Owner finance business opportunities, pros and cons

Financing can be one of the hardest parts of starting your own business.One way to go is just to try and finance it yourself.You being the sole owner of your business have many pros and cons.

Being your own boss is obviously a plus to financing your own business.The stress of not having to owe any companies, banks, friends or family any money is probably the best part of it.The down side of it is, you probably don't have much money left over for other things.If you have invested your money into the start up of your new business, you probably have cashed in all your savings and most of your assets.

It's risky financing yourself because if for some reason your business fails, you could potentially put yourself in ruin.You may be in need of credit after this, and not be able to get any.However, if your business succeeds and you make some profit, it is all yours to keep.

The best way to figure out if you want to do your own financing or not is to sit down and plan it out on paper.You should get together all of your most recent bank statements, bills, and tax forms.You need to see what your cash flow has looked like in the past, so you can make a clear plan as to what needs to happen in the future.

You need to make a clear plan as to where your money is going to get spent.Not only do you need to think of start up fees, monthly fees and expenses, but also have extra money in cases of emergency.You will also want to try and incorporate into your plan, any expanding you may think about doing in the near future.Making a detailed and organized list is really the only way you can clearly see if you are doing the right thing.

While making your business plan, you may want to start a separate list of pros and cons for financing yourself vs. obtaining loans.Only you know where your finances stand, but if you have the option to do either one, you may really want to think about it.

When you finance yourself you are basically putting equity into your company.You have to always keep in the back of your mind, that you may not ever get that equity back.A lot of people who finance themselves do so by selling off all of their assets, tapping into retirement funds, borrowing off of their home, using all of their savings, or even acquiring more credit card debt.

If you decide to pull out all of these resources, you have to make sure that you and your family would be able to survive if it were all lost.It may be better to just use a part of your personal money and get a smaller business loan.Or after writing it down and weighing out the consequences you might just find it better to keep your assets in place and finance the whole thing.

Once you make your decision, and if you still choose to do owner finance, one more very important thing to do is keep records of where your money is going to.You should make a separate bank account for your business and keep documents of all of the things you either borrowed from or sold to make this account.When actually running your business it is also extremely important that you keep all of your business transactions separate from your personal life.Even though some of the money might run together, you need to keep accurate records of where it has all come from and where it is going to.
This will also help when it comes time to do your taxes and you need to figure out if you have made any money, stayed the same, or have had a loss.