At the start, I will need help with finance. For this, I will obtain a bank loan for £50,000. I found that the best loan I could find with a payback period of 5 years was with “Platinum Loans” and had 7.5% APR, and I would have to pay £996.06 each month the total amount repaid would end out as £59,764. I also looked at a 10 year loan, and the best available was also with “Platinum Loans”. The loan also had 7.5% APR and I would have paid a cheaper amount of £587.11 each month, however, the total amount I will have paid back is £70,453 which is a lot more than the initial money I would have borrowed. Also, 10 years is a very long time and my business may have failed in the first 5 years but I would still have to pay back the loan – and I may struggle to get the extra income to do this.
I will have a 10 year loan, as although it has a lengthy pay back time and I would end up paying back more than £20,000 more than I initially borrowed, the monthly repayment is more than 40% less than that of a 5 year loan – meaning I have extra capital to invest in my business; which means a possible less chance of failure. Having smaller monthly repayments also means I have more control over my business, and have more freedom to make the investments I want.
I do not wish to use my life savings, as if the business does fail I will have no source of income to provide myself and my family with a living, and will also have to pay off any debt; which I could use this for.
I may have cash flow problems early on, as in the first 6 months – year I will be building up stock and therefore not attending many events; so I won't sell many products. My business will probably go into debt during this time , but [continues]
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