Exactly ten years have passed; I came back to the place where everything I have right now could have started. I turned my back and thoughtlessly abandoned a dream, only to find out that that very dream would eventually find me later on.
Being a graduate of BS Accountancy, there many times that I feel like a total idiot working in the fields of mass media. But most of the time, it feels great being the complete moron sometimes. There are just so much things to do and learn. Life is a continuing education. Schooling ends with college graduation rites; education goes on as long as your consciousness exists.
So where to get the money you need for your business? Basically, there two types of sources where you can get that capital you need in order to start your venture – internal and external. Internal sources are basically your own resources and that of those people that you know very well.
The very first thing that you must consider is reaching down on your own pocket. Your own personal savings are always on your disposal, and ready for you to use anytime you need it. Since it is yours, it is completely within your control. And you don’t have to worry of having to incur a debt. As a general practice, it is not wise to start the life of your business with a staggering amount of debt. Your savings gives you all the leverage that you need, but debt may drag you down.
Aside from your personal savings, you can also sell your non-performing assets to raise your funds. Examples of your non-performing assets are your personal properties which you no longer use or not essential for your business operations. If you have a hand bag by Coco Chanel that costs P80k, and you needed to start your business that requires to shell out a total of P100k but you only have P21k in hand, you might consider selling that hand bag to fill your start-up requirements.
But sometimes, incurring a debt is very advantageous. That is, if the credit term is long – too long that that it gives you all the time needed for you to recover all your investments before settling your debt. The very basic examples of people where you can borrow money for your business are your parents. Because they are directly related to you, entrusting you that you would eventually pay them back is not a problem. And since most of the time our parents would be very lenient to us in their collection, you can always extend the credit term. Plus, they may not charge you interests at all. But prudence should be observed so as to not to be so relax on paying them back. They are still your creditors. They are simply extending you with favors of using their hard-earned money for you to start with, and you are responsible for that.
Friends and other relatives are also examples where you can borrow. Like your parents, they have complete understanding of your character. They know that you can be entrusted with their money, and they already have the confidence that you are going to pay them in time. They may not be as lenient as our parents and may charge you a small interest, but they, more often than not, may give you considerably friendly credit terms. More caution must be given regarding this matter since relationship between you and your friends could become volatile if in case you won’t be able to meet your obligations on time – or worse, if ever you fail on your venture and won’t be able to pay at all.
When all else fail, and no-one within your circle of friends can lend you the money you need, you can bank on the external sources.
One example of these external sources is a bank. A bank can let you borrow money at a specified interest rate. But borrowing from a bank may be a cumbersome process. First they will require you to present them your income tax returns for the past several years. They will require you to declare your business’s assets, monthly income. And hardest of all, they will require you to pawn collateral from your property or several of your properties with market value far more than the amount you are going to loan. If things don’t go well in your business that makes you unable to pay, the bank will foreclose those properties.
There are also some micro-financing institutions that lends to small scale business owners either for start-up capital or to augment an existing one. A cooperative that engages in micro lending is one of these examples. Some cooperatives may even extend some kind of non-financial assistance to its members.
And there are also the so-called informal lenders. The most common of these types are the Indian nationals that we are very familiar about. Often times seen riding their motorcycles, they go from stall to stall to offer credit and collect payment. We are all familiar of their terms – the 5-6 system. 5-6, that is, means that when you borrow P500 from them, you are to pay them P600 in a course of a week. That’s an interest of 20% weekly. Moreover, that’s 80% monthly or more than 950% annually! But it is already an unusual occurrence where a credit with a 5-6 term be extended for a year. Most of the times when the person who fell from this scheme is unable to pay for several months, that person simply runs away from his Indian lender.
So if you are in short of cash from your personal resources, make it a point to weigh the advantages and disadvantages of borrowing money from other persons or financial institution. If you think your parents can lend you some, then go for it. And if you are very confident that you can pay back when you enter into a 5-6, go for it. There is absolutely nothing wrong with incurring a debt, as long as you can pay on time.
Just like any other ordinary kids, I have this fondness of stories wars in history. Or anything that has to do with the military stuff. Tanks fascinate me. For me they seem so powerful and so invincible. I can’t help but to make believe I’m also a tanker.
But of course, that was only when I was young. But then also, some things don’t change. As said, boys will always be boys.
I first had my first scaled model tank when I was age of 13. It was a T-34-85 Soviet medium tank. I spent my whole school year’s savings to buy that. I was overjoyed. It was my first time to construct a scaled model. And I was so excited to construct it that I wasn’t even bothered to paint it. It turned out to be a gray toy tank. Lifeless and characterless. But I was glad. It was enough for me that time.
Later on I learned to use an artist’s paint to give color to my little replica of history. I found a new art, a new canvas to paint on. And a new form of addiction too. I learned to stop smoking as a teenager and stayed away from booze and drugs. It’s fun.
Now as a grown up, I think I’ll still stick to this form of art. Just for my own indulgence.