You Are Your Lender of Last Resort

Why Personal Savings Are Your Best Seed Money

In the quest for funding for your business, you are likely to consider and explore a variety of options. Experience has shown, however, that there is no easy money out there, meaning that disappointments may dog your steps as you seek funding support.

Your personal savings may, in the end, be the key to unlocking the future of your business idea. This is for at least two reasons:

1. When the chips are down and help is not forthcoming, your ability to keep your dreams, against all odds, will depend largely on the strength of your own pocket. If you have nested a tidy sum, your chance of going forward is enhanced, even if it means scaling down to what you can fund. Perhaps taking off and being in operation will be the ice-breaker to earn you some attention from possible funding sources.



2. Most financing sources will insist on risk-sharing. To provide you financial assistance, they will demand a reasonable investment of your own money to show your commitment and faith in the project. If you do not stake any fund in the business, the likelihood of not stretching yourself to manage the resources properly may not be readily dismissed. Consequently, you are likely to be asked to match the fund injection by financiers with a significant contribution of your own resources. If you have no savings to contribute, you may fail to access the financial support you seek.

The bottom-line is that while you may count on raising funds from lenders, investors or even friends to build your business, getting through with this will stand a better chance if you can stake your own financial input. So, if you're in employment or generating income by any other means, it's time to look at the possibility of going into business at some future date and begin to structure a savings plan to build your seed fund. People at work or earning income seem to miss the point that so many factors can suddenly change that situation. Saving money in a harsh economic setting is a difficult proposition, but remains a highly empowering process. Each time you accumulate some more, it excites and energises. More importantly, you're setting the foundation for a better future.

To help you make it real, the following guides have been provided by our personal finance consultant:

• Estimate your likely requirement for a business. If you already have a fairly clear idea of what business to go into, this will be relatively easy. If you don't, take a target figure based on requirements for a standard business you like.



• Project a possible commencement date and determine an average monthly savings run-rate to meet the target amount over the projected period. Commit to this figure as a minimum monthly saving and boost this with bullet sums each time unusual inflows occur: bonuses, profit-sharing, etc.



• Decide on how to hold the savings - whether bank deposit, purchase of shares or other investments. It's important to choose an option that limits your access to the saving and has the capacity to withstand inflation and earn good returns.



• Commence immediately and do everything possible to remain faithful to the plan.

Good luck!

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