Part Time FD Advice : Are You Putting Your Family´s Personal Assets At Risk?

Post image for Part Time FD Advice : Are You Putting Your Family´s Personal Assets At Risk?

in Cash Injection Tips

Running a business doesn´t mean you have to put your personal assets at risk!  How can I make sure I don’t?  Here´s a couple of things to think about…

1 Are you trading in the right vehicle. Basically if you are trading as a sole trader if there is a problem in your business you´re the one that will have to pick up the tab

2 If you need ´business capital´ so you can run your business here are my thoughts on lenders and lending so you don´t put yourself at unnecessary risk…

      • Try to match the term (length of time) of the borrowing to the use to which the money will be put. You wouldn’t take a 5 year loan to meet next month’s rent but you might to buy a piece of equipment that will bring benefits to the business over a 5 year period.
      •  Make sure you put together a strong business case (in writing) for the loan and properly work through your numbers. Put yourself in the lender’s shoes. If you had to lend a stranger £10,000, you’d want to know what the loan was for and when and how it would be repaid.
      • A strong relationship and good communication with your business bank manager will greatly help your cause. If possible, speak to him or her well in advance of needing the money. Keep him or her apprised of your plans and your progress.
      • Think how you could run your business differently to find more cash. Many service businesses fail to bill properly for the work they do, don’t invoice promptly and then don’t chase for prompt payment. It’s not written in stone that you need to give credit to a customer.
      • It’s easier, and often cheaper, to borrow money unsecured as an individual outside the business. You then lend that money to the business on the same terms. Also are there family or friends that might help out.

These connect lenders and borrowers, and give the opportunity for a better deal for both parties especially when interest rates for savers are low but rates offered to borrowers remain disproportionately high.

The purpose of business borrowing is to leverage other people’s money to make more money for your business. In other words, the cost of borrowing must be less than the profit that your business generates from having that additional cash. The trick is to get the right balance between the risks attaching to borrowing and the returns that are generated as a result.

Hope this helps, regards Trevor

Click here to get help with the fd group

{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: