, where possible.

If you can get a no-recourse start-up loan into a limited company or some kind of grant, that is ideal. You'd probably have to top it up with your own funds.

But if we are talking about a bank loan, the banks will all require a personal guarantee, so it isn't much different from personal borrowing.

Thanks for your input.

I was thinking of looking into the Virgin Start Up loans, but will do further research. I am surprised you say it's better to risk someone else's money. I would have thought it would be better to risk your own, then at least if things don't go well, you have nobody to owe money to. Hmm, interesting and something to think about though.

trailingspouse

First things first, you need to know how much you will need. Only then can you really decide how to fund it.

And of course, you don't just need money for starting the business (say, materials, premises, equipment), but money to live on until the business is paying you enough to pay yourself a salary (rent/mortgage, food, heating).

JJG

Got2Save wrote: »

Thanks for your input.

I was thinking of looking into the Virgin Start Up loans, but will do further research. I am surprised you say it's better to risk someone else's money. I would have thought it would be better to risk your own, then at least if things don't go well, you have nobody to owe money to. Hmm, interesting and something to think about though.

What he's saying is if you start a limited company and borrow money as that company. If the company then goes bust, you are not personally liable for any shortfall. This is why you'd generally need a solid business plan before they'd lend money to you as a business loan.

ScorpiondeRooftrouser

If you think you have a brilliant idea that nobody else has thought of, please do not put any of your own money at risk. It will fail.

getmore4less

Got2Save wrote: »

Obviously I have no idea how successful it could be. My idea is fairly unique, and my target group would be males and females aged anywhere between 18-30 (and older depending on personal taste).

Work on that first.

produce a business plan

Most businesses fail because they run out of money.

The money goes out faster than it comes in and they end up broke.

If you can produce a plan that limits the working capital and can become cash flow positive and ideally profitable quickly then you could limit your losses if it fails.