The major problem that new entrepreneurs face is the need for money to finance their new business ideas. Ideas are dead without money to finance them. As a new business owner, you must be able to source for required money or capital to get your business off the ground, without which you won’t be able to start anything or even go far in any way.
An aspiring entrepreneur could access business capital through personal savings, business loans or credit, and pooling of resources from partners in the business. The easiest among these is personal savings, since there is no immediate risk of repayment and the owner is not pressured for the money from any sides.
Business loans or credit could be from banks, cooperative societies and friends and must be repaid in due time, while partners in a business could also contribute for the initial capital needed for the business to take off. Out of all, personal savings is still the best for any new beginner in business.
There is a difference between saving and savings. Saving is the process of putting money aside for future use, while savings is the actual amount of money set aside for future use. Putting money aside for future use has no risks whatever, but risks start to set in the money the money is employed for business or any other venture.
Individuals save money for personal finance out of their salaries for current jobs, profits from existing businesses, dividends from current investments, and inheritance obtained from parents and family. Companies and government also save money for future use or for further investments.
Why do people save money?
- People save money for future investments or business financing
- People save money for family upkeeps
- People save money to acquire personal assets or business equipment
- People save money to cater to special needs such as health or accommodation
- People save money to prepare for old age and retirement
Methods of saving money include banks where customers can open a current, savings or fixed deposit account. It is also possible to save money in credit and thrift societies where you save money in order to be able to access greater funds when the needs arise. People also save money in financial institutions such as micro-finance banks which give soft and long-term loans for business purposes. And people save money for the future by buying company shares and market stocks.