If you have a project you are running in your business, you may be thinking of how you are going to fund it without touching the savings from your company. External financing for the project is possible through bank loans, selling company shares, or using investments from private people. Before you go for the external sources for project funding in Kenya, there is the need to comprehend the advantages and disadvantages associated with this aspect. This article has discussed some of them.
Your company has enough expenses, and if you draw finances from various sectors, you might disrupt their progress. As such, it becomes wise to look for sources outside the business. This way, you fund your projects without having to use your resources. The savings can be utilized in other sectors within the company. Therefore, you do not disrupt operations in the company as you facilitate your new venture.
Organizations use external sources to fund projects that they cannot support on their own. For instance, if you want to increase the manufacturing space to meet the demand of the consumers, you can look for external funds to build your extra. Furthermore, such funds can be utilized in purchasing equipment to facilitate the growth of the company and the success of the venture.
The organizations funding the scheme can help give expert advice. For instance, the bank has financed a lot of small businesses. Therefore, it can guide you on how you will avoid various pitfalls so that your plan is successful. If you have an investor with technological skills, they can offer technical advice that you incorporate in your projects to make more significant changes.
Some cons come with getting cash from external sources. The organization or person lending you the money may ask for particular shares for them to allocate you the payment. Some lenders want to be part of the team that makes the decisions regarding the business. Making this agreement may eventually lead to the company going off track with your original vision.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
Acquiring funds involves a lot of time and work. You need to identify your prospective sources, create a business plan, practice your presentations, and to call various people to arrange a one-on-one meeting. These tasks can take a lot of your time and resources, and in the end, it is not a guarantee that the deals will go through.
Different financial solutions will require you to provide an asset as collateral. The asset could be equipment, land, machine, or vehicle. No matter what item you submit, you risk having them taken away in case you fail to pay back the money at the agreed time. Defaulting on your payments means you do not get the assets back.
Your company has enough expenses, and if you draw finances from various sectors, you might disrupt their progress. As such, it becomes wise to look for sources outside the business. This way, you fund your projects without having to use your resources. The savings can be utilized in other sectors within the company. Therefore, you do not disrupt operations in the company as you facilitate your new venture.
Organizations use external sources to fund projects that they cannot support on their own. For instance, if you want to increase the manufacturing space to meet the demand of the consumers, you can look for external funds to build your extra. Furthermore, such funds can be utilized in purchasing equipment to facilitate the growth of the company and the success of the venture.
The organizations funding the scheme can help give expert advice. For instance, the bank has financed a lot of small businesses. Therefore, it can guide you on how you will avoid various pitfalls so that your plan is successful. If you have an investor with technological skills, they can offer technical advice that you incorporate in your projects to make more significant changes.
Some cons come with getting cash from external sources. The organization or person lending you the money may ask for particular shares for them to allocate you the payment. Some lenders want to be part of the team that makes the decisions regarding the business. Making this agreement may eventually lead to the company going off track with your original vision.
Loan lenders and investors give out money expecting to be given back the cash with interest. Some of the lenders set high-interest rates that make it highly expensive to pay it back. Accepting these funds may prove to be a burden you did not account for.
Acquiring funds involves a lot of time and work. You need to identify your prospective sources, create a business plan, practice your presentations, and to call various people to arrange a one-on-one meeting. These tasks can take a lot of your time and resources, and in the end, it is not a guarantee that the deals will go through.
Different financial solutions will require you to provide an asset as collateral. The asset could be equipment, land, machine, or vehicle. No matter what item you submit, you risk having them taken away in case you fail to pay back the money at the agreed time. Defaulting on your payments means you do not get the assets back.
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