From all the fields that you need to control, as an entrepreneur –viability, daily operations, clients, development, financing, etc.- this last one requires a little more attention.

     Since you have decided to start a business on your own, it is time to look around and see what are your financial sources to start the business plan, which you have chosen.

     Depending on the sector it will require more or less financing and logistics (factories, machinery, etc.)

     Try to start with your own sources. Why?

     Because at the beginning sales and profits can fluctuate which means it's hard to predict.
If you avoid fixed costs as much as possible it will allow you to face your sale´s goals and business development with more tranquility.

     If every month you are dealing with: mortgages, credits, bank loans, salaries, insurance, suppliers, leasing, renting, etc. expenses that are superior to your income, this could lead you to a stressful state of mind that will make you try to close sales to have a higher income, which means reducing prices; therefore, a decrease in your profits, and in the long term as you do not have profits you will go out of business.

     On the other hand, if your fixed costs are low and can be covered with your income without problems, you will avoid the previous situation, and it will allow you to design the right sales structure with enough margins to obtain trustful clients, sales and realistic objectives.

     Avoid asking your family for money, especially when this could damage their economy and produce a change in their life style.

     It would be a different story if a family member has a factory, little store, and believes in your business plan and decides to let you use his facilities to develop your business. This is logical, because even if you go out of business the facilities will remain.

     In order to start your business activity it is not suggested to ask your family for money, never ever ask for it once you have already started your business and your financial situation does not allow you to pay your suppliers. Do not ever, and I say never ask a family member for money to pay a supplier. Make a deal with the supplier and try to find a way to pay him back. That will satisfy both parts because otherwise you could lose a friend a family member just because you asked for money to pay a supplier that you barely knew.

     Bank Credits

     It is funny to see the faces that business owners or people that attend conferences make when I tell them that they need to ask for a loan once it is already paid.

     -What? When they are already paid? How is this even possible? I do not understand it.

     Really simple!! When you are starting to run a business you cannot ask for a loan, for instance, to obtain fixed assets. Why? Because it will suppose a big economic weight in the long term, and it could be impossible to face. Even if at the moment things are going well. Your business has just started out in the market, and the economic situation in general, your sector or your economy could go bad in the future, and then what..?

     If you pay it all at once you are losing liquidity that could damage your cash flows.

     You could ask for a loan, for example, when your clients are taking longer than normal to pay causing the company liquidity problems. In this case, you could get a loan at the bank because when you receive the payment from your clients, you will be able to return the loan to the bank without any problems. The same thing could be done when a public institution owes money to the company. The money will be returned safely, and the loan will be paid without adding harm to the liquidity or financial situation of the company.

     If the payment to the suppliers is done before you get paid from your clients, you could ask the bank for a loan so you do not get into liquidity difficulties while you wait for your clients to pay you.

     Think that financing is the most important thing for the evolution and development of your company. Without a good financing situation the evolution of your company will be slower. Therefore, since you are making all your payments correctly and on time, the company starts getting a great reputation, creating a great impression of seriousness and responsibility, which is gives the company a great value.


     Any kind of financial help offered by a public institution for entrepreneurs, people that want to start a business, or women who want to start a new project are of a very wide range.

     It is good to be well informed about the different alternatives, but do not count on them. I mean, start your idea thinking that you won´t get financial help, but if for some reason you do get it great, but do not based your business in that possible help, because there could be a delay in the payment, or not get it when you need it, or even that the public institution tells you that they are going through taught times and they cannot give you any help even though they said they will give it to you.

     Use the income coming from the financial help as a second source of money, but never as your main financial source to begin your business because you could find yourself in the same situation as someone that started a rural house project: he asked for a public subsidy of one hundred thousand euros, which was approved, to develop the project.

     He started to rebuild the house with his own money, but instead of re-building the house according to his economic possibilities, he count on the subsidy that was going to get. In the project more rooms were included, more and better materials, furniture, etc. However, every time he asked for the money from the subsidy he always got the same answer: “it will be approved, it is just a matter of time and you will receive it.” As time passed the construction continued, and the payments needed to be done to the suppliers, and the only situation left was to get a loan to pay the rural house. The loan was accepted and the construction continued. Time kept passing and after several times going back and for to the administration to solve the situation, the subsidy was refused because the institution already gave a subsidy to another rural house project and it was forbidden by law to give two of this financial help the same year to the same project.

     From all of this we can conclude the following:
     First: Until you do not receive the money from the subsidy do not count on it.
     Second: When you are going to ask for a subsidy try to do it though someone, or an organization with a good knowledge on the issue. Do not do it yourself because you are not use to this process and you could miss what we called “the fine print.”

     In addition, normally the administration asks for several documents which could be confusing since they have due dates, and come from different official institutions.

     Do not waste your time going window from window asking for papers. Dedicate yourself to work, and focus in what really matters, your business.